‘Disgraceful’ Crown ‘on probation’

The probe was instigated after last year’s NSW Independent Liquor and Gaming Authority found the venue and also Crown’s Perth casino had been infiltrated by underworld figures through Chinese high-roller ‘junket’ tours, with vast sums of ill-gotten cash washing through its bank accounts.

Commissioner Raymond Finkelstein had flagged the very real possibility Crown could be stripped of its Victorian licence, describing suspicious card transactions that went through the hotel with fake invoices issued for rooms that did not exist as “a fraudulent scam from the outset”.

But he instead recommended against such a dramatic move on Tuesday, even though he found it was “inevitable” Crown would be deemed not suitable to continue to hold its casino licence.

“Within a very short time, the commission discovered that for many years Crown Melbourne had engaged in conduct that is, in a word, disgraceful … variously illegal, dishonest, unethical and exploitative,” his report read.

“Although Crown Melbourne rightly deserves criticism for its past misconduct, and no one connected with the organisation is entitled to much sympathy, what tipped the balance against the cancellation of its licence was that Crown Melbourne has, at great financial cost, embarked on a significant reform program led by people of goodwill and skill.”

Crown gutted its board in the wake of the NSW probe.

“The (reform) program is likely to succeed,” Commissioner Finkelstein said.

“If it does, that will be to the benefit of Victoria.”

As recommended by Commissioner Finkelstein, a “special manager” role is being created to oversee and control Crown Melbourne’s affairs for two years.

Gaming Minister Melissa Horne announced the founding commissioner of the Independent Broad‑based Anti‑Corruption Commission, Stephen O’Brien, would take on that position and report back to the regulator.

“The regulator will then decide whether it is ‘clearly satisfied’ that Crown Melbourne has returned to suitability,” Commissioner Finkelstein said.

“This will be a tough test to satisfy.”

Ms Horne described Crown as being “on probation”.

“We have gone further … what we’re doing is taking the recommendation and saying, at the end of those two years, the government will automatically assume that Crown’s licence has been cancelled, unless they demonstrate otherwise,” she told reporters.

“This puts the onus well and truly on Crown to reform itself.”

The Victorian government also went beyond Commissioner Finkelstein’s recommendation to lift the penalty for breaching the Casino Control Act from a fine of up to $1m currently to at least $10m – upping it to $100m.

The state government is also banning junkets.

“And finally, we will completely repeal the flawed compensation clause … that will see the Victorian taxpayer liable for hundreds of millions of dollars should any condition of the licence be changed,” Ms Horne said.

“So, we are creating the most stringent oversight of any casino in the country. No longer will Crown’s destiny be theirs to manage.”

The commissioner also recommended former chairman and largest shareholder James Packer reduce his shareholding in Crown Resorts from 37 per cent to less than 5 per cent.

The NSW inquiry found Mr Packer’s influence had been “disastrous” as he was the driving force to secure more of the junkets at the centre of the scandal.

Commissioner Finkelstein, a former Federal Court judge, said the evidence at the Victorian royal commission confirmed those views.

Asked whether the shareholding cap recommendation was among nine of the 33 suggestions the state government sought to enshrine in legislation, Ms Horne only said: “That is a matter for Crown.”

She said the other 24 recommendations would be considered but had been accepted in principle.

In a brief statement to the ASX, Crown said it was reviewing the report and the response of the Victorian government, whom it would work “co-operatively and constructively” with.

Crown was deemed unfit to hold a gaming licence for its new $2.2bn Sydney venue at Barangaroo and its Perth licence is being reviewed at a separate royal commission still under way, with Mr Packer due to face the investigation on Friday.

The findings of the West Australian investigation are due in March, with the commissioners saying they will take into account the conclusions of the Victorian probe.

It is highly likely the WA government will give serious weight to the thousands of staff employed at Crown, as noted by Commissioner Finkelstein – although he did say it was “the height of ‘chutzpah” for the company’s lawyers to have sent a letter citing staff job losses among its list of dire consequences stemming from a licence cancellation.

OTHER KEY FINDINGS OF THE VICTORIAN ROYAL COMMISSION:

• Grave, ongoing legal breaches that not only contravened Australian law but the laws of other countries – often with the knowledge of Crown executives. Commissioner Finkelstein said it was “nothing short of appalling” Crown let staff in Indonesia, Malaysia, Taiwan and Singapore continue promoting the business after 19 employees were arrested in China in 2016

• Consistent non-co-operation with the regulator, including bullying and providing false or misleading information

• Tax breaches known by senior staff that were then intentionally concealed

• Serious, systemic breaches of responsible gaming obligations

Originally published as Victorian royal commission recommends against cancelling Crown Melbourne gaming licence