Fitch downgrades Crown’s rating as controversy plagues casino operator
Crown Resorts has been placed on negative watch by Fitch ratings agency after a fortnight of controversy and a combative AGM, amid a New South Wales government inquiry into the operators’ suitability to hold a casino licence in New South Wales.
Fitch revised the outlook on Crown to negative from stable following the announcement that two more regulatory inquiries have been opened into its operations and compliance with regulations, including anti-money laundering provisions have been called into question.
The negative outlook reflects weaknesses in Crown’s governance structure that were revealed during an inquiry in New South Wales, as well as the risks to Crown’s operations and financial profile from potential outcomes of the various inquiries, which could include fines, changes in operating conditions and regulations, or changes to or loss of licences.
Fitch would consider downgrading Crown’s rating should the regulators impose onerous regulatory conditions or fines or penalties that have a significant impact on the company’s business or financial profile, it said.
Crown would be able to absorb around A$800 million in fines or penalties such that its financial profile remained consistent with its rating, according to The Australian.
If this were to materialise, Fitch said it would be among the largest fines imposed on a corporate in Australia.
Alternatively, the most severe regulatory action would be loss of licence, which Fitch believes to be a low probability event and hence have captured the risks under the negative outlook.
Crown recently announced measures to address the weaknesses identified and failure to rectify these could lead to a rating downgrade.
In October, Crown said the Victorian Commission for Gambling and Liquor Regulation has ordered it to provide more information about Crown Melbourne’s compliance with its internal control statement for junket operations and that financial crime agency Australian Transaction Reports and Analysis Centre (AUSTRAC) has identified potential non-compliance by Crown Melbourne with anti-money laundering legislation and started a formal enforcement investigation.
The inquiry into Crown’s suitability to hold a licence in NSW is expected to provide its findings to the regulator by February 2021.
Crown chairwoman quizzed on money laundering at casino
The NSW inquiry into Crown Resorts’ suitability to hold a casino licence in the state has heard Crown chairwoman Helen Coonan conceded the casino giant facilitated money laundering at its Melbourne casino.
The Age reported last week that Ms Coonan blamed the oversight on “ineptitude” rather than the company deliberately “turning a blind eye” to criminals banking their dirty cash with the company.
The comments made in evidence to the inquiry came a day after the financial crimes watchdog, AUSTRAC, said it was formally investigating Crown for potential breaches of anti-money laundering laws.
During her second day of evidence at the inquiry, Ms Coonan was asked about Crown’s relationship with its largest high-roller “junket” tour partner, Suncity, which is run by the alleged former Macau triad member Alvin Chau.
Suncity operated a private gaming room at Crown Melbourne up until late last year when the Macau-based junket shut it down following reports about Mr Chau’s criminal links.
A series of reports by the masthead triggered an inquiry, which will recommend whether Crown should keep the licence for its new Barangaroo casino.
Counsel assisting the inquiry, Naomi Sharp, SC, challenged the former Howard government minister on why Crown did not shut Suncity’s private room even after multiple red flags were raised that indicated money laundering was occurring within the gaming parlour.