Shares in Crown Resorts take a tumble
Shares in Crown Resorts plunged to a more than two-year low amid poor press and the resumption of a public inquiry into New South Wales’ casinos.
News.com.au reports that the probe, initiated by the New South Wales Independent Liquor and Gaming Authority, is investigating the multi-billion industry’s vulnerability to money laundering and organised crime.
Former Supreme Court judge Patricia Bergin has been asked with reporting on whether Crown and its Barangaroo casino licensee are fit to hold a gaming licence in New South Wales.
The latest round of hearings kicked off in Sydney with expert witness Paul Bromberg, from consultancy firm Spectrum Gaming Group, who appeared by video-link from Bangkok to advise on junkets for high rollers.
Mr Bromberg said casinos had left themselves open to alleged money laundering by hosting junkets for mega-rich VIP players, 96 per cent of whom were from mainland China and Hong Kong.
“There’s been a huge wave of hot money coming out of China over the past 10 years, leading to a huge increase in the VIP market,” he told the inquiry on Monday.
In China’s gambling capital Macau, junkets were traditionally run by Triad-backed groups independent of the casinos, which were unaware or “too scared” to stop the gang making backroom deals with players, Mr Bromberg said.
However, since China’s corruption crackdown in late 2012, high rollers have shifted further abroad, to places where despite tighter regulation they can still access crime-linked credits and funnel them through casinos.
And unlike Macau, “in Australia the casino maintains control over most VIP rooms,” Mr Bromberg said.
His appearance follows a report in Nine newspapers on Sunday that a Crown Resorts vice president authorised a junior casino staff member to transfer $500,000 to a Melbourne drug trafficker in January 2017.
Meanwhile, the Australian Securities and Investments Commission is casting its eye over a now halted $1.8 billion deal to sell a 20 per cent stake in the company to Lawrence Ho’s Melco International last May.
Mr Ho’s father, Stanley Ho, has been allegedly linked to organised crime and is banned from being an associate of Crown’s Barangaroo casino – though he has never been convicted and has always rejected such accusations.
Crown Resorts board members Michael Johnston and John Alexander, as well as Crown’s general counsel and company secretary Mary Manos, and Melco’s Geoffrey Davis, will be called before the inquiry.
Major Crown Resorts shareholder James Packer and Lawrence Ho are set to appear at a later date.
Crown shares were 6.55 per cent low at $10.99 by 3.02pm AEDT on Tuesday, having slipped to $10.975 in earlier trade.
The shares fell to $10.80 in October 2017, following accusations by Independent federal MP Andrew Wilkie that the company deliberately tampered with poker machines.
Melco thinks twice about Crown deal
In June last year, Crown Resorts was still reeling from the crushed deal that would have seen Wynn Resorts acquire the company.
Casino Aus reports that Melco Resorts and its chief executive officer, Lawrence Ho, came forward with an offer to buy a 20 per cent stake in Crown from James Packer.
That offer was welcomed until this month, when the deal disappeared.
Melco rescinded the offer and blamed the recent coronavirus outbreak.
Melco made its offer to expand its business into Australia with a strong foothold.
It was willing to pay $1.76 billion for a 20 per cent stake in Crown Resorts, with the possibility of buying more over time.
James Packer, who had been wanting to offload some of his share in the company in a nod toward semi-retirement, was all in.
He snap-called the deal.
The initial part of the transaction closed on June 6, 2019.
The companies hoped the deal would be finalised by the end of September, pending a regulatory investigation by New South Wales’ government.
Mr Ho went about applying for gaming licences in New South Wales, Victoria and Western Australia, with an eye towards Melco’s expansion.
It all seemed like a positive long-term deal for both companies, with the exception of the scrutiny the deal would soon come under.
Little more than two months after the companies announced their hopeful partnership, Crown came under fire via a media investigation by three prominent Australian media outlets.
The allegations were wide-ranging in that Crown reportedly participated in or knowingly allowed money laundering, sex trafficking and other criminal behaviour at its casinos.
Ultimately, the investigation tied Crown to a powerful criminal syndicate in China.
Members of that criminal organisation would travel to Crown casinos in Australia via fast-tracked visas, and junkets delivered them to the steps of Crown properties.
All the while, Crown allegedly looked the other way.
And then there was Ho, son of famed and alleged member of a Chinese crime syndicate Stanley Ho.
While Ho avoided any criminal prosecutions throughout his life, Australian businesses notoriously stayed away from doing business with him because of his reputation.
Therefore, his son’s desire to enter Australian territories in casino business did more than raise a few eyebrows.