Tenfold compensation could be paid to Crown if inquiry forces change

by William Brown Last Updated
Fitch downgrades Crown?s rating as controversy plagues casino operator 

Millions of dollars in compensation to Crown Resorts would be paid by NSW tax payers if the casino group is ordered to implement tighter controls at its new casino, set to open in December.

The Sydney Morning Herald reports a state government probity inquiry has heard how Crown’s lax due diligence and legal compliance measures led it into business with high-roller junket operators, tied to powerful criminal syndicates who money launder.

Under the terms of the deal Crown signed with the NSW government in 2014, the gambling giant is entitled to claim compensation worth 10 and a half times the estimated negative impact from “any action” the NSW government takes which changes its licence. 

Crown can claim the same tenfold compensation for any government action which has a material negative impact on its “assets, liabilities, properties…operating results, operations, reputation or prospects,” the deed says.

The clause opens the door for Crown to claim compensation if the inquiry’s findings lead to new controls or restrictions over how it operates Barangaroo, or who it works with to fill its new casino with high-rollers. 

Independent NSW MP Justin Field said the deed’s implications for the inquiry were “outrageous” and could hamper the government acting on its recommendations to prevent organised crime and money laundering at Crown Sydney.

“There are questions to be answered about the failed probity process for the Crown licence and agreement and how clauses like this, that weaken the hand of the government and parliament to regulate in the public interest, were allowed to be included,” Mr Field said.

Unless Crown made public commitment to seek no compensation for any regulatory changes stemming from the inquiry, Mr Field said the government should cancel Crown’s licence and bring forward retrospective legislation to prevent compensation being payable.

A spokesman for NSW’s minister for Customer Service Victor Dominello, whose portfolio encompasses gambling licensing, said the minister was “aware of the terms of the agreement, including the compensation clauses.”

However he “does not intend to pre-empt the outcomes of the Bergin Inquiry nor the regulatory changes which it might give rise to,” the spokesman said. 

The inquiry will report back to the ILGA by February 1 on whether Crown is a “suitable person” to hold its casino licence.

If it finds Crown unsuitable, Commissioner Bergin will report on what changes, if any, would be required to make it suitable.

Crown intends to open casino in December

Questions have also been raised about Crown’s intention to open its casino in December this year, before the due to date of the inquiry and report.

Federal Independent MP Andrew Wilkie, who has worked with whistleblowers that have exposed malpractice at Crown’s Melbourne casino examined during the inquiry, said opening Crown Sydney before the probe into its character was finalised was “laughable in the extreme.” 

“Here we have Crown standing accused of systemic and prolonged misbehaviour which, if proved, would make the company patently unsuitable to hold any casino licence,” Mr Wilkie said.

“Clearly they shouldn’t get a Barangaroo licence. In reality, the only unresolved question is whether or not they are a fit and proper entity to hold a casino licence anywhere in Australia.”

Asked if there was anything to stop Crown from opening while the probity inquiry was still pending, an ILGA spokesman said: “Crown Resorts has a valid licence to operate a restricted gaming facility at its Barangaroo site.”

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