Inquiry finds Crown "unsuitable" to run casino, calls for board change and forensic audit

Inquiry finds Crown "unsuitable" to run casino, calls for board change and forensic audit

An inquiry into alleged criminal activity at Crown Resorts' (ASX: CWN) operations in Melbourne and Perth has concluded the company is "quite unsuitable" to hold a casino licence in NSW, potentially blocking the opening of its already delayed Barangaroo casino in the heart of Sydney.

An inquiry into alleged criminal activity at Crown Resorts' (ASX: CWN) operations in Melbourne and Perth has concluded the company is "quite unsuitable" to hold a casino licence in NSW, potentially blocking the opening of its already delayed Barangaroo casino in the heart of Sydney.

The Bergin Inquiry report commissioned by the NSW Independent Liquor & Gaming Authority (ILGA) said the findings may be "an irresistible death knell for the Crown Board's continued existence as it is presently constituted", noting many of the company's problems stem from poor corporate governance and culture, as well as deficient risk management.

Bergin was appointed to conduct the inquiry in August 2019, but the pandemic meant the process took much longer than previously planned, involving 187 summonses, more than 80,000 documents and 60 days of public hearings.

The report has been tabled before NSW Parliament, and it will ultimately be the ILGA's decision whether to cancel, suspend or make conditional Crown's licence based on the Honourable Patricia Bergin SC's conclusions.

The two-volume report is available on the NSW Parliament.

Bergin highlighted three stark realities that came out of media investigations into the alleged behaviour of Crown such as money laundering, staff arrests in China and hosting junkets.

"Any applicant for a casino licence with the attributes of Crown's stark realities of facilitating money laundering, exposing staff to the risk of detention in a foreign jurisdiction and pursuing commercial relationships with individuals with connections to Triads and organised crime groups would not be confident of a positive outcome," Bergin said.

"It is obvious that such attributes would render an applicant quite unsuitable to hold a casino licence in New South Wales."

She said while Crown recognised there was a need for cultural change, this must come from within the company rather than from some proposal to the authority through the inquiry process.

"It may be that the consequences of some of the suggestions made in answer to the question posed, if adopted, might at least initiate a feeling that it is possible to achieve a fresh start," she said.

In light of the inquiry's findings about CEO Kenneth Barton, as well as non-executive directors Andrew Demetriou and Michael Johnston, Bergin said the ILGA would be "justified in entertaining very serious doubts that Crown could be converted into a suitable person under the Casino Control Act whilst they remain as directors; or that the Licensee could be converted into a suitable person under the Casino Control Act whilst Mr Barton remains as a director".

However, Bergin doesn't appear to think a board renewal would go far enough and recommends a deeper investigation of Crown.

"The Authority could have no confidence that either the Licensee or Crown could be rendered suitable without a full and wide-ranging forensic audit of all of their accounts to ensure that the criminal elements that infiltrated Southbank and Riverbank have not infiltrated any other accounts," she said.

"Any audit must be on the premise that the main aim is to ensure that the casino operations are free from criminal influence and exploitation.

"If Crown is to survive this turmoil and convert itself into a company that can be regarded as a suitable person and achieve the same for the Licensee, there is little doubt that it could achieve a fresh start and emerge a very much stronger and better organisation."

The ILGA will consider the report at a special meeting to be held on Friday 12 February, and then at its regular monthly board meeting, scheduled for 17 February.

"The report is detailed and complex. It will take time for the Authority to give it proper consideration before determining the most appropriate course of action," ILGA chair Philip Crawford said.

"It is not appropriate for the Authority to comment on any of the report's findings or content until this process is completed.

"It is critical that the management and operation of casinos in NSW are free from criminal influence or exploitation."

In November the ILGA blocked a planned December opening of the new $2.2 billion casino at Barangaroo after deciding to defer its decision on the matter.

In December the group then appointed Steven Blackburn as its chief compliance and financial crimes officer to oversee improvements in compliance across Crown's casino operations. The Victorian Government is also undertaking a review of the company.

CWN entered a trading halt this morning pending the release of the report. 

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