The inner workings of an Australian casino company’s efforts to evade China’s currency controls and ban on gambling promotion have been laid bare in a public inquiry in Sydney.
Crown Resorts staff inside China were told to work from home to evade scrutiny as they lured wealthy gamblers to company hotels in Australia with gifts, trips on private jets and help with quick visa approvals.
But the Crown hotels in Melbourne and Perth had casinos attached, which was the unstated reason for promoting the trips.
The inquiry’s extensive terms of reference include whether Crown breached gambling laws, engaged in money-laundering and partnered with tour operators with links to drug traffickers, money launderers, human traffickers and organized crime groups.
The inquiry has heard evidence that Crown partnered with triad-linked tour operators, known as junkets, to lure the high-rollers. The key was Macau, the only part of China where casinos are allowed.
Junkets were also able to get around a problem with the law in China where moneylending is illegal.
Junkets, which took on gambling debts, could use their connections back home to recover money from customers who lost fortunes and who borrowed heavily to keep going.
Claims about Crown’s links to triad gangs and junkets with connections to sex trafficking, money-laundering and drugs are not new.
An investigation by Australia’s Sydney Morning Herald and Age newspapers and the television program 60 Minutes in 2019 cited leaked company documents alleging that top executives in the company knew of the malpractices.
Two years earlier, the ABC’s Four Corners program said Crown built a business model luring Chinese gamblers to its casinos.
However, Crown issued vigorous denials of wrongdoing to the Australian Stock Exchange and in newspaper advertisements in which it said it was setting the record straight in the face of a deceitful campaign.
These denials fell apart over three days from October 6 when former Crown chairman and major shareholder James Packer testified by videolink at the inquiry into the company’s fitness to hold a license for a multi-billion dollar casino being built at Barangaroo in Sydney.
Crown’s aggressive push to lure high-roller gamblers from China was a high-risk, high-reward strategy.
At the time, Chinese President Xi Jinping had launched a crackdown on foreign currency transfers and corruption.
One Reuters report tendered at the inquiry quoted Chinese officials as saying: “A fair number of neighboring countries have casinos, and they have set up offices in China to attract and drum up interest from Chinese citizens to go abroad and gamble. This will also be an area that we will crack down on.”
Many of Packer’s answers to questions were that he could not recall, citing his well-documented mental health issues for memory failures. However, the central facts from company documents and emails were not in dispute.
One email between Crown’s former head of international marketing and another executive in 2013 was about the concerns of staff in China.
“This is one thing that is important to understand when it comes to the China team, they are living in constant fear of getting tapped on the shoulder,” it said.
“In a country where due process is inconsistently applied, it is a risky place to be for all our team.”
Packer, who was not a Crown Resorts director at the time, agreed at the inquiry that this was completely unacceptable for a publicly listed Australian company.
Crown ignored signals that the Chinese were serious when in 2015 South Korean casino staff were detained, sentenced to jail but quickly deported instead.
In June 2017, Chinese police swooped on the Crown staff, arresting 19 of them. Eighteen were jailed for promoting gambling.
All were freed after up to 10 months in detention. One later spoke bitterly to the ABC about being abandoned by Crown and unable to find a job in China with a criminal conviction.
Packer was also questioned about six trips he made to Macau. Crown had a casino there at the time and it was where he realized the importance of junkets to the VIP trade.
He agreed that casinos advanced credit for gamblers to the junket operators rather than the patrons and that casino operators could enforce debts against junket operators rather than patrons.
The inquiry, which continues October 12, is of great importance to Crown. Barangaroo, with its 75 floors, will cater only to VIPs in a world market where the super-wealthy generate the mega-profits.
Evidence to the inquiry suggests that junket operators are key to success in this market. However, not all junket operators are linked to organized crime and casinos in Australia have a legal obligation to vet them thoroughly.
Packer has said he will sell down his interests in Crown to try to protect the company from being stripped of its Barangaroo license. Crown sold the last of its interests in the Macau casino under Chinese pressure after the arrest of its staff.
Crown is also facing fresh scrutiny in the state of Victoria as regulators absorb the inquiry evidence into Crown’s Melbourne operation.