A Crown director says he was "shocked" to find out the James Packer-backed group had been potentially avoiding millions in tax payments to the Victorian government.
Crown non-executive director Nigel Morrison said on Tuesday he first learned the company may have avoided paying the tax through media coverage of a royal commission on June 7.
"I was shocked by the magnitude," Mr Morrison told the inquiry into whether Crown can retain a licence for its Melbourne operations.
"The magnitude was unbelievable."
Commissioner Ray Finkelstein QC asked Mr Morrison if he was concerned that Crown's executive chair, Helen Coonan, had known about this issue for months without disclosing it to him.
"I think that is concerning," Mr Morrison responded.
Mr Morrison, who joined Crown as a director in March, said the company had "clearly" lacked an "open and honest" relationship with Victoria's gaming regulator.
Commissioner Finkelstein, a former Federal Court judge, also asked Mr Morrison whether, hypothetically, directors should resign if they knew their company was underpaying tax but took no steps to fix it.
"In that case ... it's hard to argue they should remain," the Crown board member said.
Mr Morrison also revealed he had been left with an "impression" the company may have been underpaying tax following a 30-second chat with Crown head Xavier Walsh in March.
Crown was earlier this month accused of failing to produce a document at the inquiry that shows it could owe the state government $167 million in unpaid taxes.
The commission was told Crown began preparing a spreadsheet calculating "potential underpayments of gambling tax" on February 26, four days after the inquiry was announced.
The spreadsheet estimated the savings the company made from 2014 to 2019 by deducting loyalty scheme costs from poker machine tax payments.
These deductions, counsel assisting Geoffrey Kozminsky said, included free valet parking, accommodation and hospitality.
Mark Mackay, executive general manager of gaming machines, said the expenses were tax deductible but "ambiguity" surrounding the law had raised concerns.
Mr Mackay said Crown adopted the deductions practice to make its loyalty program cheaper to run.
He also said the company was concerned about the Victorian Commission for Gambling and Liquor Regulation finding out.
The inquiry continues this week.
