Back in 2003 there was a report of a royal commission into collapsed insurer HIH that contained what amounted then and continues to be a scathing assessment of decision-making within that particular company.
The royal commissioner on that deep dive was Neville Owen, and he wrote in a section of the first instalment of a three-volume report about a key question that has universal application.
“From time to time as I listened to the evidence about specific transactions or decisions, I found myself asking rhetorically: did anyone stand back and ask themselves the simple question — is this right?” Owen said.
“This was by no means the first time I have been prone to similar musings. But I think the question gives rise to serious thoughts.”
Owen was appointed last year to chair the royal commission into Crown’s Perth operations.
His HIH observations kept coming back to me as I read through three separate inquiry reports on Crown Casino and transcripts of the inquiries’ hearings in my quest to better understand this corporate equivalent of a five-car pile-up on a freeway at peak hour.
The evidence painted a rather bleak but familiar picture of profit-driven amorality. What the hell was Crown doing having staff flogging casino attractions to people in China when its laws made that illegal? Nineteen staff were arrested in October 2016, of which 16 were imprisoned.
Victorian royal commissioner Raymond Finkelstein observed that these promotional activities were targeted at Chinese residents who were being enticed to gamble large amounts in Australia.
“Crown executives were warned that Chinese officials intended to crack down on this activity,” Finkelstein said. “Yet they did nothing to protect their staff.”
Was this really worth the risk?
Another question: why was James Packer often kept in the dark? Packer was kept in the dark when Crown’s staff first became targets for Chinese law enforcement. He was also kept in the dark when Crown’s banks closed down accounts being used to funnel money into the casino from overseas.
These were major risks, and the company’s top executive at the time was not informed. How come?
Respected jurist Patricia Bergin was appointed to conduct the Independent Gaming and Liquor Authority review of Crown in NSW that ran for most of 2020. Her February 2021 report highlighted the failure of senior staff in Crown to properly brief their boss on serious risks.
“A significant escalation of the risk to the staff in China was the questioning of the employee by the Chinese police. This was never reported to Mr Packer, notwithstanding that at the time of this questioning he was the chairman of Crown,” Bergin said.
“Perhaps this was another indication of not providing the ‘bad news’ to Mr Packer. In any event, it is inexplicable that the chairman of the company should not have been advised that its major banker had decided to close a subsidiary’s account because of the indicia of money laundering.”
There was no valid excuse for not telling Packer. Both represented regulatory and reputational risk.
It doesn’t end there. There were junket operators with organised crime links, attempts to avoid gambling taxes owed to the Victorian government, and the use of hosts employed specifically to keep wealthy but addicted gamblers coming into Crown to drop large sums on the gambling floor.
One gambler who was a member of the exclusive “black tier” dropped $30,000 at a gaming table at Crown when stopping by the casino to pick up complimentary tickets to see Phil Collins. Surely that’s a bit much to “pay” to hear “In the Air Tonight” live?
Risk-taking was not just limited to Crown’s operations. It was also present in the way in which legal advice was provided to Crown by its lawyers. Royal commissioner Raymond Finkelstein’s musing on the ethics of his own profession is priceless.
“The lawyer is part of the system charged with upholding the law. That is the reason why the lawyer should have some obligation, perhaps best characterised as a moral obligation, to see that their client obeys the law,” Finkelstein said.
“Put more directly, rather than a lawyer simply advising a client whether a given course of action is completely legal, in an appropriate case (and whether the case is appropriate will usually be self-evident) the lawyer could ask their client of the proposed conduct: ‘Is it right?’, ‘Is it honest?’ and ‘Does it thwart the purpose of the law?’”
Multiple findings of unsuitability to hold a licence were laid at Crown’s doorstep, but the licence still remained in its hands with strict conditions that its new owner, private equity play Blackstone, must follow.
One is left feeling that, even with tougher fines and tighter monitoring, Crown Casino is — like the banks before it when Kenneth Hayne came calling — an entity that might just be too big to fail.
Commissioners and inquiry chairs do not have the luxury of social media and journalistic outrage. They need to make a decision that deals with transgressions but does not make the cure worse than the disease.
Can you imagine the impact of more than 11,000 employees losing their jobs during the peak of the pandemic, had Finkelstein and Owen decided to pull the licence to print money?
Tom Ravlic’s book Crown: Playing in the Shadows (Wilkinson Publishing) is out now and available at www.wilkinsonpublishing.com.au.