Packer sent packing after inquiry reveals organised crime links

No lifesaver for billionaire James Packer, who, after an 18-month inquiry, was found ‘unsuitable’ to hold the gaming license at Crown Casino, Barangaroo, Sydney, Australia (pictured). Photo: Alec Smart, Wednesday, 10 February, 2021.

By ALEC SMART

Multibillionaire businessman and international casino operator, James Packer, was sent packing from operating Sydney’s prime new waterfront casino at Barangaroo this week, after an 18-month long public inquiry found his company unfit to operate the gaming licence.

Allegations of corruption, money-laundering and intimidating a business associate (investor Ben Gray, after a failed business merger with TPG Capital) were revealed. Packer’s company, Crown Resorts, of which he is a director and majority shareholder, was ruled ‘unsuitable’ to host the gambling license. The license was originally granted in 2014 to their subsidiary, Crown Sydney Gaming.

Serious questions are now being asked about the legality of the NSW Government’s November 2013 contractual deal with Packer to build the One Barangaroo tower and casino – also known as ‘Packer’s Pecker’ due to its phallic shape.

Packer, who told the inquiry his bi-polar disorder medication impaired his ability to recall past events, may now be forced to sell his 36 per cent stake in Crown Resorts.

The inquiry into Crown Sydney Gaming, commissioned by the Independent Liquor & Gaming Authority (ILGA) and invested with powers equivalent to a Royal Commission, was overseen by former Supreme Court judge Patricia Bergin. Commissioner Bergin presented the inquiry’s findings to the NSW Parliament on 9 February, 2021.

Crown’s $2.2 billion Barangaroo hotel-casino complex, a 75-storey tower with a 350-bedroom 6-star hotel, restaurants, bars and mixed retail outlets, was opened in late December 2020, on the north-western corner of Sydney’s CBD, overlooking Darling Harbour. 

Crown was set to open the gaming floors in the Barangaroo casino in December, but ILGA regulators blocked them from operating – pending the outcome of the Bergin Inquiry – after evidence of systemic money laundering in Crown’s casino’s in Melbourne and Perth came to light.

Commissioner Bergin directed the Inquiry to determine whether Crown Sydney Gaming was a “suitable person” to manage the Barangaroo licence and whether parent company Crown Resorts was a “suitable person” to be a “close associate”. 

After considering months of evidence, much of it damning, she ruled that they were not. 

Although Packer is on the board of Crown Resorts and not Crown Sydney Gaming, and has been described as “not having an official role with Crown since he left the board in 2018”, Commissioner Bergin believed his 36 per cent controlling share of Crown Resorts made him the primary influence. 

She explained that “both by reason of his personality and also the somewhat supine attitude adopted by Crown’s operatives”, Packer was the “real power” steering the tarnished casino operation.

“The Crown name is for many people synonymous with the Packer name,” she affirmed. 

In the days since the report was tabled, two of Packer’s representatives, Crown boss Kevin Barton and former Australian Football League (AFL) boss Andrew Demetriou, have resigned from its board.

Packer’s media firm, Consolidated Press Holdings (CPH), also cut its ties with Crown’s board after terminating its consultancy contract with non-executive board member John Poynton. This followed the resignation of CPH directors Guy Jalland and Michael Johnston shortly after the Bergin Inquiry results were made public.

Crown Resorts Ltd’s Crown Sydney nears completion at Barangaroo, 17 April, 2020. Photo: REUTERS/Stephen Coates.

Gaming license up for grabs?

Crown paid a $100 million fee to the NSW Government for the gaming license in 2014, which is still operational and can only be cancelled through disciplinary proceedings under the Casino Control Act

The ILGA is the only body with the authority to take disciplinary action against Crown, and if it finds against the multinational casino operator, Crown cannot pursue compensation in return. 

If the ILGA chooses not to prosecute Crown, the government will be obliged to return their $100 million license fee, albeit withholding a $5 million non-refundable deposit.

It’s unclear at this stage whether Crown will appeal any aspect of the Bergin Inquiry’s ruling, or demand ILGA rescind their ban from operating the Barangaroo casino. Commissioner Bergin left open the option of Crown Sydney Gaming launching the gaming rooms in their new harbourside tower, if they reorganise their management to meet ILGA approval.

“The conversion to suitability will require a restructure of the Crown Board and the Board of the Licensee,” she explained. “Some observers may expect the Authority to require the purging of the whole Crown Board before it would be in a position to regard Crown as a ‘suitable’ person under the Casino Control Act,” she added. 

Jamie Parker, Balmain Greens MP, whose constituency directly faces Barangaroo across Darling Harbour, has called for the casino license to be ‘scrapped’. 

In a Facebook post on 10 February, Parker said, “Back in 2013 the NSW Greens were the only party that voted against Crown’s proposed casino. At the time, we made it clear that issuing a second Sydney casino licence would open the door to corruption, money laundering and criminality.

“But instead of listening, the government carved Crown out of existing planning rules, handed them prime public waterfront land, and delivered a casino licence outside the normal tender process. This is a mess of the government’s own making, helped by the Labor Opposition who gave Packer’s gambling empire full bipartisan support.”

Parker added on 11 February, “If you’re looking for a reason why the government and NSW Labor rushed through legislation to abandon Sydney’s one-casino policy for Crown it could be this. Crown has donated $87,000+ to both parties every year for the last 20 years.”

Money laundering

During the course of the hearings, investigators learned Crown partnered with at least seven ‘junkets’ – teams given preferential treatment to attract ‘high-roller’ competitors with millions of dollars at their disposal – with known links to organised crime. 

According to Fairfax newspapers, Crown defended its dealings with junket operators, insisting it employed “a robust process for vetting”, and dismissing an investigation by Nine Network’s 60 Minutes and Fairfax Media as a “deceitful campaign” against them.

The junkets included: three ‘high-roller’ gamblers connected to Asian Triad criminal networks; an international criminal fugitive wanted by Interpol known as ‘Mr Chinatown’; a brothel-keeper implicated in sex-trafficking; and a close association of Song Zezhai, identified in a Chinese court in 2003 as engaged in extortion racketeering to maintain his illegal gambling syndicate.

A leaked 2015 internal Crown strategy document suggested Song’s junket is paid millions of dollars in commissions, while a 2016 court hearing learned that a Lamborghini Aventador sports car was bought in 2012 with $747,000 from the ‘Song Zezhai Junket Account at Crown Casino’.

After initially resisting compliance with the then 15-month Bergin Inquiry, Crown’s legal team performed an unexpected U-turn at 11pm on 16 November, 2020 and conceded that two bank accounts it was operating through two shell companies, known as Southbank and Riverbank, had probably been used to conceal proceeds from organised crime.

Crown’s counsel, Robert Craig, admitted: “Crown accepts that an inference can be drawn that at some point in time deposits into the Southbank and Riverbank accounts were more probably than not part of cuckoo smurfing activity.” 

ILGA Chairman, Philip Crawford, reacted angrily at a press conference the following day, stating, “It’s come at the 11th hour – literally. That gives us great concern because we’re talking about money laundering.

“We’re talking about – potentially – drugs, we’re talking about child sexual exploitation, we’re talking about people trafficking and we’re talking about financing terrorism.”

This was the primary factor influencing ILGA’s decision to suspend Crown’s gaming license after Crown’s lawyers had previously urged Commissioner Bergin to ignore suspicious transactions in the two accounts and dismiss the theory they were utilised for money laundering.

‘Cuckoo smurfing’ is the term for moving large sums of illicit money and swapping it with legitimate sources of income to dilute and hide its origin. Also known as ‘alternative remittance’, it is legal but highly regulated in Australia, but can be a means of circumventing authorities to disguise the proceeds of crime – especially drug money or terrorism.

The word ‘cuckoo’ relates to the cuckoo bird, which lays its eggs in the nests of other unsuspecting birds that subsequently raise its offspring. Syndicates that launder their clients’ ill-gotten gains often move their illicit cash through the accounts of innocent people to make it appear legitimate, and the third parties are often duped into spending it. Or, in the case of corrupt casinos, they’re active partners in redistributing the unattributable cash.

Crown patrons would deposit money into the accounts, often under $10,000, which meant Crown weren’t legally obliged to report them to the Australian Transaction Reports and Analysis Centre (AUSTRAC) – a government intelligence agency that monitors financial transactions for fraud and criminal enterprises – and the funds would then be available to draw upon from the patron’s personal account inside the casino.

The AFP and AUSTRAC have identified known money launderers depositing funds to facilitate Chinese high-roller gamblers visiting Crown casinos in Australia. Photo: Stock image/Pexels.

Investigations

In June 2015, an Australian Federal Police (AFP) inquiry, codenamed ‘Haricot’, reportedly traced multiple deposits from a Chinese cocaine trafficker into Riverbank and Southbank accounts, while a Southbank account received a $200,000 deposit from another drug trafficker via a previously identified money-laundering agent.

Ironically, the Riverbank and Southview accounts were publicly exposed in August 2019 by Fairfax Media, shortly after they merged with Nine Entertainment Company, the successor to PBL Media, which the Packer family owned until James Packer officially ended their involvement in October 2008.

Fairfax Media also revealed that between 2012 and 2016, former investigators from the AFP and AUSTRAC traced money from known money launderers and a number of suspected or convicted drug traffickers deposited in Crown’s Riverbank and Southbank accounts.

The AFP and AUSTRAC have also identified known money launderers utilising Riverbank and Southbank accounts to deposit funds to facilitate Chinese high-roller gamblers visiting Crown casinos in Australia.

After the issue first came to the public’s attention in August 2019, a Crown Resorts spokeswoman released a statement insisting the two companies were set up for receiving and transferring funds to and from casino customers of Crown Perth and Crown Melbourne, respectively.

“Both accounts are authorised to be used for that purpose in accordance with casino-regulated and legislative requirements,” she claimed.

Australian Securities and Investments Commission (ASIC) records show Riverbank Investments Pty Ltd was a $2 company owned by Crown Resorts Limited. Riverbank channelled funds to Crown’s Perth casino.

Southbank Investments was a $100 company also owned by Crown Resorts that channelled funds to Crown’s Melbourne casino.

Both Riverbank and Southbank were directed by Crown’s senior management, including executive chairman John Alexander, chief financial officer Ken Barton, former company CEO Rowen Craigie, and Crown’s CEO of Australian resorts, Barry Felstead.

Banks step away from Riverbank and Southbank

In mid-2013, HSBC closed a number of international bank accounts linked to organised crime and suspicious clients, including accounts for Riverbank and Southbank, after American authorities accused the global bank of laundering money for Mexican drug cartels.

In January 2014, six months after a Riverbank account was opened with them, ANZ Bank raised their concerns with Crown questioning several suspicious deposits of less than $10,000 made by the same person at different Perth branches. 

The Birgin Inquiry heard that ANZ closed the accounts in 2014, wary that money laundering was taking place.

Apparently, the Crown board was “never informed”, and Crown’s chief legal and regulatory compliance officer, Joshua Preston, told the Birgin Inquiry he couldn’t recall if he was alerted to the incident or attended any meetings with ANZ.

Crown did not review the suspicious transactions, but instead opened new accounts with the Commonwealth Bank (CBA). The Inquiry heard how, over the next three months, a series of suspicious cash deposits of up to $50,000 each were then made to the new CBA account, eventually totalling $5 million.

CBA eventually shut down the Crown-run accounts in late 2019 after it came to public attention they were repeatedly used for questionable cash transactions.

Meanwhile, New Zealand’s ASB Bank also terminated a bank account linked to the Crown’s Southbank company in 2018 after it took Crown three months to “urgently answer” a list of questions ASB sent them requesting how they monitored suspicious activity on the account.

Commissioner Bergin said in her report that Riverbank and Southbank were “infiltrated and exploited by criminal elements, probably including international criminal organisations” since at least 2014.

The report added that through these accounts, “hundreds of millions of dollars were deposited and swept into the accounts of Crown’s casinos”.

“No action was taken to close down the operations of Southbank or Riverbank, or implement additional controls to prevent the accounts being exploited for the purposes of money laundering,” the report continued.

“There can be no doubt that the processes adopted by Crown outlined above enabled or facilitated money laundering through the Southbank and Riverbank accounts,” Birgin’s report concluded.

Commissioner Birgin found that processes adopted by Crown facilitated money laundering. Photo: Stock image/Pexels.

Watchdogs with no teeth

Curiously, although Western Australia’s casino watchdog, the Gaming and Wagering Commission, was aware of the Riverbank account, it appears they didn’t raise it with the WA Police Commissioner, although one of their key remits by law is “to enforce and to prosecute persons contravening the laws relating to gambling”.

Furthermore, both Victorian and Western Australian gaming authorities ignored repeated media allegations of money laundering and Crown’s associations with known criminals, including a 2014 investigation by ABC-TV’s Four Corners.

Although there is no suggestion that any of the top Crown executives who directed the Riverbank and Southbank companies knew about criminals depositing funds into their firms, Professor Linda Hancock from Deakin University, who has been investigating both Crown and gambling regulations for over 20 years, told the ABC that casinos need to be monitored and regulated by a national body, because state-based regulators routinely fail.

“So far the state regulators call themselves independent, but you can hardly come to the conclusion after this inquiry that they are independent, because if they were, they’re also incredibly incompetent,” Hancock told the ABC on 11 February, 2021.

“You can’t trust the states to do it because their hands are in the till,” she alleged. “They get a certain percentage of turnover and it’s more or less like the mining companies with royalties, but it’s mining vulnerable people.”

Crown Perth, for example, is a major asset to the WA Government – in the last financial year it paid $40 million in casino tax.

In her report, Commissioner Bergin recommended NSW establish an Independent Casino Commission (ICC), a “dedicated, stand-alone, specialist casino regulator with the necessary framework to meet the extant and emerging risks for gaming and casinos”. 

Commissioner Bergin suggested it would “engage an independent and appropriately qualified Compliance Auditor approved by the ICC, to report annually to the ICC on the casino operator’s compliance with its obligations under all regulatory statutes … and the terms of its licence”. 

Commissioner Bergin’s report also recommended a gambling card, similar to the Opal card used on the public transport network, as a means to significantly hinder organised crime from laundering money in casinos and poker machines. 

NSW would transition to cash-free poker machines that utilised the card, which gamblers would be required to register and top up, like a debit bank card.

The move is backed by NSW Minister for Customer Service, Victor Dominello, who also has responsibility for gambling. 

In NSW, an estimated 96,000 poker machines are in operation throughout 4000 licensed venues, including 1500 of them in Star Casino in Pyrmont.

NSW has the dubious distinction of having one of the world’s highest concentrations of pokers machines. According to the Gaming Technologies Association, NSW has the world’s second-highest number of gaming machines of any jurisdiction in the world after Nevada – the US state which is home to the international gambling meccas of Las Vegas and Reno.