NSW Puts Crown Inquiry on Hold Due to Covid-19

As Australia continues to suffer under the spread of the coronavirus, the country remains under orders to self-quarantine and refrain from public gatherings.

This has hit many companies very hard, one being Crown Resorts. Though there is nothing positive about standing down 18,500 employees, Crown can breathe one sigh of relief for a break in its most serious inquiry. New South Wales deferred the process until a date to be announced in the future.

Welcome Notice from NSW

The NSW Independent Liquor & Gaming Authority posted the notice on April 3 with regard to the inquiry under Section 143 of the Casino Control Act 1992.

“The Independent Liquor & Gaming Authority has decided that most of the work of the Casino Inquiry will be deferred in the current context of the COVID-19 epidemic, until it is considered safe and practicable for all public aspects of the work to resume.

“The inquiry and its public hearings will resume promptly as soon as circumstances allow.”

Crown subsequently posted its own notice, saying it will continue to fully cooperate. Undoubtedly, this was a welcome delay, though under unwelcome circumstances.

Where It All Began

The original impetus for the inquiry was a wide-ranging and damning exposé. The six-month investigation by 60 Minutes, the Sydney Morning Herald, and the Age provided quite a bit of evidence that Crown Resorts was involved – sometimes knowingly, sometimes unknowingly – in criminal syndicate activities initiating in China.

Member of the syndicate reportedly used junkets to travel to Crown Melbourne or Crown Perth, where the casinos and hotel rooms became ground zero for money laundering. Even further, the investigation revealed links to drug rings and human trafficking.

Icing on the Inquiry Cake

There was more. The NSW Independent Liquor & Gaming Authority also wanted to investigate a financial deal between shareholder James Packer and investor Lawrence Ho of Melco Resorts.

That deal was reportedly worth $1.76 billion, as Melco was to purchase half of Packer’s stake in Crown.

The problem, however, was that Ho’s father, Stanley Ho, had long been suspected of having connections to organized crime. While there were no precise links to Lawrence Ho, the act of opening the door to him to allow a growing stake in the largest casino company in Australia was enough to prompt a regulatory probe.

NSW wrapped the two inquiries together.

New Year, New Inquiry

The NSW Independent Liquor & Gaming Authority began its inquiry in mid-January under the oversight of former Supreme Court Judge Patricia Bergin. However, the evidentiary part of the hearings didn’t begin until mid-February.

One of the first revelations pertained to junkets. Australia has more relaxed laws than other countries like Singapore, while some countries like Japan have banned junkets entirely. Gaming expert Paul Bromberg also noted that junkets are often connected to the triads and crimes involving prostitution, drugs, and debt enforcement.

Crown responded by noting that the primary junket in question with prior links to Crown was Suncity was a publicly-traded company on the Hong Kong stock exchange.

Australia leaves probity checks into junkets to the casinos themselves with no federal oversight, giving rise to the possibility that many junkets have not been fully vetted. Bromberg said the reason for the lack of probity checks was to bring as many wealthy VIP customers to Crown casinos as possible.

Problems Prompt Pause

By the end of February, a court judgement interfered with the inquiry. Specifically, the NSW Supreme Court found that the inquiry did not have the powers of a royal commission, while the NSW Attorney General argued for broad powers of investigation.

Melco Resorts brought the case to court, arguing that it shouldn’t have to provide privileged company documents to the inquiry. Melco argued that making those documents public would have breached professional privileges between the company and its customers.

However, in early March, the NSW Court of Appeal ruled for NSW Attorney General Mark Speakman. That court ruled that Melco could not claim privilege. In addition, the Royal Commission Act did allow “implicit correlative right or power in a commissioner to exercise compulsory powers unfettered by claims of privilege.”

Insert Pandemic Here

Within days of the ruling against Melco, as the inquiry prepared to resume, COVID-19 concerns began to emerge. With a slowly rising number of cases, casinos changed their focus to customer safety, and NSW authorities did the same.

While a pandemic is not the way anyone likely wanted to the inquiry to halt, Melco and Crown likely breathed a secret sigh of relief for the reprieve, albeit a temporary one.

There is no way to know how the coronavirus will spread or be reduced by the governmental restrictions placed on all Australian persons and businesses in the past weeks. As of April 5, there were more than 5,600 confirmed cases of the virus and 35 deaths.