Inquiry Finds Crown Resorts Unfit to Run Sydney Casino
Things are going from bad to worse for James Packer as the inquiry into his Crown Resorts casino concluded the firm is unfit for purpose and recommends not to aware of the operating license for its newest brick & mortar location. The specific nature of the review looked at the viability of the firm pursuing an expansion of its brick & mortar portfolio into Barangaroo Sydney, where a massive skyscraper casino yet to open is being assessed by the regulatory authorities.
The ongoing inquiry into Crown Resorts seems to be never-ending, the Australian casino operator’s brand image and reputation have certainly been dragged through the mud over the previous 12 months, as investigators uncover countless irregularities and missteps when it comes to internal control mechanisms at the operator. Whether or not these actions amount to criminal activities remains to be seen, but for now, the operating license of the new casino is facing a major existential threat.
The implications of banning the new casino from opening would be huge for the operator. Having already sunk hundreds of millions of dollars into the project, many investors and private financiers are worried that they’re looking at what is known colloquially in the industry as a white elephant. It’s certainly a worrying prospect for the organization that is hoping to solidify its dominance of the Australia & Oceania casino industry.
As we previously reported, James Packer was interviewed by a panel of regulatory investigators following a series of financial mishaps at the casino in Melbourne. A major incident occurred in 2019 where bundles of cash were mysteriously kept inside rooms at the casino, which was supposedly being processed by one of the resident junket operators called Sun City.
Crown Resorts Never-Ending $1.7 bln Problem
Any last-ditch hopes the management of Crown Resorts had of opening their $1.7 bln. skyscraper casino in Sydney this year has been severely dampened. An independent inquiry concluded the firm is not capable in its current posture of being trustworthy enough to handle the project. Leading the inquest was Patricia Bergin a former chief justice at the Supreme Court of New South Wales.
It is clear from the damning reports into the Crown Resorts scandal that a wholesale culture change from top to bottom is needed, and achieving this in such a short time period is pretty unlikely. Given this assessment, it is impossible to see Crown Resorts opening a new resort in Sydney anytime soon. A wide range of experts from academia, judiciary, and the industry itself have contributed with their own conclusions, with the consensus clearly being that Crown Resorts is not going to be opening anytime soon.
The principal report into Crown Resorts was carried out by the gaming industry analyst firm AB Bernstein. As their senior executives have correctly stated, it is important to look at this quagmire in the context of broader Australian society and values. The 768 report produced by AB Bernstein will play a central role in the forthcoming discussions being held by the state casino regulator.
Early indications show that the main concern of the board focuses on two executives still serving at the casino, both of which have close ties with James Packer. They are Andrew Demetriou and Michael Johnston and have caused immense doubts from the independent adjudicator deciding on the fate of the casino. James Packer himself has escaped strong criticism after he blamed his poor conduct on mental health problems during his video testimony from his superyacht.
Regulator Believes Packer Inappropriately Influenced Crown
Principal investigator Bergin has stated that she believes James Packer inappropriately influenced the casino after leaving his post at the helm of the organization. Whilst Bergin conceded that Packer’s intentions weren’t inherently malicious and did carry good intentions to an extent, they often landed with disastrous consequences. Bergin restrained from siding with other investigators that argue James Packer should have his ownership stake forcibly diluted, which was unexpected.
Since 2019 endless audits and investigations have turned up with lots of similar information, money-laundering, underage gambling breaches, shady VIPs being allowed to gamble huge sums of money unchecked – all of which amounts to an unsavory picture of the true intentions of this firm with a severely defected moral compass.
Now under the new leadership of Helen Coonan, Crown Resorts will attempt to pivot away from a scandal littered past which saw major internal control, governance, and risk management failings. Instead, they will reevaluate and halt most of the junket agreements and only resume the arrangements with these money transfer vehicles after they receive official approval from their native governments.