Crown Director Morrison Shocked At Magnitude of Tax Avoidance

Nigel Morrison tore into his fellow Crown board members

Crown Resorts director Nigel Morrison is shocked at the magnitude of Crown’s recent tax avoidance revelations. The James Packer-backed casino giant revealed up a nine-figure underpayment in pokies tax.

The Royal Commission at Crown’s Perth casino stems from a damning inquiry into how it runs its Melbourne property. It heard last week Crown Perth underpaid pokies tax to the tune of $167 million over a nine-year period. Various news outlets put the figure as high as $272 million. Crown’s chief financial officer Alan McGregor believes the actual figure is $8 million.

Mr. Morrison answered public questions as part of the ongoing royal commission. Mr. Morrison, a non-executive director, joined the Crown ranks in March. He learned about the tax avoidance issue on June 7 at a scheduled board meeting. Crown chairman Helen Coonan knew about the problem as early as March, Mr. Morrison claims.

Morrison Slams Crown Board

Mr. Morrison was not backwards in coming forwards, and fired some fierce words at his fellow Crown board members. Those scathing comments included the cultural problem embedded deep in Crown.

“I was shocked by the magnitude. The magnitude was unbelievable. It tells you they had an attitude that, if they didn’t think it was overly important and they could get away with it, they did.”

He went on to say Crown lacks an “open and honest” relationship with regulators.

Commissioner Finkelstein QC, the man in charge of the royal commission, asked Mr Morrison if he believed the current Crown board should resign from their positions if they knew about the tax avoidance.

“In that case, it’s hard to argue they should remain,” Mr. Morrison answered.

How Did Crown Avoid So Much Tax?

All casinos and clubs offering pokies and gambling products pay gambling tax. Crown pays the Victorian government a tax based on its gross gambling revenue. This is worked out by taking the total money received through gambling and subtracting whatever it pays in winnings. The money left over is taxed at a rate agreed by Crown and the government.

However, Crown subtracted extra costs from the gross gambling revenue, making it look like they had not made as much money as they had. Mr. Morrison claims Crown personnel knew about this for a long time.

Crown included free rooms, drinks, and food as costs for running its pokies. Victorian gambling laws do not allow this.

$167 million is the figure talked about at the royal commission last week. Crown’s number crunchers now put the figure closer to $8 million.

Mark Mackay, Crown’s executive general manager of game machines, admitted Crown knew the practice was wrong. Crown adopted the practice to make its loyalty program cheaper to run.

When asked if loyalty program payments were winnings or not, Mackay responded with a typical Crown response.

“The definition of winnings, I think, is where the ambiguity is. But they are not [winnings] from a gaming machine event.”

What Next For the Royal Commission

The royal commission rolls on towards its new August 1 deadline. An extension was granted, in addition to $9.75 million added to its budget, last week.

A closed hearing takes place on Wednesday; it involves several unnamed Crown employees. Public hearings resume on Thursday, which is where matters could get juicy. This is because the Head of Crown’s security and surveillance, Craig Walsh, is giving evidence.

Crown has not faired well when the commission grills the heads of its departments.

Surprisingly, Crown’s share price increased more than 0.9% to $12.240 following the comments from Mr. Morrison. The price is, however, artificially inflated due to ongoing takeover and merger talks.