Crown Melbourne Gets to Keep Its Licence Despite Being Unfit To Do So

The Crown Melbourne royal commission lasted eight months and cost $19.75 million, but it is over. The commission deemed Crown Melbourne unsuitable to hold a casino licence in Victoria, yet it gets to keep its licence.

October 26 was an important date in the history of Crown Resorts. The Victorian Government publicly released the royal commission’s report on this date; the report spans more than 650 pages.

Several prominent board members fell on the swords during the royal commission’s investigations. Former executive chair Helen Coonan began the task of reforming Crown’s procedures and practices. Those sacrifices were not in vain; those sacrifices ultimate led to Crown getting to keep its licence.

The Honourable Ray Finkelstein led the royal commission. He left no stone unturned, nor did he pull any punches in his summation of the facts. Finkelstein reported in great detail Crown’s use of junkets, its underpayment of casino tax, and blatant disregard for anti-money laundering rules and regulations.

Page 539 of the report sums up Crown’s unsuitability to hold a licence.

“When regarding the extent of the misconduct that has occurred over the past ten years, the seriousness of that misconducts and the harm that misconduct caused, to now hold Crown Melbourne to be suitable on the basis that is has begun a serious and earnest reform program would be to undermine a central element of the licensing framework.

“The evidence, when considered and weighed, only admits of one conclusion: Crown Melbourne is not a suitable person to continue to hold its casino licence. In light of this finding, there is no need to also consider whether it is in the public interest for Crown Melbourne to hold its casino licence.”

Why Does Crown Get To Keep Its Licence?

Crown keeps its licence despite damning evidence against it. Furthermore, Finkelstein clearly states it is not in the public interest for it to do so. However, there are compelling arguments for allowing Crown to continue operating.

First, Finkelstein praised the new Crown board for its dedication to reform and change. He states the new regime should be allowed time to prove themselves. In addition, Finkelstein is happy the new senior management team has the skills to successfully turn around Crown and rebuild its tarnished reputation.

Crown’s lawyers wrote to the royal commission claiming that not keeping its licence would be financially catastrophic. Finkelstein took this on board but said the letter was “chutzpah,” a Yiddish word meaning “brazen gall.” While Finkelstein appreciated the financial predicament, he laid that blame of that on Crown’s board.

Most of Crown’s shareholders are innocent parties in this long-running saga. Cancelling the licence would see Crown’s share price plummet, thus negatively affecting thousands of innocent investors. Furthermore, up to 11,000 staff’s jobs would be at risk.

New Laws Passed in the Casino and Gambling Legislation Amendment Bill 2021

Although Crown gets to keep its licence, the royal commission’s findings resulted in law changes.

Junkets are banned with immediate effect. Crown voluntarily temporarily ceased using junkets last year. Fines for breaching the Casino Control Act have a new maximum of $100 million instead of $1 million, too.

“This reflects the Royal Commission’s recommendations that the penalties under the Act are wholly inadequate. The Royal Commission recommended that the fine for disciplinary action should be increased to at least $10 million.”

The new legislation states Crown requires a Special Manager who has unprecedented powers to oversee Crown. Stephen O’Bryan QC takes up this role at the earliest convenience. O’Bryan previously held the position of Independent Broad-based Anti-Corruption Commissioner, the first of his kind in Victoria.

No person is permitted to hold more than 5% of shares in Crown. This follows the royal commissions extremely negative view of James Packer‘s influence. Packer’s Consolidated Press Holdings company holds 37% of Crown’s stock. Finkelstein highlighted many instances where Packer’s might and voting power was detrimental to Crown operations.

Allowing Packer to dispose of at least 32% of his shares was another reason Crown gets to keep its licence. Packer has made no secret he wants out, expect vultures to sweep in for his shares sooner rather than later.