Crown Resorts Faces $100 Million in VGCCC Fines

The fallout from Crown Resorts’ dodgy dealings continues with Victoria’s Gambling and Casino Control Commission (VGCCC) flexing its muscles. The VGCCC is unhappy at Crown’s attempts to evade Chinese currency restrictions. Fines worth up to $100 million are coming Crown’s way, much to the disappointment of its shareholders.

The VGCCC has started legal proceedings against Crown Resorts. It claims Crown devised a cunning plan to evade Chinese currency restrictions and enabled the illegal transfer of gambling funds. Indeed, those claims are true, as the royal commission into the casino’s affairs showed. This flouting of the rules is one of the reasons both Crown Melbourne and Crown Perth are deemed unfit for a casino licence.

Under-fire Crown confirmed the legal proceedings in a statement to the Australian Securities Exchange.

“Crown Resorts Limited announces that it has been informed by the Victorian Gambling and Casino Control Commission (VGCCC) that it is considering the findings of the Victorian Royal Commission Report insofar as they relate to the China UnionPay process with a view to deciding what disciplinary action should be taken.

“Crown previously announced on June 7, 2021, that its Board had received legal advice that the China UnionPay process (which ceased in November 2016) contravened section 68 of the Casino Control Act 1991 (Vic) and it notified the predecessor of the VGCCC and the Victorian Royal Commission of that matter.”

VGCCC Holds Crown to Account

Fran Thorn is the VGCCC chair. Thorn confirmed the role of the regulator is to hold Crown Melbourne to task.

“As a first step, we are acting on the Royal Commission’s findings that Crow’s China UnionPay process breached important Victorian regulatory obligations, was illegal and constituted serious misconduct.”

Fines are incoming because of Crown’s fraudulent use of the China UnionPay card between 2012-16. Chinese law prohibited Chinese nationals from transferring more than US$50,000 per year to another jurisdiction.

Crown devised a plan to flaunt the rules, faking room and hotel expenses for Chinese gamblers. Those people gambled at Crown’s casinos, sometimes to the tune of hundreds of thousands of dollars, and paid for it with China UnionPay pretending the cost was hotel expenses.

The casino promised full cooperation with the VGCCC.

“Crown is currently reviewing the notice and will be working cooperatively with the regulator to close out this and all other outstanding matters stemming from the report of the Victorian Royal Commission.”

AUSTRAC Battles Crown In Another Legal Case

It is not only the VGCCC launching legal proceedings because the Australian Transaction Reports and Analysis Centre (AUSTRAC) wants its pound of flesh. AUSTRAC is another eegulator unhappy with the findings of the royal commission. It is focused on Crown’s anti-money laundering and risk management failings.

AUSTRAC files 547 contraventions of its rules and regulations to the federal court. Each carries a maximum fine of $22.2 million, equating to a potential $1.2 billion fine. AUSTRAC filed an 862 page dossier containing masses of information. For example, it shows 60 well-heeled foreign nationals wagered $70 billion. Crown won $1.1 billion from them.

However, AUSTRAC is unlikely to issue the maximum permitted fine. In addition, Crown’s legal team is highly likely to offer a settlement amount rather than face an astronomical cost.

Crown Shares Remain Stable

Crown’s share price remains stable despite massive fines looming overhead. Why? Because the $8.9 billion Blackstone takeover is still going ahead. Those shares would plummet if this was not the case.

Blackstone remains tight-lipped about its takeover and the potentially massive fines. One would expect any fines levied fall at Blackstone’s door.

Shares in Crown change hands at $12.74, slightly less than the $13.32 52-week high. Those shares are up 5.64% year-to-date but a far cry from the $17.40 all-time high of February 2014.