Crown says ‘honest mistakes’ should not stop casino licence

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Crown Resorts' legal team says the group made "honest mistakes" before 19 employees were arrested and jailed in China on gambling crimes that should not disqualify it from operating a casino in Sydney.

Neil Young, QC, told the Independent Liquor and Gaming Authority inquiry on Monday that Crown had taken steps to address problems exposed by a string of scandals over the past four years, which had to be considered when deciding on the company's suitability to keep the licence for its new casino at Barangaroo.

Crown’s lawyers say the group has learnt from its mistakes.Credit:Getty Images

Counsel assisting the inquiry have argued Crown is unfit to operate the casino, which is set to open next month, due to its failure to prevent money laundering at its Melbourne and Perth casinos, its partnerships with high-roller tour operators linked to organised crime, and the arrest of its staff in China in 2016.

But Mr Young said these arguments were made "in a piecemeal fashion that pays no regard to any of the conscientious and considered steps that Crown has taken to address and eliminate the shortcomings and failings that have been identified".

In his first day of oral submissions on behalf of Crown, Mr Young tackled the arrest and imprisonment of 19 Crown employees on gambling crimes, which counsel assisting have said shows a failure in Crown's culture, risk management and its approach to compliance that render it unfit to hold a casino licence.

Commissioner Patricia Bergin, who will report back to ILGA on whether Crown should keep its licence by February next year, has lambasted Crown for never conducting an internal investigation into what went wrong in China.

Mr Young said Crown accepted there were "serious failings" in the lead up to the arrests, with senior executives not raising red flags about the growing risks in China with their superiors.

That included the Chinese government announcing a crackdown on foreign casinos, employees of a South Korean casino being arrested and Chinese police questioning a Crown employee on suspicion of organising illegal gambling tours.

"The failure to escalate those developments meant that a small number of individuals in senior management made the decision about how to respond to developments on the ground," Mr Young said. "The board should have made those decisions – that course of events should not have happened."

However Mr Young said that failure was not relevant to assessing Crown's current suitability, given they were followed up by significant internal reforms, and that the key executives in the international VIP business at the time have left Crown.

"The events in China occurred more than four years ago," he said.

"Neither the personnel nor the structures nor the policies that were in place at the time of the China arrests are not the personnel, structures and policies that will be in place at the time of the opening of the Barangaroo facility".

The senior executive responsible for the international VIP business, Barry Felstead, is leaving Crown following his disastrous appearing at the inquiry in August.

"There were honest mistakes by management," Mr Young said. "Those matters don’t carry forward to and cannot be the foundation logically or sensibly for any assessment going to current suitability."

In a significant admission, Mr Young said Crown accepted that the creation of a "VIP Working Group" with representatives from James Packer's private company Consolidated Press Holdings, including Crown board nominee Michael Johnston, did have an "indirect impact on the way in which Mr Felstead reported certain matters".

However the working group was not a "fully fledged" reporting line and did not lift his responsibility to report to Crown's then chief executive Rowen Craigie.

ILGA will meet on Wednesday to decide whether to stop Crown from opening the Barangaroo casino next month until Commissioner Bergin has handed down her findings.

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