[Theme Music Starts]

RUBY:

From Schwartz Media, I’m Ruby Jones, this is 7am.

Archival tape -- News Presenter #1:

“The Bergin inquiry dropped a bomb on Crown. The 800 page report card into the behaviour of James Packer’s Crown Casino.”

RUBY:

The Bergin report has exposed the dysfunction and misconduct inside Crown Resorts.

Archival tape -- News Presenter #1:

“….she said Crown showed poor corporate governance, deficient risk management structures...”

RUBY:

Tabled last week, the report found Crown was not fit to hold a casino licence in Sydney, despite having just built an enormous casino.

Archival tape -- News Presenter #2:

“...effectively meaning its $2.2 billion skyscraper can’t have the very thing it was built for.”

RUBY:

In the wake of the findings, several directors have quit the company’s board. But the report raises bigger questions about Crown’s fitness to operate casinos in other states, such as Victoria.

Archival tape -- Unidentified Man #1:

“At the heart of the report is a relationship between organised crime, money laundering and gambling.”

RUBY:

Today, senior reporter for The Saturday Paper, Rick Morton, on James Packer and the fall of his casino empire.

[Theme Music Ends]

RUBY:

Rick, this is a big story that touches on so many things: power, politics, money, organised crime, but tell me where it begins.

RICK:

It starts as so many things often do in Sydney with a lunch in February 2012 with the billionaire James Packer and the then premier of New South Wales, Barry O'Farrell.

And the meeting was brokered by and held in the home of the powerful radio shock jock, Alan Jones. And the trio had met to discuss Packer's vision for this kind of behemoth tower and casino and resort complex that he wanted to build on what was then the Harbourfront wasteland at Barangaroo near Darling Harbour. And this was huge because Sydney has only ever had one casino in recent memory, and that was Star City, which is now owned by Echo Entertainment.

And, you know, that debate had been raging about whether Sydney needed a second or whether one was enough and Packer was bold enough to come in and say, no, we do and I want to run it.

But not just any old casino. He wanted to run the bee's knees casino, a six star hotel and resort with gaming floors that were restricted to, you know, in the Asian market they call them the whales, the high rollers, people with fabulous net wealth who loved to gamble big money. And they pay big money up front to these junket operators to come in all around the world to lavish them, essentially, with these big trips.

And that's what James Packer wanted to corner in Australia. And, you know, he was quite accustomed to getting what he wanted, certainly professionally, if not if not personally. The only kind of sticking point at this point was that it's a huge development and ordinarily, it's on public land and ordinarily there are lots of regulatory hurdles that Packer would have to overcome, but that usually wasn't an issue for him.

RUBY:

OK, so tell me about that. How did James Packer get this casino built?

RICK:

So this part is really interesting to me. So like days after that first meeting at Alan Jones's home, which is weird, the concept plans for the six star, 350 room hotel and the gaming rooms at Barangaroo are released to the media.

Archival tape -- News Presenter #2:

“Billionaire businessman James Packer has spoken to Nine News about his plans for a lavish skyscraper hotel and casino that will transform Sydney Harbour…”

RICK:

And he's been kind of pumping the media, particularly The Daily Telegraph for years, to just kind of massage the way.

Archival tape -- News Presenter #3:

“Casino king James Packer has placed all his chips on the winning design for his new Barangaroo hotel and casino, and it is arguably spectacular. Some are even predicting that it will join the bridge and the opera house as iconic Sydney landmarks…”

RICK:

And then later in August, just a few months down the track, he meets with Barry O'Farrell the premier again, and the premier tells him that there's this new process in New South Wales. It's called an unsolicited proposal process for big infrastructure developments that can be fast tracked. And O'Farrell actually says to Packer and to Crown: “Use this process for the Barangaroo project”.

Archival tape -- News Presenter #4:

“The premier has strongly backed a proposal by James Packer to build a casino at the Barangaroo development on Sydney Harbour. If approved, the high rise hotel complex would be built on land originally intended for open space…”

RICK:

Now, this is important; one week after that meeting, one week, the New South Wales government updates the actual unsolicited proposal process to completely remove the requirement for an independent evaluation as to whether the project should go to a public tender. So that was previously a requirement. One week after O'Farrell meets with Packer, it's gone. And that was massive. I mean, that essentially paved the way. That made it a fait accompli for Packer.

Archival tape -- Barry O’Farrell:

“I think this development could add life to Barangaroo, not only a world class hotel, but extra jobs and a boost to tourism…”

RUBY:

So you could say, I suppose, that the Barangaroo project got pretty benevolent treatment throughout the planning process, but where did things start to go wrong, Rick?

RICK:

So just three months after it wins the casino licence, Four Corners broke this massive story alleging that Crown Casino in Macau were being used by crime syndicates to launder drug money and proceeds of crime.

Archival tape -- Four Corners report:

“Crown had developed a business model based on luring rich Chinese, known as VIP high rollers, to its casinos. But it was a risky business in a country where gambling and promoting gambling are illegal.”

RICK:

And then in 2019, just five years later, we have even more pressing allegations that emerged in the Fairfax papers and on the ABC that Crown's casinos in Melbourne, Perth, were being used to launder money.

Archival tape -- News Presenter #5:

“An investigation into Crown Casinos has revealed the company, which is part owned by James Packer, did business with tour operators linked to Asian organised crime in an effort to bring Chinese high-rollers to Australia…”

RICK:

And that is what eventually led to this enquiry into Crown and whether the company was fit to operate a casino in Sydney.

Archival tape -- News Presenter #6:

“Anti-gambling activists say they’re impressed by a move from the New South Wales government to launch a powerful inquiry into Crown Casino. The New South Wales inquiry will have similar powers to those of a Royal Commission. The announcement means there are now 3 separate government investigations into Crown across the country…”

RICK:

And finally, last week, nine years after that initial meeting in Alan Jones’ house, the enquiry led by former Supreme Court Justice Patricia Bergin, issued its findings and they were explosive.

RUBY:

OK, so what were the findings, Rick?

RICK:

So Patricia Bergin does not hold anything back and she's forensic. And she essentially says that Crown Resorts, as it currently is constituted and with its current crop of board directors, is not fit to hold a casino licence anywhere in New South Wales.

It's not her decision to revoke that licence. But now with these massive recommendations and the weight of all the evidence behind them, the independent regulator in New South Wales will almost certainly reject the licence or suspend it permanently unless there are major changes at Crown.

But the only thing that really matters to James Packer and Crown Resorts more broadly is whether they can operate this $2.2 billion Barangaroo development that has been built and was meant to open in December.

Everything's ready. They've had retail in there that's been operating for a while now. But the gaming room, these VIP, extremely lavish rooms, are completely set up with the gaming tables, the chips, everything's there, and they can't open.

RUBY:

We'll be back in a moment.

[Advertisement]

RUBY:

Rick, I want to talk a bit more, if we can, about the Bergin report. The findings were handed down last week and a lot of the allegations about the operations at Crown were already public, thanks to reporting it at Four Corners and 60 Minutes. But did we learn anything else, anything new from this report? What are the details?

RICK:

We went deeper into the allegations. I mean, casinos around the world are known as essentially the perfect vehicle for money laundering because they are quasi banks, but they don't have the same identification requirements of banks. So people come in, particularly through these third party junket operators, which Crown and every other major casino operator has, you know, contractual relationships with. But they don't know anything about the people who are betting the money through the junkets. And so people are just churning cash through and what they call structured payments - you know, every transaction is below $10,000. So it doesn't meet the reporting threshold requirements in Australia, for instance.

And there was actually a lot of information in the Bergin report about these two accounts out of Crown Melbourne bank accounts where structured payments were clearly being used at a huge scale and the directors knew this. The staff at Crown knew this. Andrew Demetriou, the former boss of the AFL, you know, had a look at the accounts and thought it was all fine.

And what the Bergin report did essentially was uncover just how deep the rot was in terms of the culture. Like culture sounds like such a broad term, right? But inside Crown, we have a kind of a history, I guess, of whenever something bad happens or there's some bad media reporting, rather than deal with the underlying foundational rot, they just close the programme with these bank accounts. They just closed the bank accounts and they told the enquiry, oh we closed them, so problem solved.

And Patricia Bergin and the counsel assisting were right to say, but don't you understand that you actually should have done something about this? Like this is not new information. We know that casinos are prime targets and you need to be 100 percent on all of your obligations.

And the word she used to describe the people at Crown and the fact that they had an unjustified belief in their own powers of good governance, even when presented with quite powerful evidence to the contrary, was astounding.

RUBY:

And what about the other Crown casinos, the ones in Melbourne and Perth, where some of these activities, things like money laundering, were actually happening? Will they survive this?

RICK:

Well, that is a very good question. I was talking to Chris Sidoti, who's the former chair of the New South Wales Independent Liquor and Gaming Authority...

Archival tape -- Rick:

“Hello, Chris, how are you?”

Archival tape -- Chris Sidoti:

“Very good. Rick, how are you yourself?”

Archival tape -- Rick:

“I’m not bad.”

RICK:

...and he says it's inconceivable that the casino giant could be allowed to continue operating in Melbourne or Perth.

Archival tape -- Chris Sidoti:

“I fail to see how it is possible for Crown to be allowed to continue to operate in two jurisdictions when the most comprehensive examination of a casino operator in Australia in 20 years has produced such a damning record report...”

RICK:

And he goes on, this is important, he goes on to say. ‘I don't see how they cannot be suspended pending a full investigation by those authorities in Victoria and WA, bearing in mind, particularly, that all of the material examined by the New South Wales enquiry related to the activities of Crown in Victoria’. Crown are not even operating in Sydney.

Archival tape -- Sidoti:

“So on the basis of Crown's operations in Victoria, the former Supreme Court judge, after an extensive public enquiry spanning 18 months, has found that Crown is not fit to hold a licence. Now, that has clear and immediate implications for the Victorian regulator.”

RICK:

They’re huge ventures, these casinos, and they bring in huge amounts of revenue for both state governments in WA and Victoria. Crown Melbourne in particular is the largest private employer in the state, 16,500 staff. And I had a chat to independent federal MP Andrew Wilkie, and he said that the report shows very clearly that Crown is unfit to operate anywhere in the country and in fact, is an indictment on the authorities, particularly in Victoria.

Archival tape -- Andrew Wilkie:

“You know, they've got the politicians covering their back. And they've got regulators like the VCGLR,virtually in their back pocket.”

RICK:

He has written personally to Victoria Police at least four times, five times since 2017, with allegations of money laundering.

Archival tape -- Andrew Wilkie:

“I've been making complaints far and wide, and particularly to the VCGLR and others for four years. And so I met with the VCGLR in Melbourne on a number of occasions and they would, they'd just fob me off. I've called twice now for a royal commission at the national level to look into the casino industry. And both times I've been voted down by the LNP government and the Labour opposition.”

RICK:

So already before this report had come out, Daniel Andrews, the premier and the government had brought forward the five yearly review of Crown's licence in Melbourne and so that review was going to be happening anyway this year in 2021.

But it's going to be done by Victoria's Commissioner for Liquor and Gaming Regulation. And they've been shown quite universally now to be a fairly toothless tiger, or completely unwilling to act on allegations that were very serious and that have now been brought to bear, brought to light, I should say, in a 18 month shocking investigation by Patricia Bergin.

RUBY:

Rick, this current situation feels like a world away from that lunch back in 2012 when James Packer was at the peak of his powers and he was manoeuvring to grow his empire. So what does this mean for him, for James Packer?

RICK:

Packer in many ways is a bit of a tragic figure I think.

I mean, well before this happened, before the report was released, he had to step back from Crown. He's, you know, had to sell off a chunk of the family empire to his sister, I think it was a billion dollars worth from CPH because she wanted her share. And his reputation is damaged.

RUBY:

And what about Crown? What happens now for Crown casinos?

RICK:

We've already seen just a flurry of resignations from the board, which is a start. The facts are this; I mean, while the central finding of the Bergin report is that they are not suitable to hold a licence, it doesn't mean that they will never be suitable to hold a licence. That essentially lies entirely now with the independent regulator in New South Wales.

And according to the former Victorian minister for gaming, Tony Robertson, what the report shows more than anything else, I think, is that the way in which the different states have been regulating casinos is not fit for purpose any longer. And I think that's definitely true, and especially in New South Wales, where there's been an erosion of the powers of this independent body over two decades now. Bit by bit, block by block. And that they've built a system that is almost pathologically unable to bring powerful casino operators to heel.

RUBY:

Rick, thanks so much for talking to me today.

RICK:

Thanks, Ruby. Thanks for having me.

[Advertisement]

[Theme Music Starts]

RUBY:

Also in the news today...

Australia's medical regulator has approved the Oxford University-AstraZeneca coronavirus vaccine for use in Australia.
It will be produced in Melbourne and will be the vaccine most Australians receive.

It’s been approved for everyone over 18, but will be given to people over 65 on a case-by-case basis.

And the Prime Minister Scott Morrison has announced two new processes aimed at better supporting women working in politics.

The announcement came after former liberal staffer Brittany Higgins went public with allegations a male colleague raped her in the office of then-defence industry minister Linda Reynolds in 2019.

I’m Ruby Jones, this is 7am see you tomorrow.

[Theme Music Ends]