Crown ‘lied to regulator’, Victorian royal commission told

Crown Resorts allegedly lied to its regulator and adopted a belligerent attitude towards an investigation into the arrest of 19 of its staff in China, an inquiry into the James Packer-backed casino operator has heard.

A royal commission into Crown, called by Victoria’s Andrews government, also heard that the Victorian Commission for Gambling and Liquor Regulation was still considering referring the company to the state’s supreme court for failing to properly respond to notices ordering it to produce documents for use in the investigation.

The commission opened public hearings on Monday with testimony from Timothy Bryant, a compliance officer at the VCGLR who worked on an investigation into the arrests of Crown staff in 2016 over allegations of illegally promoting gambling in China.

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The VCGLR began the investigation in July 2017, after the 19 staff were convicted by a Chinese court, but it was not finished until February this year because Crown made few concessions and provided documents late, Bryant told the hearing.

“The investigation was particularly protracted because of that defensive position and also the provision of material from interviews not being particularly fulsome at times,” he said.

Challenged by the commissioner, former federal court judge Ray Finkelstein, as to why he “dressed up” Crown’s behaviour as “not particularly fulsome”, Bryant replied that at the time he was giving the company the benefit of the doubt.

“In hindsight, though, I certainly consider that at times they lied to me in interviews as to what they weren’t aware of or were aware of,” he said.

The investigation report found that Crown adopted a “belligerent” attitude towards the regulator, although Bryant said this was not a word he would personally use.

“Furthermore, the variations and belligerence in Crown’s position over time have meant that this investigation has been far more protracted and complicated than it needed to be,” the VCGLR said in the report, which was tendered in evidence on Monday.

The report found that “Crown’s risk management structure was inadequate to the extent that it failed to identify the risks associated with the operating environment in China (including the accepted risk escalation events), so that those risks could then be managed pursuant to that structure”.

Bryant said he was frustrated by Crown’s attitude to the production of documents after the VCGLR demanded them using its compulsory powers. Some documents arrived only after Crown dug them up to comply with orders for discovery made in a class action brought by Crown investors, the commission heard.

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It heard that in an April 2019 memo Bryant wrote to another VCGLR officer, he said that “Crown has delayed providing documents in response to statutory notices issued by the VCGLR since the beginning of the investigation”.

“This failure to respond to notices within the specified timeframes appears to be due to Crown choosing to disclose documents to the VCGLR as part of its class action discovery process and possibly as a tactic to delay the finalisation of the investigation,” he said in the memo.

Under the Casino Control Act, the VCGLR can refer people or companies who fail to properly comply with its document production to the Victorian supreme court for prosecution as if they had committed contempt of court.

The VCGLR has never used this power.

Asked by counsel assisting the commission, Penny Neskovcin QC, whether the VCGLR was now considering referring Crown to the supreme court, Bryant said: “I think now it is something the commission would be considering as part of our final report and our final outcomes.”

The commission also heard claims that Crown gave the VCGLR incorrect information about the extent of a Chinese crackdown on illegal gambling by leaving key words out of a presentation given by its chief legal officer.

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The inquiry also heard that the company’s head of Australian resorts, Barry Felstead, allegedly gave incorrect evidence to the Victorian Commission for Gambling and Liquor Regulation about why a Crown employee was grilled by Chinese police.

Bryant said a presentation given to the VCGLR by Joshua Preston, who was Crown’s chief legal officer, gave the impression that a crackdown on illegal gambling ordered by Chinese authorities that preceded the arrest of the company’s staff related to people involved in gambling.

However, at the time, Crown had advice from a specialist intelligence firm, Mintz Group, that the crackdown related to people who worked in the gambling business, which Bryant said was a wider category.

The language about the crackdown in the presentation and the Mintz report was otherwise very similar but this difference was “quite significant”, he said.

During Felstead’s interview with VCGLR he said that a Crown employee was interviewed by Chinese authorities about a “customer, not about Crown’s operations in China”, according to an internal VCGLR memo prepared by Bryant and tendered to the royal commission.

“However, documentary evidence produced on 18 March 2019 to VCGLR indicates that Crown and Mr Felstead was advised that the questioning of the Crown employee related to allegations that the employee was organising gambling tours, not about a customer,” Bryant said in the memo.

Both Preston and Felstead no longer work at Crown.

The commission hearings continue.