Crown Resorts used its serious law-breaking record to dispute the third-largest corporate fine in the history of Australia.
According to new reports, so-called “high-risk customers”, some of whom are known for their association with criminal groups, generated revenue of about AU$2.3 billion for the Australian gambling and casino giant as the company used to woo them with special benefits.
About a week ago, the Federal Court ordered Crown Resorts to pay AU$450 million for more than 540 violations of the country’s counter-terrorism financing and anti-money laundering laws following an action brought by the Australian Transaction Reports and Analysis Centre (AUSTRAC).
In a legal document used in the Federal Court, CFO Alan Frank McGregor highlighted the fact that the Australian gambling behemoth’s operations generated an AU$155 million profit from junket operations; paid about AU$966 million in commissions to programmes and people who lured high-rollers; spending AU$39 million to entertain the aforementioned high-risk customers; and making a bad debts write-off of AU$68 million associated with that same group of customers. At the time, Mr McGregor informed the court that the operator would face serious financial difficulties in case it faced a larger fine.
With Crown Resorts now being an asset of a private equity firm, this is probably the last time when such details about the operator’s finances are being made public under its current owners. The company will still be expected to issue annual financial reports and hand them to the country’s corporate watchdog, the Australian Securities and Investments Commission (ASIC). It will also be required to file an annual affidavit on its financial state in order to determine whether it could accelerate the payments on the record penalty.
Federal Judge Appalled by Crown Resorts’ Request
According to the affidavit, Crown Resorts used the fact of facing heavy penalties as a result of state regulatory action to ask for an interest-free payment plan in an effort to divest the real value of the AUSTRAC fine over violations of the CTF and AML laws.
Monash University’s gambling expert Dr Charles Livingstone shared he was appalled by the Australian gambling giant’s move, which, according to him, is lacking any kind of logic. Apart from that, he described the way Crown Resorts used to operate as a “catastrophe” for a massive number of families and individuals by fostering a culture of repeated regulatory failures, corporate decay, and institutional corruption.
Legal representatives of both the AUSTRAC and Crown Resorts turned to the Federal Court in Sydney a week ago, jointly seeking Justice Michael Lee’s approval of an AU$450-million monetary penalty. Even though the parties had spent literally months negotiating the fine, the judge was far from impressed. Justice Lee noted that the two-year interest-free payment plan presented by Crown Resorts was misleading, and would effectively provide the gambling company with a 10% discount, making the payment effectively AU$406 million.
The Federal Court judge was also perplexed as to why the financial regulatory body was unwilling to dig further into the gambling operator’s financial position. Moreover, the AUSTRAC did not challenge CFO McGregor’s evidence, with Justice Lee warning the regulatory body that it should have taken into account the risks of its actions being perceived as “a soft touch”.
- Author
Olivia Cole
