Why Crown investigation to be expanded

The scope, length and budget for Victoria’s Crown royal commission has been expanded after ‘significant’ revelations emerged.

Victoria’s royal commission into Crown Resorts has been extended substantially and had its funding doubled “due to the seriousness of evidence” heard so far, which has broadened the scope of the probe.

Acting Premier James Merlino granted Commissioner Raymond Finkelstein’s request to continue the investigation until mid-October and increase its funding from $10m to $19.75m, the state government announced on Friday.

“Due to the seriousness of evidence produced through hearings and submissions to date, Commissioner Finkelstein is now investigating a wider range of matters,” the statement read.

“This relates to the corporate culture of Crown Melbourne, gambling harm minimisation, and claims brought forward in evidence so far – including allegations Crown Melbourne underpaid casino tax.”

The probe this week heard a litany of serious concerns about Crown’s workplace culture drawn from employee surveys and Deloitte risk advisory partner Victoria Whitaker’s meetings with human resources manager Alicia Gleeson and former chief executive Ken Barton.

These included a “disjointed culture” whereby the Perth and Melbourne venues at the centre of the company’s explosive money laundering scandal operated in “silos”, “bending” internal rules, staff too “scared” to speak up about problems within the business and “complacency that nothing is done if you raise an issue”.

Another cultural problem was “permafrost” in middle management, whereby information from the board didn’t filter down to employees and feedback from them didn’t make its way up.

Ms Whitaker agreed with counsel assisting Penny Neskovcin that these issues painted “a pretty grim picture”, while Commissioner Finkelstein seemed to suggest – while posing hypothetical questions – that it may not be possible for Crown to turn around its deeply ingrained culture where the pursuit of profit trumped everything else.

“Assume you have a firm who’s engaged in the following kinds of conduct,” he said.

“Systematic, long-term breaches of the law, both statute law and other legal obligations. Systematically, and over a period of time, facilitated illegal conduct by third parties.

“In dealings with government, lacks candour, doesn’t make full disclosure.

“Deals with lots of vulnerable people and takes advantage of them.

“And each of those types of conduct is explicable by a profit motive. That is, ‘If I engage in all of those things, I will make more money than I otherwise would.’

“What would that tell me about the culture of the firm?”

Ms Whitaker replied: “It would give rise to a number of questions in relation to the culture … such as ‘what is the tone being set by the leaders? What processes do they have in place to manage risk and conduct? What attitudes do they have towards those that they impact upon? What processes are in place to draw out mistakes or poor conduct?’”

She was then pressed by Commissioner Finkelstein to rate the culture of a company like Crown on a scale of one to 10, with one being the worst.

Clarifying that she believed he was referring to what extent it was an ethical, responsible culture, she replied “at the lower end of that scale”.

Ms Whitaker said cultural change took a long time to shift but that was starting to happen, largely due to the “changing of the guard” – the almost complete overhaul of the board.

But when pressed again by Commissioner Finkelstein, she agreed “simply changing the top will only get you part of the way”.

The royal commission also heard from Crown’s chief risk officer, Anne Siegers, who said she wasn’t asked to do a root cause analysis into the arrest of 19 employees in China in 2016 after last year’s NSW Independent Liquor and Gaming Authority inquiry, despite the arrests being “absolutely traumatic” for the company.

That probe heard Crown’s Australian Resorts chief executive, Barry Felstead, was in 2015 warned by then president of international marketing Michael Chen about staff being concerned for their safety and living in “constant fear of getting tapped on the shoulder” as they sought to lure Chinese high rollers to Crown’s Australian casinos via junket tours.

The Victorian investigation will determine if Crown is fit to hold a gaming licence for its Melbourne casino, while a separate royal commission is doing the same for the Perth venue.

The damning findings of the ILGA inquiry led to Crown being deemed unfit to hold a gaming licence for its new $2.2bn Sydney casino, which has only been operating non-gambling aspects of the business such as a hotel and restaurants.

Responding to the Victorian royal commission extension, chair Helen Coonan said she had made clear that any shortcomings identified by the probes would be addressed.

“The board and I are committed to making Crown a stronger, more transparent and respected company,” Ms Coonan said.

“We have initiated a sweeping program of significant reforms, enhancements and personnel changes.

“We cannot change the past, but we can be absolutely steadfast in the approach we take to driving the culture and transparency of the company into the future.”

Victoria’s gaming Minister Melissa Horne described the evidence so far as “significant”.


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