Trust 'in part' misplaced to those reviewing Crown's junket partners

The inquiry is examining the fitness of Crown and its "close associates" to hold a restricted gaming licence for its nearly completed Barangaroo casino on Sydney Harbour. And it has spent weeks examining management personnel and the board ahead of handing down findings in February.

Commissioner Patricia Bergin, SC, could recommend further restrictions on the VIP-only casino licence or for the state to revoke it entirely. Ejecting specific individuals from Crown and shareholding caps are also options.

The latter would see billionaire shareholder James Packer, who appeared before the inquiry last week, become a forced seller for some of his 37 per cent stake – worth about $2.2 billion – in the company.

ILGA established the probe after a series of adverse media reports alleging Crown had breached anti-money laundering laws and partnered with organised crime-linked junkets.

Junket review was done by those approving partners

Junkets – a method of bringing offshore VIP high-rollers to specific casinos – became a central part of Crown's VIP international business in recent years, before the casino giant recently suspended these relationships.

Professor Horvath – the nation's chief medical officer between 2003 and 2009 and the late Kerry Packer's physician – said the reports shocked him and made him concerned for Crown's reputation.

Still, he regretted tasking Australian Resorts boss Barry Felstead and chief legal officer Joshua Preston, who both do not have roles at Crown under a proposed restructure, to investigate the allegations over risk and audit specialists.

"They appeared to be the appropriate people at the time," Professor Horvath said.

Mr Felstead and Mr Preston were two of the three executives with the final say over which junkets with which Crown would partner.

"I trusted management to act in the best interests of Crown and give us an honest appraisal to the board," Professor Horvath.

Counsel assisting the probe Naomi Sharp, SC, pressed: "Knowing what you know now do you think that trust was somewhat misplaced?"

"Only in part," Professor Horvath answered. "I believe that most of the material was presented to us and that we acted on was appropriate. In hindsight, it would have been even more valuable to have the risk committee oversight the preparing of that report."

Professor Horvath said he was unaware of details surrounding Crown's junket partnerships, including revenue-sharing arrangements between the parties. He only became cognisant that controversial junket operator Suncity had a private gaming room at Crown Melbourne when he saw signage at the front of the area.

The inquiry also heard the Department of Foreign Affairs and Trade had warned Crown of problems with the foreign gamblers Crown had endorsed to enter Australia years before the media reports.

"An analysis of applications lodged by Crown reveals that very few are part of the high-roller scheme," the October 2010 email to a Crown migration officer said. "A significant number of Crown [visa] applicants that we speak to have no connection to Crown casino or anyone who intends to gamble there.

"It appears Crown has become a visa agent, lodging on behalf of travel agents and junket operators from all over China."

"More alarmingly, we continue to see significant levels of fraud in the caseload, and we refuse approximately 10 per cent of applications lodged by Crown. This does not represent a low level of risk."