As the Bergin Inquiry found, triad involvement with junkets was ‘notorious and well-known in Macau’, such that ‘if people have no idea that Macau casino junkets have a background in organised crime and have allegations of money laundering surrounding their business, then they clearly have not looked at the internet or the news for about 20 years’.16

  Crown Resorts was indisputably James Packer’s company. He was the major shareholder, with 38 per cent of the stock, and he twice served as its chairman. He set the company’s culture and drove it in the direction of the criminal underworld. But why did he take such a risk? Why roll the dice on the company’s reputation? The answer is complex.

  The starting point is Packer’s personality. Even as a teenager he was conscious of the dynastic burden he carried. The family’s media company, founded in the 1920s by Frank Packer, Kerry’s father, had built a corporate culture defined by brute power and entitlement. The Packers threw their weight around in the political ring and followed their own rules. When Kerry contemplated handing the reins to James, he instinctively felt James needed toughening up. So Kerry brought in Al Dunlap to be his mentor. A business guru, Dunlap had a reputation for reviving troubled companies by a process of ruthless asset stripping and profits-at-all-costs goals.

  Dunlap’s biographer John Byrne said that Dunlap ‘sucked the very life and soul out of companies and people … and replaced those ideals with fear and intimidation’. James later admiringly described Dunlap as ‘emotionless’; he had shown him ‘how hard you can push people’. It was as if he were admiring a psychopath, which is what some thought Dunlap was. The tough love worked. ‘The key to James Packer,’ a former Packer executive explained, ‘was all about proving himself to Kerry.’17 And driving this ambition was the family ethos, which prioritised above all else the acquisition of immense wealth.18

  Stephen Mayne has been a long-term observer and critic of Crown and the Packer family. He describes the insatiable ambition driving James Packer’s casino ambitions:

  He loved the adrenalin of the casino industry. He loved building big buildings. He oversaw the construction of $12 billion worth of casinos. He used to gloat that he’d built 3 of the world’s 10 biggest buildings. He had a fetish for building the great monuments of the world … he wanted to prove that he could be the biggest casino mogul in Asia and the world.19

  But Packer’s first and decisive foray into the industry in 2004 exposed him to the criminal underpinnings of Macau’s casino industry.

  Also driving the connections to junkets was Packer’s obsession with building the Barangaroo casino and his awareness of the financial pressures involved in the project. Its future success, Bergin found, was reliant on luring high rollers from China: ‘Packer intended to leverage the success of the junket operator model in Macau and implement the same model in Crown Sydney.’20 Reckless risk was built into the Packer casino business model.

  Packer invested heavily in the construction of casinos in Macau with Lawrence Ho, the son of the flamboyant ‘godfather’ of Macau’s casino industry, Stanley Ho. The pair became close friends, bonded by the shared experience of being raised by domineering fathers. Kerry died the following year, but Stanley was thought to be a shadowy presence in the young billionaires’ glittering business venture; some thought he controlled their operation.21

  From the 1960s, the tall, urbane and enigmatic Stanely Ho became the most powerful, wealthy and shadowy figure in Macau. In 1982, he established the first VIP room in one of his casinos for high-roller gamblers. Within a few years, there were 61 such rooms, which delivered some 80 per cent of Ho’s profits. But the VIP rooms were informally subcontracted to triad gang members and became a lawless space where the rules were enforced by the muscle applied by gang members.22

  Chinese triad gangs originated in the 17th century, when they were formed as secret political societies in the struggle for power between the Ming and Qing dynasties. Slowly they morphed into obsessively secretive and closed criminal societies.23 Drug trafficking and money laundering became their specialty. Today, they do so globally as well as in mainland China, where thousands of members have been arrested and jailed over the years.24 Family-run and with a culture of violence, triads are sometimes referred to as the Chinese mafia.

  At the time of the Packer–Ho partnership, astute observers commented on the risk the Australian was taking in teaming up with the Ho family. In 2005, an Australian lawyer closely involved with gaming licensing told The Sydney Morning Herald that he was ‘astounded that Packer would go into business with this man [Stanley Ho]’. He could, the lawyer reckoned, ‘potentially prejudice his land-based assets here in Australia’. In a startlingly prescient comment, the lawyer said that if the deal with the Ho family ‘blows up, it can come back and haunt him here’.25

  Initially, the success of the partnership proved the critics wrong. Packer and Lawrence Ho built three mega-casino resorts in Macau, which Packer eventually sold for $2 billion – six times his investment outlay. He then doubled down on running Crown’s casinos in Melbourne and Perth, while building his multibillion-dollar glass tower Sydney casino.

  For Packer, the lesson behind his success in Macau was clear: making it big in the international casino industry, and especially in the emerging era dominated by wealthy Chinese gamblers, meant engaging with the industry’s criminal elements. That was just the reality. But it seems Packer never really questioned whether the Macau casino model could be transplanted into Australia. And why should he? He could be assured of Australia’s supine politicians, and of the already flaky regulators cradling his Australian operations.

  There were certainly ways to mitigate the risks of importing the Macau model: by establishing a proper system of vetting junket operators at Crown, for instance. But Packer and his team chose to ignore the risks in the chase for greater profits. Counsel assisting the Bergin Inquiry argued that Crown ‘demonstrated a culture that pursues profit at all costs’.26 The Victorian royal commissioner into Crown, Ray Finkelstein, also noted that the company’s core value was not just profit, but ‘profit above all else’.27 The culture of the company was all about ‘hitting the numbers and getting returns’.28 AUSTRAC would accuse Crown of failing to carry out ‘appropriate risk-based ongoing due diligence, including enhanced customer due diligence’.29

  A former Crown employee gave a damning assessment of the company’s culture to the Finkelstein Inquiry. Although the informant preferred to remain anonymous, the claims they made were consistent with other evidence. The former employee said that senior management insisted that high rollers came first because they were the key to Crown’s success. Consequently, ‘no action was taken against high rollers known to have criminal connections’. The informant further claimed that most of Crown’s junket partners had ‘known ties with triad criminals’, yet Crown refused to shut them down because they ‘brought in the big bucks’. Lastly, the former employee claimed that senior management regarded both the regulator and AUSTRAC as ‘a joke’. In their eyes, Crown had grown into a company that believed it was above the law.30

  Packer dominated Crown, its executive and board. He created a ‘cult of personality’ at the company that shaped its culture, and put pressure on his executive team to deliver greater high-roller revenues.31

  Surrounding himself with a loyal executive team, Packer ensured that Crown reflected his corporate values: profits, power and loyalty. As one observer noted, Crown’s problems might have been caused by its having too many ‘yes men’ running the group. According to business columnist James Thomson, ‘Packer’s personality permeated Crown, and made staff hesitant to push bad news to the surface.’32 Only one director had ever been appointed who had a background in the gaming industry, and none had received any formal induction on casino regulation. A half-hour online training course became available just prior to the scandal erupting.33

  What about Crown’s board – couldn’t its members provide effective oversight, as the law required? Bergin systematically took apart the poor performance of Crown’s board. She found most were, to a greater or lesser extent, Packer loyalists. Finkelstein also found that directors and executives were committed and steadfast in their devotion to assisting Packer achieve his business goals.34 There were a few commercial hardheads and smart operators at both board and executive levels, but, as a whole, the company’s leadership team lacked both independence and expertise in the global gambling industry. There was no one who could raise red flags with Packer.35 And, crucially, Packer set the tone that ‘bad news went nowhere’.36

  This loyalty to Packer led to what counsel assisting the Victorian royal commission, Penny Neskovcin QC, argued was Crown’s ‘wilful blindness’ to the risks associated with junket operators. Crown, she said, did the ‘bare minimum’ to monitor the risks because it was driven by ‘a culture of not looking too hard’.37 One after the other, board members deflected responsibility for doing nothing about the implosion of Crown, claiming that the risks were being handled on the ground in China.

  But having staff on the ground in China put those staff at huge risk of arrest and jailing for flouting China’s strict anti-gambling laws. From 2012, Packer built a team of 19 staff based in China whose task it was to lure high rollers to its casinos in Melbourne and Perth. The company had three long-range business jets – all Bombardier Global Expresses that could carry up to 16 passengers – operating out of China to transport high rollers to Crown Resorts. Operating in China in this way was dangerous, as it was illegal to openly promote gambling there. The Chinese authorities were trying to clamp down on the large amounts of capital fleeing the country for overseas casinos.

  Crown turned a blind eye to these risks. The head of its operations in China, Michael Chan, believed that, as the staff were not promoting the company’s services from a designated company office, and as the pitch to potential wealthy customers was built around travel to Australia, they could stay on the right side of authorities.

  The incentive to remain was enormous. The presence of Crown in China led to continued growth in the number of high rollers coming to Australia, contributing substantially to the company’s robust yearly profits: $26.9 billion in 2010 and $31 billion in 2011. Profits increased year-on-year between 2012 and 2014.38

  However, Chan and the executives to whom he reported failed to understand that this was a totalitarian state, where the law was always what the authorities deemed it to be. And so, on 6 February 2015, the Ministry of Public Security announced that China was further cracking down on foreign casinos seeking to recruit Chinese citizens to travel abroad. And the game was up in October 2016 when all 19 Crown staff were arrested in a crackdown and jailed for up to 18 months.

  Although it wasn’t clear at the time, these arrests marked the beginning of the end for Crown’s criminally infused business model. Not only did the arrests hammer home the risks the company had been dancing around, but one of the arrested staff members, Jenny Jiang, became a whistleblower for the 60 Minutes program that exposed the sordid mess in which Crown had immersed itself.39

  The entire Crown senior management – executives and board members – had convinced themselves that junket operators were an established part of the global casino industry and represented a manageable risk.40 This allowed them to rake in the profits for a while, but ultimately proved to be a fatal misreading of the situation.

  Deepening ties with triads

  By 2011, China had become Crown’s largest market for high-value international VIP players. AUSTRAC found that Crown had formed partnerships with eight junket groups, most of which had deep criminal connections. The two largest were Suncity and Chinatown.

  The Chinatown junket was run by Tom Zhou, a short and intense man who held joint Chinese and Australian citizenship. He’d moved to Australia in 2010, buying a mansion in Melbourne’s elite suburb of Toorak. But he was on the run from the Chinese authorities for fraud and for allegedly throwing acid into a rival’s face. He was described as someone who ‘would resort to extreme measures to resolve his problems’.41 Zhou was also an international criminal fugitive with an Interpol ‘red notice’ alert out on his name, alleging his involvement in foreign influence operations, extortion and money laundering, and his association with drug and human traffickers.42

  Before Crown became his ‘plaything’, Zhou was already immensely wealthy. An enigmatic figure, he had high-level connections with the Chinese Communist Party, being a business partner of billionaire Ming Chai, the cousin of Chinese president Xi Jinping. In Australia, Zhou set up a network of Chinese Communist Party influence organisations under the auspices of the party’s United Front operation and supported by the Chinese consulate in Melbourne. Thus, while supposedly on the run from Chinese officials, he was also acting as part of the Chinese government’s ‘soft power’ operations in Australia.

  As investigative journalist Nick McKenzie discovered, at the height of his powers Zhou was flying around Australia with Ming Chai on private jets chartered by Crown or other Australian casinos. He donated $26 600 to New South Wales Labor in 2015, met Victoria’s Premier Daniel Andrews at a 2012 function that Zhou helped host, and that same year formed a business directed by a former adviser to the premier.43

  Zhou was thus a double threat to Australia’s security, attracting the keen eye of both the Australian Federal Police and ASIO, which failed to find sufficient evidence to charge him with a crime. Unconfirmed reports circulated that Australian authorities believed that junket operators in China were working with government authorities to provide sensitive information and data to the Chinese government. According to the gambling website playstlfest.com, the authorities then ‘[used] this sensitive information to blackmail these people and get them to further the interests of China abroad. As many of the targets are very rich and could potentially lose their fortunes and face lengthy jail sentences, many are willing to work closely with the government.’44

  Yet Zhou became ‘the undisputed king of Crown’s junkets’.45 He was treated like royalty at Crown in Melbourne. Senior management developed ‘a deep business partnership’ with Zhou, paying him tens of millions of dollars to funnel Chinese gamblers to Crown’s Australian operations.46 Crown’s internal accounts revealed that clients of the Chinatown junket gambled $1.5 billion there.47 In late 2019, Zhou was arrested in Vanuatu and deported to China under a longstanding arrest warrant.48 Had Crown done its due diligence, it would undoubtedly have seen multiple red flags raised about Tom Zhou.

  The Suncity junket was operated by Alvin Chau. By his mid-40s, Chau had developed the flamboyant style of a young Chinese entrepreneur, sporting snappy suits and a fashionably slicked-back hairstyle, and accompanied by a glamorous actress as his girlfriend.49 Chau was fodder for the tabloids but he had a shady past. He is thought to have risen through the ranks of Macau’s organised crime networks through notorious local crime boss Wan ‘Broken Tooth’ Kuok Kai.

  Chau embodied the rags-to-riches story. He built an empire around servicing Macau’s casinos by bringing wealthy Chinese to their gambling tables while funnelling their profits into legitimate businesses. But he continued to have deep ties with senior triad gang members. Chau also had links to elites within the Chinese Communist Party, some of whom, it was speculated, ‘wanted to quietly move large amounts of money to Australia’.50

  Suncity evolved into a sophisticated financial company. In addition to its junket operations, Chau also offered high interest rates in exchange for storing money with his company, attracting shady investors who preferred this to using traditional financial institutions. Effectively, Suncity operated as an international bank for criminals who needed to move money globally.

  Chau and his Suncity associates also set up a network of front companies in mainland China, including real estate and property development operations, through which to launder money under various identities. Suncity’s regional network of casino VIP rooms enabled billions of dollars in underground cross-border payments to be transmitted and effectively laundered into jurisdictions where Suncity had operations, including at Crown and Star.51

  Chau saw the opportunities provided by Australian casinos. It is claimed that he offered both Crown and Star the chance to recruit the biggest high rollers to their respective premises for a small cut on each bet made. Crown and Star embraced Chau’s offer, as it alleviated their need to use more of their own resources to lure these ‘whales’ from China. Throughout, Chau maintained his extensive and dangerous criminal network. Patricia Bergin found that there were clear links between Chau, the Suncity junket and crime groups such as 14K.52

  Who are the 14K group? Based in Hong Kong but active internationally, the triad is responsible for large-scale drug trafficking around the world, mostly heroin and opium from China and South-East Asia. They are also involved in illegal gambling, loan sharking, money laundering, contract murder, arms trafficking, prostitution, human trafficking, extortion, counterfeiting and, to a lesser extent, home invasions and robberies.53

  Crown’s partnership with Suncity did not end there. The group was given its own private gambling room at Crown Melbourne, complete with arrangements to store cash in cupboards. At one point, more than $5 million was stashed at the Suncity desk. One Suncity client had been given money ‘in a backpack in the valet parking area of Crown Melbourne by a Suncity junket representative who had retrieved the money from behind a curtain in the Suncity room inside Crown Melbourne’. The money could have ended up anywhere.54

  Crown didn’t consider ending the partnership with Suncity even after it found $5.6 million stashed in its partner’s private gambling room – an incident that had, Crown’s chief legal office later told the Bergin Inquiry, sent ‘money-laundering alarms ringing’.55