Federal Court approves $450 million Crown settlement

Crown will pay $125 million in 28 days, a further $125 million within one year of the order, and the balance of $200 million in two years.

But in a variation of the original settlement, Crown must now hand AUSTRAC its 2023 and 2024 financial statements, and an affidavit from Crown’s chief financial officer stating whether it can finalise payment of the penalty.

“The applicant [AUSTRAC] has liberty to apply for a variation of the orders deferring the payment of the balance of the judgment debt [on the basis that the financial position of the respondents is such that the repayment of the balance of the judgment debt ought not to continue to be deferred],” the judgment says.

Crown Resorts’ lawyers had earlier warned the Federal Court that the casino operator would face “significant financial hardship” if forced to immediately pay its $450 million settlement.

Crown told the court that it was now forecasting a loss of $390 million for the financial year ending June 30, 2023, up from $374 million when the affidavit was filed, due to deteriorating economic conditions.

Lee expressed concern that these claims of financial hardship were untested as AUSTRAC chose not to cross-examine Crown on this point.

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“You’ve made a choice not to cross-examine on any of that material. And I’ve got to do the best I can as to whether I accept that submission, on the basis of the current evidence, as to whether or not Crown can’t afford to pay more than they’ve agreed.”

He also expressed concern about the evidence presented by Crown.

“Most notably, there’s no evidence as to past payment of dividends and diminution of retained earnings or the group’s current enterprise value, and only the most superficial evidence of its ability to obtain future alternative sources of debt capital or additional equity capital,” Lee said during the hearing on Tuesday.

Crown’s barrister, Philip Crutchfield, KC, disagreed that the suitability of the $450 million fine needed further scrutiny: “We’ve got an agreed position with a very sophisticated regulator, dealing with the largest companies in Australia, extracting properly huge fines for breaches of very important Commonwealth legislation.”

Crown and AUSTRAC agreed to the settlement over the group’s anti-money laundering and counterterrorism failings in May but needed court approval.

AUSTRAC took into account the substantial and ongoing efforts undertaken by Crown to address its failings, which were the subject of these proceedings.

Acting AUSTRAC CEO Peter Soros said: “$450 million is one of the largest penalties ever ordered against a casino globally. It serves as a clear warning to anyone who provides casino or gaming services in Australia that they must have strong AML/CTF compliance systems and processes that meet their obligations.”

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James Packer and other Crown shareholders sold the company to private equity group Blackstone last year, after a series of inquiries that found it unfit to hold a casino licence in any state where it operates.

The inquiries were triggered by a series of reports by The Age, The Sydney Morning Herald and 60 Minutes into Crown’s affairs in July 2019.

AUSTRAC has also commenced civil penalty proceedings in the Federal Court against Star Entertainment in March this year for alleged serious and systemic non-compliance with anti-money laundering and counter-terrorism financing (AML/CTF) laws.

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