#AceNewsReport – July.08: Parked beneath the concrete overpass leading into Melbourne’s Crown Casino, he scans the seedy patch of the city between him and the casino, as the echoes of passing cars ricochet overhead.

AUSTRALIA: Crown Casino’s power concerned these gambling inspectors. Now they’re speaking out and old gaming inspector’s badge sits inside Peter “Macca” McCormack’s wallet. The accompanying photo ID is stamped with faint blue letters: “Retired” according to 4Corners

But old habits die hard ? ….As inspectors, we believed our role was to keep the casino crime-free,” he says.

His eyes dart as he surveys the scenes that play out before him; a group of cleaners bundle out of a visibly unroadworthy car, a momentarily unaccompanied child is reunited with her mother, and a petty thief and regular patron at Crown is spotted passing by in the rear-view mirror.

This is a spot he would come to before he began his shifts at the casino, during his 30-odd years as a senior inspector and team leader for Victoria’s independent gambling watchdog.

“We would walk the gaming floor, we would always be dressed in corporate clothing,” he says.

“All the dealers and the pit bosses, they knew who we were.”

Inspectors work for the regulator and are supposed to have oversight of the casino — one of their most important functions is to keep out criminal influence and infiltration.

While Peter’s eye for detail served him well to observe criminal activity, he says he was told by management it was not their responsibility to act on it.

“I would often see loan sharking, in the gaming pits,” he says.

“We were told, ‘That’s not our problem, that’s a police matter,’ or, ‘It’s Crown’s problem if there’s loan sharking.’

“I had drug deals happen right in front of me, where a little plastic bag of powder and the money’s exchanged right in front of me.

“But again, we were told, ‘No, it’s a police matter, not our matter.’

“A lot of the things that we would report up the chain of any sort of criminal activity, just disappeared into oblivion, we never heard of anything further about it.”

Over the years, inspectors say they lost access to parts of the casino, were shadowed by Crown staff in high-roller rooms, and felt their presence was unwelcome.

“I felt that Crown were running our office. When they wanted things changed, things got changed,” he says.

“We’d be told off by a manager for doing our job, because Crown had complained about what we had been doing on the gaming floor, who we might’ve spoken to, or how we dealt with it.”

Peter is one of five former inspectors now speaking out for the first time.

He says they feared if they told the media what was happening they’d be fined or fired.

“I haven’t got a job to lose anymore, so I’m not worried.” Peter says.

As Crown casino became engulfed by scandals revealing mass money laundering and the pursuit of commercial relationships with a parade of organised crime figures, these men watched on as the dirty secrets they’d been forced to keep unravelled.

They’ve told Four Corners their roles at the casino were constantly undermined as the watchdog they worked for gave Crown what it wanted again and again.

Tick and flick

One of the inspectors on Peter’s team was former Victoria Police officer Danny Lakasas.

Danny says he once ran a 12-month operation to track the use of counterfeit notes at the casino — methodically tracking dates, times and gaming table numbers, as well as who the dealers and patrons were.

He says when he compiled what he’d found and passed it up the chain, nothing happened.

“Somebody from intel came down then, took all the information, said, ‘Thanks very much.’ That was the last I heard of it,” he says.

“You get disheartened after a while, and you start thinking, well, why am I busting my backside in doing all this work when it’s not going to go anywhere and nothing’s going to happen?”

Danny and Peter were employed by the Victorian Commission for Gambling and Liquor Regulation (VCGLR).

It was formed in 2012 when the then-Liberal state government merged the gaming and liquor authorities – saying it would increase efficiency.

Inspectors on the ground say it created chaos. Budgets and staff numbers were cut by 30 per cent.

Experienced gaming inspectors were routinely called away from the gaming floor to conduct liquor licence checks at cafes, bars and restaurants.

“It was a takeover by liquor, clearly. There seemed to be a directive from above, whether that was at state government level, to focus in on liquor activities,” says Rod Walker, another former Victorian gaming inspector.

Rod says the liquor inspections became “tick and flick events, just so that you could reach your KPIs”.

The inspectors’ reaction to the new policy was visceral.

“Whoever invented the word KPIs, in my opinion, should be shot,” Peter says.

“Morale went down considerably. They weren’t interested in doing proper investigations, it was all tick and flick.

“What I wanted to do was investigate proper crime.”

Peter says there were many shifts where the casino had no inspector at all.

“That’s still happening,” he says.

“It is in the legislation that we must have casino inspectors there all the time.”

As the regulator was undergoing this upheaval, James Packer ramped up Crown’s aggressive expansion into the Chinese high-roller market.

VIP gamblers were brought into Melbourne by third party agents known as junket operators.

To Danny, the casino suddenly became more vulnerable to organised crime.

“What changed then with the junkets coming in was the amount of Chinese people coming in, having their own rooms, and gambling basically millions of dollars,” Danny says.

“What we saw was a lot of money change hands.

“I don’t know where this money came from, or how it was accounted for, or whether the state was receiving their cut of taxes at that time, because it was all mainly cash.”

Opening the door to money laundering

Crown had an ace up its sleeve.

Years earlier, in 2004, the state government had given the casino the power to approve the same junket operators that it would end up making hundreds of millions of dollars from.

The former head of the regulator, Peter Cohen, has told Four Corners it was his idea to hand over the power to Crown.

“The idea at the time was that Crown actually had more resources than we had to undertake due diligence checks. They could engage private investigators,” Mr Cohen says.

The regulator’s job was to audit the process to ensure Crown was adequately assessing the junket operators.

“Like Ronald Reagan would say, ‘Trust, but verify,'” Mr Cohen says.

Barry McGann, who was a gaming inspector from 2007 to 2018, says this was a key moment that opened the door to money laundering.

“For the commission to give up their powers to allow Crown to approve their own junket operations, in my opinion, was a mistake,” Barry says.

The inspectors still had the ability to audit junket operators and the VIP players Crown flew into Melbourne, but the regulator had to rely on the casino to provide accurate and extensive information for any background checks.

“I’d order the report. If there were any players there that [Crown] didn’t want me to see, there was nothing stopping them from wiping them out, or taking it off the database. I’d be none the wiser,” Barry says.

Because of the lack of access to independent information, Barry says “it would be hard to associate [the players] with any illegal play or triads”.

The junket audits were also rarely done.

From late 2013, audits stopped for close to a year, until a Four Corners program exposed that Crown Melbourne was dealing with junket operators linked to criminal syndicates.

After the story ran, Danny Lakasas says he received a panicked phone call from management asking to see the latest junket audit.

“I said, ‘Well, there hasn’t been an audit done for probably six to 12 months.’ When they said, ‘Why?’ I said, ‘Because we were told not to do any audits, because they were being reviewed.'”

Crown was not only approving these junket operators, some of whom had links to organised crime, but the regulator was doing little to scrutinise the individuals who were coming in and gambling hundreds of millions of dollars in the casino’s private rooms.

The one ‘banned’ high roller

Terry McCabe understands better than most how the fear of punishment can be a strong motivating force for compliance.

Before becoming a gaming inspector in 2004 he was a senior detective in Victoria Police’s Arson Squad.

“For a regulator to be completely effective, there needs to be a climate of likely being caught out, likely being exposed. [While I was there] I’m not sure that that risk really existed,” Terry says.

Crown pays the Victorian government over $200 million a year in taxes, and Terry believes this ends up influencing how the state-based regulator operates.

“Governments all around the world are addicted to gambling as much as many patrons are, and regulation of a casino is extremely difficult against that background.”

Terry noticed the growing frustration amongst inspectors who felt they were not able to properly hold Crown to account.

“The troops worked hard. Many of the troops were among the original casino inspectorate and had done a lot of great work, but it didn’t come as any surprise that, when that good work was done, it would amount to very little.”

“The disappointment became disenchantment and disenchantment became, not disinterest, but, ‘Here we go again.'”

Short of cancelling a casino’s licence, one of the strongest powers at the regulator’s disposal is the ability to force the casino to cease a relationship with one of its players or junket operators.

The VCGLR has only used this power once, despite a series of connections that have been identified between junket operators and organised crime syndicates.

The one case where the regulator used this power was with high-roller Richard Yong, who was convicted of illegal bookmaking after an undercover FBI sting at Caesar’s Palace in Las Vegas in 2014.

But Four Corners has revealed that after the regulator twice wrote to Crown ordering it to cease dealing with Yong, the casino resisted and continued to deal with him.

The regulator also had concerns about one of Yong’s close associates who was also a VIP client at Crown, Paul Phua – a well-known Malaysian poker player and unregulated bookmaker. He is also alleged to be a high-ranking member of the 14K triad.

The regulator dropped its pursuit of Phua, claiming it had “insufficient evidence” to order Crown to cease dealing with him.

In 2016, Four Corners revealed that Victoria Police had serious concerns about Phua’s alleged links to triads and his status as a Crown VIP.

Terry McCabe is not familiar with either case, but says the casino had a reputation for pushing back against the VCGLR.

“I think Crown had a very robust legal department who were very strong and very aggressive in the way they dealt with the regulator.”

“I don’t believe in all instances we were as strong back.”

A big blue bag of cash

In 2019, frustration inside the regulator reached a tipping point.

Two whistleblowers contacted the office of independent federal MP Andrew Wilkie with evidence of suspected money laundering at Crown Melbourne.

One unnamed inspector provided footage of a young man with a cooler bag full of cash exchanging it for chips inside a room run exclusively by the junket operator Suncity.

“[The chips] shortly thereafter were cashed in — a very easy, quick and effective way to launder millions of dollars,” Mr Wilkie says.

“Importantly, that inspector came to me after he had tried to send that footage up the chain within the regulator and it was not acted on.”

The regulator identified the man in the vision as Chenkang Pan, a junket representative and premium player at Crown Melbourne.

While the watchdog wanted him banned, the casino refused to accept it was him because his face was blurred in the leaked video.

Crown had a copy of Pan’s photo ID and access to the dates he was in the Suncity room, but still said it wasn’t enough.

Andrew Wilkie takes issue with Crown refusing to accept the regulator’s word.

“Crown Casino is treating us like mugs. They know the big names that are in their casino. It’s part of their business model.”

Inspectors from the Victorian regulator, who were the eyes and ears in the casino, say they were not only discouraged from looking at money laundering, but actively blocked.

“We’d put it up to our manager, and our manager would put it up many times to senior management, but it fell on deaf ears,” Danny says.

‘Bad things happen when good people do nothing’

Three states have now examined Crown’s misconduct. NSW held an inquiry, while Victoria and WA have ongoing royal commissions.

But the Victorian royal commission’s terms of reference do not include a direction to examine the failings of the state-based regulator, something the former inspectors would like to see.

“I think for consistency around the country, gaming should be a federal issue. It should be regulated federally,” Terry says.

Both Crown and the regulator declined to be interviewed by Four Corners. A VCGLR spokesperson said it would be inappropriate to comment while the royal commission into Crown was underway.

VCGLR CEO Catherine Myers has previously made the case that criminal activity at the casino was the responsibility of other agencies such as the federal financial crimes watchdog AUSTRAC.

AUSTRAC has confirmed it is investigating Crown for potential breaches of anti-money laundering and counter-terrorism financing laws.

All five inspectors have risked speaking out so that they might see a regulator restored with sufficient power, expertise, and independence.

“So many ex-inspectors speaking up just shows that they’re concerned and that the system’s broken, and hopefully our voices are taken on board and something’s done about it,” Danny says.

Terry is hoping the risk will pay off.

“I believe bad things happen when good people do nothing. Crown puts itself out there as the world of entertainment. It sells a very dangerous product.”

“It needs close scrutiny.”

Credits

• Story by: Steve Cannane and Kyle Taylor
• Researchers: Lucy Carter and Naomi Selvaratnam
• Photography and cinematography: Louie Eroglu ACS
• Digital producer and designer: Nick Wiggins
• Drone video: Sam Hannan 
• Additional photographs: Unsplash, Pixabay

#AceNewsDesk report ……….Published: July.08: 2021:

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