Probe into SkyCity kept under wraps
The state government has admitted it might never make a report into SkyCity’s suitability to hold Adelaide’s casino licence public.
A report into whether SkyCity is a suitable entity to hold the Adelaide Casino licence is sitting under wraps, more than three years after one of the state’s pre-eminent silks was asked to conduct a review into the company’s suitability, and a year after SkyCity admitted to breaches of Australia’s money laundering and counter-terrorism financing laws.
And the State Government has admitted it might never make the report, handed to the state Liquor and Gambling Commissioner Brett Humphrey in May, public.
The ASX-listed company was handed a $67 million fine in mid-2024 after striking a deal with the Australian money laundering and counter-terrorism regulator AUSTRAC, in which the company admitted to breaching the relevant laws, albeit not deliberately.
The settlement and admission of guilt followed the lodgement of a statement of claim by AUSTRAC in late 2022, containing allegations that SkyCity had failed in its obligations under Australia’s anti-money laundering and counter-terrorism laws to monitor and report on almost 60 gamblers who were, in some cases moving large amounts of cash through the casino.
Brian Martin KC – a former Commonwealth director of public prosecutions and retired Supreme Court justice – was asked in mid-2022 to investigate and report back on whether “the licensee is a suitable person to continue to hold the casino licence under the Casino Act’’.
Martin’s report was delayed while the AUSTRAC case played out, however it has recently been handed to the State Attorney General’s Department.
“Mr Martin has provided his completed report to Liquor and Gambling Commissioner Brett Humphrey,’’ the Department website said.
“The Commissioner is now carefully considering Mr Martin’s report and findings before determining the next steps.’’
The government said in a statement to InDaily that the Commissioner has provided a copy of the report to Consumer and Business Services Minister Andrea Michaels.
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It did not respond to a question about whether she had read the report.
“The report is comprehensive, and the Commissioner is considering his options, including whether the report can be released to the public,” a spokesperson for Consumer and Business Services said.
“As the matter is still under consideration, we are unable to provide any further information at this time. To the extent possible, the public will be made aware of any action taken as a result of the investigation.’’
Independent MLC Frank Pangallo called on the release of the report “to clear the air”.
“If it isn’t, then this government isn’t interested in accountability or addressing corruption in gambling, or anything else involving the big end of town for that matter,” he told InDaily.
“As Minister Michaels has said herself, holding a casino licence is a privilege which comes with significant responsibilities.
“The government has a responsibility to release Mr Martin’s independent investigation into SkyCity Adelaide.
“And if it doesn’t, I will move for a Parliamentary inquiry into the State Government’s handling of this entire episode through the Crime and Public Integrity Policy Committee.”
As well as being the operator of the Adelaide Casino, SkyCity is also a major sponsor of Liv Golf, which Premier Peter Malinauskas recently announced would continue to hold events in Adelaide until 2031, and employs more than 1000 people.
The allegations levelled by AUSTRAC, which were not ultimately tested in court due to the $67 million settlement, included extraordinary claims about hundreds of millions of dollars gambled at the casino, including by “Customer 1” who, the claim said, was widely known to have links to overseas organised crime syndicates.
The Bergin Inquiry into the Crown group’s gambling operations in Sydney heard evidence in early 2020 that Customer 1 had alleged links to overseas crime syndicates and the Bergin Report found that “there were links between Customer 1, the Suncity junket and overseas organised crime syndicates’’.
Despite SkyCity Adelaide being aware of the “adverse information regarding Customer 1, it … did not ban Customer 1 until March 2022″, the statement of claim said.
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Another gambler, Customer 2, allegedly gambled more than $420 million personally and through junkets they operated.
The AUSTRAC statement of claim alleges that from at least April 2017, SkyCity Adelaide was aware that Customer 2 was associated with a number of customers “who conducted transactions involving the receipt and movement of significant amounts of cash with no apparent economic or visible purpose and were related to loan sharking activities’’.
Other allegations levelled at the casino include that ‘Customer 33’ gambled more than $33 million through the venue in 2020 and 2021, despite the casino’s records indicating that they worked as a part-time waiter and farm worker.
“In March 2021 and April 2021, SkyCity Adelaide officers circulated reports that Customer 33 was a known drug dealer and a media article that contained a video of Customer 33 attending a dinner with a person who was convicted for selling illicit drugs and money laundering,’’ the statement of claim said.
“SkyCity Adelaide did not have adequate reason to believe that Customer 33’s source of wealth or source of funds was sufficient to explain the high value financial and gambling services provided to Customer 33.’’
Another gambler, Customer 38, “transacted using large amounts of cash and cash that appeared suspicious, including cash that was in poor condition and was covered in dirt as if it had been buried’’.
In the statement of agreed facts published last year, which accompanied SkyCity’s $67 million fine, AUSTRAC said the deficiencies in SkyCity’s programs designed to monitor and report on potential money laundering were “systemic” and amounted to “serious” contraventions of Australia’s anti-money laundering laws.
SkyCity has since made changes to how it manages money laundering risk at the casino.
“SkyCity’s failure to comply with the Anti-Money Laundering/Counter-Terrorism Financing Act over many years allowed high-risk customers to move millions of dollars through the casino, in ways that made the source and ownership of the funds unclear,’’ Austrac said last year.
“SkyCity also provided services through high-risk channels and to high-risk customers without appropriate risk-based controls. It failed to carry out required checks on 121 customers, including where SkyCity knew customers were the subject of law enforcement interest, or where there were indications that some posed a higher risk of money laundering.
“The casino also failed to establish an appropriate framework to ensure adequate board and senior management oversight of its AML/CTF Programs.
“SkyCity has taken steps to address the issues identified in these proceedings however this remediation remains ongoing.’’
As well as the AUSTRAC action, Litigation Capital Management has recently flagged that it proposes to apply to the Supreme Court in NSW “to bring a statutory derivative action on behalf of SkyCity Adelaide Pty Limited against its former directors and its officers due to the failure to implement adequate AML/CTF programs and systemic compliance failures at SCA’s Adelaide casino’’.
Former SkyCity Adelaide boss and SkyCity Group chief operating officer David Christian stepped down from his roles in April last year, with no explanation given by the company.
Then-interim chief executive Calum Mallet said Christian had “led the SkyCity Adelaide business through a very challenging and demanding period, demonstrating strong leadership and resilience’’.
SkyCity told InDaily in a statement that it was “progressing a comprehensive, multi-year transformation program, developed in conjunction with independent monitor, Kroll Australia, and approved by the Liquor and Gambling Commissioner”.
This program of work focuses on strengthening SkyCity Adelaide’s AML/CTF capabilities and minimising gambling-related harm, to ensure both regulatory obligations and community expectations are met.”
SkyCity shares are currently trading near decade-lows on the ASX, changing hands for 91.5c. The stock has traded between $1.47 and 81.5c over the past 12 months.
The company in May downgraded its earnings outlook, noting that in Adelaide, “performance has been impacted by both lower visitation and lower spend by customers due to the uplift in our anti-money laundering and harm-minimisation program’’.
