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REPORTER: Mr James Packer and Mariah Carey!
- Kerry Packer, a larger than life character known as a sports fanatic and prodigious gambler, had amassed a fortune of Aust. $6.9 billion ($5.1 billion), according to Australian business magazine.
- Packer and Ho expand in Macau Australia's most famous gambler, Kerry Packer, is doubling up in the gaming haven of Macau, building a second casino that is twice the size of his first. The nation's richest man also appears to be going for extra wow-factor - building it underwater, to showcase tropical marine life, and tacking on a huge resort.
GRACE TOBIN, REPORTER: In a world where cash is king, James Packer has always had plenty of it - thanks to the company he inherited from his father.
In 1987, Kerry Packer sold the Nine Network to Alan Bond for $1 billion, who then expanded the network to include QTQ-9 Brisbane and STW-9 Perth. Packer later bought the network back for half of what he sold it for in 1990. PBL was involved in two casino projects in Macau: the $260 million Crown Macau, scheduled for completion in 2006–07.
JAMES PACKER: I spent a lot of time in casinos as a kid with my dad and I ended up thinking (BLEEPED) this must be a good business.
GRACE TOBIN: Packer took a punt on the casino business and it paid off. Crown conquered the Australian market before Packer set his sights on China and its high roller market.
JAMES PACKER: Ladies and gentlemen, I have made many mistakes in my life but investing in China is not one of them.
GRACE TOBIN: In China, Crown's business model was aimed at enticing rich Chinese gamblers to its Melbourne and Perth casinos.
DAMON KITNEY, BIOGRAPHER: Gambling is actually illegal in mainland China. So, he has seen the opportunity for his Australian casinos is very much to attract those Chinese gamblers to Australia.
GRACE TOBIN: James Packer's biographer, Damon Kitney, says Crown worked closely with local agents known as junket operators to find VIP gamblers.
DAMON KITNEY: It is quite an elaborate set-up, luxury hotel rooms, private jet trips, you name it.
And that's been the centrepiece, I guess, of the high roller business models for Crown, but all casinos.
GRACE TOBIN: Crown's plan to lure Asian high rollers to our shores grew even bolder in 2012 when James Packer won approval to develop an exclusive waterfront casino in Sydney to cater solely to VIP gamblers.
BARRY O'FARRELL, FMR NSW PREMIER (2012): The Crown proposal for a six-star world-class hotel and VIP-only gaming facility will proceed.
GRACE TOBIN: Barangaroo was Crown's shining jewel and the project got the royal treatment from the state government. Crown's bid was approved without a public tender.
DR JOHN HEWSON, FMR LIBERAL PARTY LEADER: I found it almost incomprehensible that they would award or make that decision, offer those approvals without a full, open, public, transparent tender.
GRACE TOBIN: Former federal Liberal leader, John Hewson, was scathing of the lack of scrutiny Crown received.
JOHN HEWSON: I mean it is almost unconscionable to imagine that a government would give a major privileged position without any public accountability, without any probity process at all.
GRACE TOBIN: The Crown empire seemed unstoppable.
But that all changed in 2016 when 19 Crown employees, including three Australians, were arrested in China for breaking gambling laws.
BILL BIRTLES, ABC REPORTER: Crown's immediate challenge is to support the employees who are about to spend another night behind these walls.
GRACE TOBIN: Crown was in turmoil - revenue from its VIP gamblers plunged, throwing the future of Barangaroo into question.
DAMON KITNEY: The arrests were a bit of a turning point for James Packer in his attitude towards Crown. He started to reduce his exposure to Crown, so he's been looking to sell part of his interest.
GRACE TOBIN: Since then, Crown's problems have only gotten worse.
In July last year, explosive allegations of money laundering and the company's links to Asian organised crime bosses were revealed by Nine's newspapers and 60 Minutes.
JUANITA PHILLIPS, ABC PRESENTER: Crown is under investigation for tactics used to lure Chinese high rollers to Melbourne.
GRACE TOBIN: Crown denied the allegations but the report sparked an inquiry in New South Wales which is now investigating whether Crown is fit to keep its casino licence for Barangaroo.
This is a high-stakes inquiry which could result in Crown losing its casino licence in New South Wales or facing heavy restrictions.
The most serious allegations being examined by the inquiry are that Crown breached gambling laws, engaged in money laundering, and partnered with junket operators who had links to organised crime.
The inquiry has been played CCTV footage showing bags of cash being deposited in the high roller rooms of Crown in Melbourne.
Crown CEO Ken Barton told the inquiry he didn't know this type of activity was even occurring in the casino until he saw the footage in media reports last year. His concession prompted a stinging assessment by the inquiry's commissioner.
PATRICIA BERGIN SC, COMMISSIONER: This is what's troubling me and so there has to be some more transparency because this, in effect, has really reached a debacle level.
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GRACE TOBIN: The inquiry is also investigating allegations that two bank accounts operated by Crown were used for money laundering by drug traffickers.
Crown bosses are being questioned about whether they turned a blind eye to these types of transactions.
PATRICIA BERGIN: You do accept, do you not, Mr Johnston, that some of your junkets were connected to criminal elements?
MICHAEL JOHNSTON, CROWN DIRECTOR: It would appear that way, yes.
MARTIN PURBRICK: Well, I couldn't second-guess the executives in those companies, but if they 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 haven't looked at the internet or the news for about 20 years.
So, it does surprise me that casino executives wouldn't know that.
GRACE TOBIN: Martin Purbrick is a world-leading expert on Asian organised crime within the gambling industry. He says Crown should have had a more robust anti-money laundering system because setting one up is not that hard.
MARTIN PURBRICK: It's quite well-known whether you're in the casino business or the banking industry how to set up an appropriate anti-money laundering system, know your customer processes and then execute that.
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So I would say it's negligence if any major business entity doesn't do that at this stage of development.
GRACE TOBIN: The inquiry has also heard that when the allegations were first made public last year, the company released an ad in newspapers and the Australian Stock Exchange, disputing the story and branding it a deceitful campaign.
At the inquiry on Friday, Packer's right-hand man, John Alexander, agreed that some parts of the board's response were inaccurate.
NAOMI SHARP SC, COUNSEL ASSISTING: Do you accept now that parts of this ASX media release are wrong?
JOHN ALEXANDER, FORMER CROWN DIRECTOR: I think some of the language could be refined, yes.
NAOMI SHARP: Well, parts of it are just wrong, aren't they?
JOHN ALEXANDER: Essentially yes.
GRACE TOBIN: As Crown's largest shareholder, James Packer is due to give evidence tomorrow.
JOHN HEWSON: We still need full accountability. It's not too late. I mean, if James is going to go in and give evidence, then, you know, go whole hog. Ask for the lot.
GRACE TOBIN: Damon Kitney says the fact James Packer is fronting a public inquiry is extraordinary in itself.
DAMON KITNEY: This is quite unprecedented. A lot of people would remember his father's appearance, very famous appearance, before a broadcast inquiry into his media ownership at the time.
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KERRY PACKER (1991): Kerry Francis Bullmore Packer. I appear here this afternoon reluctantly.
I am not evading tax in any way, shape or form. Now, of course, I am minimising my tax and if anybody in this country doesn't minimise their tax, they want their heads read, because as a government I can tell you, you're not spending it that well that we should be donating extra.