Crown Resorts is opening its wallet to settle an outstanding debt with the Victorian government, but it may not be enough. The beleaguered Australian casino operator has acknowledged that it will hand over approximately AUD$37 million (around $44.6 million) after it inadvertently underpaid its taxes for 2012. The sudden windfall will be welcome by the government; however, it may not be enough. In Victoria’s ongoing investigation of Crown’s lack of operational integrity, prosecutors have asserted that over $353 million is owed.
Crown Resorts Tries to Make Amends
The investigation into allegations that Crown was complicit in money laundering and other illegal activities continues in Victoria, where it could have its casino license suspended. Having opened its operations to in-depth scrutiny, Crown was found to have employed creative accounting practices when calculating its taxes for 2012. It reportedly underpaid its taxes for the year by around $27 million, but another $17.6 million has been tacked on for penalties. However, according to local media outlet ABC News, the Royal Commission overseeing the hearing learned from prosecutors that the operator may owe over $353 million, which means that Crown may still be on the hook for a significant amount of money.
Crown has already agreed to pay a fine of $774,000 to the Victorian government for not abiding by the rules regarding junket operations, and the operator could now be considered one of the state’s largest benefactors if it is forced to come up with all the money reportedly owed. If another revelation that surfaced during the hearing is true, it’s likely that Crown won’t be able to cover its debt, especially as new fines and penalties are added. According to testimony, Crown Melbourne CEO Xavier Walsh knew about the creative accounting since 2018, but never spoke up until after Victoria announced its investigation into the company.
Crown Brass Knew It Was Playing Tax Games
According to the investigation, Crown was deducting marketing expenses from its poker machine revenue prior to crunching the numbers on what it owed the government. With the revelation, it has been determined that the accounting practices were supported by those at the top of the Crown ladder, and Raymond Finkelstein QC, Royal Commission Commissioner and Chair, isn’t pleased. He asserted, “This kind of deception was known to many people in the organisation, and it didn’t seem to trouble anybody. They were happy to go along with it.”
The mismanagement of its tax responsibilities is just another indication of a pattern of improprieties by Crown’s corporate leadership. It is now believed that the company may have misrepresented its actual tax liability for more than seven years, and determining the final amount owed will take some time to figure out. This is part of the reason Victoria has granted an extension to the investigation, and a final decision could come sometime next month. At this point, Crown shouldn’t be too optimistic that the state will reach a different conclusion than that handed down in New South Wales.
According to Victoria Premier Daniel Andrews, he is willing to rip up Crown’s casino agreement if the Commission recommends it.