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Erik Gibbs February 7, 2022 3 min read
Melco Resorts Billed for Crown Resorts Investigation in New South Wales
The Independent Liquor and Gaming Authority (ILGA) in New South Wales (NSW) has filed a lawsuit against Melco Resorts & Entertainment to recover some of the costs of the Bergin Inquiry into Crown Resorts. According to an exclusive report by the Australian Financial Review (AFR), the lawsuit has been filed in the Supreme Court. It seeks AU$3.7 million ($2.62 million) from Macau’s operator.
Melco on the Hook for Bergin Inquiry
The Bergin Inquiry, which lasted 18 months, looked into Crown’s business transactions and found that the operator was not suitable to hold a license for its new Sydney casino. The investigation revealed serious weaknesses in corporate governance and even money laundering through its casinos.
Separate investigations in Victoria and Western Australia have led to the same conclusion. However, Crown was given probation in Victoria in lieu of a license suspension. Western Australia will reveal the findings of its investigation in the coming weeks.
Melco and Crown used to be joint venture partners. They worked together to create resorts like City of Dreams Macau and City of Dreams Manila. The partnership was dissolved in 2017. However, Melco purchased a small portion of Crown’s stock – 20% – from Crown founder and former CEO James Packer two years later.
Although the sale was supposed to be in two tranches, Melco decided to abandon its plans to purchase a second tranche in February 2020 due to COVID-19’s negative impact on the region. The 9.9% original stake was then sold to Blackstone Group.
The inquiry also examined the links between Crown, Stanley Ho, and Lawrence Ho, Melco’s CEO. As a condition of its Sydney casino license, the ILGA had prohibited the elder Ho’s acquisition of any beneficial stake in Crown because of alleged ties with organized crime. Stanley Ho owns a share in Melco’s parent firm via a discretionary trust.
Melco Tries To Make Peace With NSW
According to the AFR, a Melco spokesman said that the casino group tried to cooperate with the ILGA in a “professional, fair and reasonable” manner throughout the investigation. The unidentified individual added that Melco has requested information from the gaming regulator in order to try to reach an amicable solution. However, despite the attempts, the company hasn’t received the information it wanted in order to “adequately assess [the] ILGA’s claim.”
The ILGA suit against Melco is expected to be heard by the Supreme Court on February 11. Crown was also requested to pay its part of the trial. In May of last year, a $12.5-million ($8.86 million) bill was presented to the company.