Questions over stalled SkyCity inquiry amid money-laundering case
A state government probe into whether SkyCity Adelaide is fit to hold a casino license remains on hold pending the outcome of a Federal Court money-laundering case which could take years to resolve, prompting crossbench questions about the “government’s will” to address the issue.
Image: Tom Aldahn/InDaily
The state government’s Liquor and Gambling Commissioner enlisted retired South Australian Supreme Court Judge Brian Martin KC on July 1, 2022, to investigate whether SkyCity Adelaide is suitable to hold a casino license in South Australia and, if not, “what changes, if any, are required for the licensee to become a suitable person to hold the casino license”.
Martin was due to provide a written report of his findings to Liquor and Gambling Commissioner Dini Soulio on February 1, 2023.
A day before, Premier Peter Malinauskas said Martin’s report would eventually be made public “unless there’s a good reason not to”.
But the review was complicated when the federal government’s financial crimes watchdog AUSTRAC revealed in December it would take SkyCity Adelaide to Federal Court over alleged “serious and systemic” non-compliance with Australian anti-money laundering laws.
In February, Soulio said that Martin’s inquiry would be put “on hold” following advice from Martin that the question of whether SkyCity Adelaide is suitable to hold a casino licence could not be determined “reliably” until AUSTRAC’s Federal Court proceedings were resolved.
But it is unclear how long AUSTRAC’s court case will take given the regulator has been criticised for slow progress in a similar money laundering lawsuit it has open against Crown Resorts in Melbourne and Perth.
In February, the Federal Court judge overseeing AUSTRAC’s Crown lawsuit questioned if the regulator was serious about proceeding swiftly in its case.
The judge, Justice Michael Lee, noted that although the regulator launched the lawsuit against Crown in March 2022, nothing much had happened in the case with the parties stuck in negotiations about agreed facts and admissions.
Lee asked AUSTRAC why there had been “such an extraordinary delay for no apparent progress”.
“The Congress of Vienna took nine months to talk about the future of Europe, you’ve had 12 months to talk about admissions,” Lee told AUSTRAC’s barrister at the time.
The delays in AUSTRAC’s case against Crown has raised questions about when, or if, Martin’s inquiry into SkyCity Adelaide will resume and be made public, particularly if AUSTRAC’s Federal Court case against SkyCity is subject to similar delays.
We have a suspended investigation, and we have no further details and little faith in the courts proceeding with this in a timely manner.
SA-Best MLC Frank Pangallo asked Attorney-General Kyam Maher in March whether he “think(s) it is appropriate that it could be at least five years before the report by the Hon. Brian Martin sees the light of day?”
In a response printed in Hansard on May 18, the Attorney General said: “Once the AUSTRAC proceedings have been resolved, the commissioner will then be in a better position to consider when and whether the investigation into the continued suitability of SkyCity Adelaide Pty Ltd to hold the casino licence… should resume.
“The government supports the commissioner’s decision to place the investigation on hold and notes that it was not taken lightly.
“While this process is underway, it is not appropriate for the government to comment any further on the investigation or the AUSTRAC proceedings currently before the Federal Court.”
Soulio confirmed today that Martin’s inquiry remains on hold pending the outcome of AUSTRAC’s proceedings.
Greens MLC Tammy Franks said it was “quite concerning” there have been no government updates about Martin’s inquiry following Justice Lee’s criticisms of AUSTRAC.
“Here we are many months on, we’ve not had an update from that statement (announcing the inquiry was being put on hold) in February,” she said on Friday.
“We have a suspended investigation, and we have no further details and little faith in the courts proceeding with this in a timely manner.
“This looks likely to drag out three, four, five years before we see the clarity that the public deserves.”
Franks added that the crossbench is “losing faith in the government’s will to tackle this”. Both SA-Best and the Greens have previously called for a Royal Commission into SkyCity Adelaide.
Pangallo said the findings of Martin’s report should be released immediately.
“It is of significant public interest that Mr Martin’s report, any findings and recommendations into the operations of SkyCity in Adelaide must be released immediately, not put on hold for civil proceedings which could take years to resolve given the extent of the allegations and charges,” the SA-Best MLC said on Friday.
SA-Best MLC Frank Pangallo. Photo: Tony Lewis/InDaily
“If Mr Martin found evidence of suspicious criminal activity or misconduct and maladministration by the operators… those findings or recommendations should have been referred to police and other relevant authorities to investigate by now.
“Our concern is by the time any of this surfaces, the casino could argue it has already fixed those serious issues and basically it will be back to business as usual, with a slap on the wrist.”
AUSTRAC’s 800-page statement of claim against SkyCity Adelaide alleges the casino made $74 million from “high-risk” customers who had reported links to organised crime.
The regulator claims the casino made numerous contraventions of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, including alleged failures to conduct ongoing customer due diligence on 59 people “posing high ML/TF (money laundering/terrorism financing) risks”.
SkyCity Adelaide’s New Zeeland-based parent company, SkyCity Entertainment Group, told investors on Wednesday that it continues to review AUSTRAC’s Statement of Claim “with support from external counsel”.
A case management hearing is scheduled July 14, the company said, along with “conferral meetings with AUSTRAC set down in late May/June 2023”.
The company said the “regulatory environment” in Australia is providing “challenging and changing operating conditions”.
“SkyCity Adelaide has proactively implemented an AML/CFT (anti-money laundering/counter-terrorism financing) enhancement program which is well underway, including full source of wealth reviews for all premium customers,” the company said.
“Positive engagement and feedback with both AUSTRAC and CBS on program. Resulted in a significant uplift throughout the business, leading to a more sustainable AML framework.”
The company also said its legal and compliance costs were increasing and it is assessing its accounts “to determine a provision for a potential financial penalty currently underway (relating to AUSTRAC proceedings)”.
In October, SkyCity Entertainment Group revealed it was keeping “liquidity headroom” more than three times higher than normal levels due to future uncertainty associated with a range of factors, including COVID-19 and “potential regulatory penalties”.
The company now has an Adelaide AML “senior management committee” which oversees “AML issues specific to the Adelaide operations”, the company said last week.
It also said it has established a “specialist Financial Crime team (including designated AML Compliance Officers) within the business [which] oversees the Group’s ongoing day-to-day compliance with AML requirements”.
‘Independent monitor’ to track SkyCity’s anti-money laundering programs
SkyCity Adelaide has ceased offering “junket” gambling programs in a bid to strengthen its anti-money laundering program. Photo: Pexels
The Liquor and Gambling Commissioner today announced that he has directed SkyCity Adelaide to appoint an “Independent Monitor” to review the casino’s progress on strengthening its AML/CTF and host responsibility programs.
The new appointee will be a “suitably qualified independent expert” who will report back to the Commissioner on SkyCity Adelaide’s compliance with AML/CTF laws and its gambling harm minimisation obligations.
They will also be able to “seek amendments” to SkyCity Adelaide’s AML/CTF “enhancement” programs if they are not satisfied with their progress
The announcement comes after Soulio reviewed the evidence from the AUSTRAC statement of claim and wrote to SkyCity Adelaide on February 6 seeking a response.
“After evaluating all the material and considering SkyCity Adelaide’s responses to my concerns, I feel it is appropriate for SkyCity Adelaide to demonstrate it is meeting these important regulatory obligations,” Soulio said in a statement to today.
“I believe it’s important that the people of South Australia can have confidence that SkyCity Adelaide, as the licensee of the Adelaide Casino, is operating effectively to minimise gambling harm and ensure compliance with all anti-money laundering and counter-terrorism financing regulatory obligations.
“The Independent Monitor will not displace the role of the SkyCity Adelaide Board, but will monitor SkyCity’s enhancement program implementation and operations to ensure that these objectives are met.”
Soulio also confirmed today that Martin’s inquiry remains on hold pending the outcome of the Federal Court proceedings.
“As the AUSTRAC proceedings are ongoing and are currently before the court, it would be inappropriate to comment further at this point,” he said.
Reacting to today’s announcement, Pangallo questioned the independence of the new appointee.
“How can the expert be ‘independent’ when the casino is making the appointment – that is simply ludicrous and lacks any form of transparency or accountability,” he said.
“Any such appointment needs to be at arm’s length from the casino and made by Commissioner Soulio – and the costs incurred paid by the casino’s operators.”
SkyCity’s Adelaide casino license runs until 2085. The company has an exclusive right to provide casino gaming in South Australia until 2035.