The pursuit of profit in Crown: ethics of the adviser
In 2021 a royal commission, led by Ray Finkelstein, was established to inquire into the suitability of Crown Melbourne to hold its casino licence after allegations of dodging state taxes and money laundering linked to organised crime.
- A new book by Tom Ravlic, "Crown: Playing in the Shadows" looks behind the glitz and glamour of Australia’s Crown casinos.
- The royal commission report concluded Crown Melbourne had engaged in conduct that was variously illegal, dishonest, unethical and exploitative.
- The behaviour of executives to put profits first, and ignore corporate governance was highlighted by commissioner and chairperson, Ray Finkelstein.
This is an edited extract from the last chapter of Tom Ravlic’s book Crown: Playing in the Shadows. The royal commission resulted in Crown retaining its licence while it undertook a significant reform agenda under the stringent oversight of a special manager, Stephen O’Bryan. Finkelstein said he had taken the decision because he understood that if Crown Melbourne’s licence was cancelled, it would hurt the Victorian economy.
Culture is determined by people and Ray Finkelstein, the royal commissioner responsible for the Victorian deep dive into Crown Melbourne casino was blunt with his assessment of their conduct.
“Senior executives also were plainly at fault. They were responsible for the day-to-day affairs of the organisation,” Finkelstein said. “It was their job to make sure that all legal and regulatory obligations were, in fact, satisfied.”
It is observed in the report that many senior executives were responsible for wrongdoing regardless of whether they authorised bad behaviour or simply suspected it and took the matter no further. “It is open to conclude that the actions of certain senior executives were so unsatisfactory that they should no longer have any role in the affairs of a public company,” the Finkelstein report said.
Eye on the prize
One of the key reasons for misconduct highlighted throughout the royal commission was the pursuit of profit. The royal commissioner was unconvinced that the cultural problem is simply explained by people who were given the responsibility to chase profits. That was deemed too easy an answer on its own and something else lurked in the back of the minds of senior executives and their legal counsel.
The reality of being an enterprise that was taking operation risks of this type was that it would ultimately lead to confrontations with regulatory authorities. Finkelstein noted that there was an unhealthy compliance culture in the Crown stable of enterprises and this meant that people were focused on what the chances were of getting caught and how much it was likely to cost the corporation.
“Many senior executives adopted this mindset. Their decision whether or not to engage in improper, or probably improper, conduct was made by considering the chance of discovery and sanction,” Finkelstein said. “If these executives thought Crown Melbourne would get away with improper conduct that was otherwise beneficial, they did not hesitate in going ahead. It was only when conduct was plainly unlawful that it was rejected.”
“If these executives thought Crown Melbourne would get away with improper conduct that was otherwise beneficial, they did not hesitate in going ahead.”
Playing chase with the regulators and attempting to avoid being pinged for breaches was not solely the province of the executives. The legal fraternity were caught up in the game of cat and mouse as well and Finkelstein doesn’t spare the profession from a tongue-lashing.
“There were occasions when Crown Melbourne was investigated by the regulator. Some investigations concerned alleged wrongdoing,” Finkelstein observed. “Strategies were adopted to thwart and frustrate the regulatory process. All too often, these strategies were devised by lawyers or, at least, they were willing accomplices.”
One legal mind appearing before the royal commission said they thought it was not their role to be telling the client what they should or should not do. Finkelstein hit hard. “Rather than a lawyer simply advising a client whether a given course of action is completely legal, in an appropriate case (and whether the case is appropriate will usually be self-evident) the lawyer could ask their client of the proposed conduct: ‘Is it right?’, ‘Is it honest?’ and ‘Does it thwart the purpose of the law?’,” the royal commissioner said.