Moody’s Investors Service has confirmed it has changed Crown Resorts outlook to negative. The rating agency has shared that the Australian gambling company Crown Resorts has received a Baa3 rating, with its outlook having been changed to negative.
The revelation has come at a time when Crown Resorts has been dealing with serious problems in three Australian states following the scanting report of the former Supreme Court judge and current NSW Commissioner Patricia Bergin.
Following the negative outlook announcement, one of the Moody’s analysts – Maadhavi Barber – explained that Crown Resorts has good potential to keep its investment grade credit profile, especially in case it is willing to make right all shortcomings that the inquiry of Ms Berging identified in its operations in New South Wales (NSW), as well as the other shortcomings that may be found as a result of regulatory probes in the rest of the country.
Lately, Crown Resorts has been facing a really hard time. In February, the NSW Independent Liquor and Gambling Authority (ILGA) found the gambling giant unfit to hold the operating licence of its newest casino in Sydney after it took into consideration the findings of Commissioner Bergin’s report. But the problems for the Australian gambling giant continued, with probes initiated by regulatory bodies in Victoria and Western Australia following allegations of facilitation of money laundering.
Despite the unfavourable position Crown Resorts has been put into, Moody’s Investors Service said it does not expect new surprises to appear from either one of the ongoing inquiries faced by the Australian gambling giant.
Furthermore, considering the fact that Crown Resorts is currently the biggest single-site employer in the states of Victoria and Western Australia, local governments are likely to keep the company’s casinos operational in order to support employment and states’ economic growth, especially at a time when the economy has been hit by the negative impact of the coronavirus pandemic.
James Packer Hopeful to Get Permission to Keep His 37% Stake in Crown Resorts
As all of the above happens pretty much at the same time, the major investor of Crown Resorts – James Packer – expects to get permission to keep his 37% in the Australian gambling giant, rather than to be required to reduce it to 10% only. The sell-off of most of Mr Packer’s holding in the company has been one of the options included in the Commission of Inquiry report presented by Patricia Bergin last month.
Recently, the Australian Federal Police (AFP) has confirmed it had started an investigation into potential criminal offences after receiving a referral from Ms Bergin. The AFP, however, did not unveil the subject of the probe and explained that the matter was associated with communications offences.
For the time being, it remains unknown if any potential AFP charges could affect the attempt of Crown Resorts to get the approval of the NSW gambling regulatory body and retain its casino licence for its Barangaroo casino. The NSW gambling regulator’s negotiations with the gambling giant aimed at finding a way to limit the voting influence of James Packer to the one held by a 10% shareholder but at the same time keep his economic interest to the current rates seem to be progressing well.
As mentioned above, the report of Commissioner Bergin found that Mr Packer’s influence had been extremely harmful to the company, with a counsel assisting the probe explaining that the dominant shareholder of Crown Resorts, CPH, and Mr Packer had a disastrous impact on the operator.
NSW Commissioner’s Report Finds Serious Failures at Crown Resorts’ Casinos
As Casino Guardian reported at the time, a landmark inquiry has found the Australian casino company unfit to hold its Sydney gaming licence. The findings of NSW Commissioner Patricia Bergin and the subsequent decision of the state’s gambling watchdog put Crown Resort’s ability to actually open its already-built Barangaroo casino under question.
For years, the gambling company and its associates have been facing allegations of illegal activity, including the use of junket operators, money laundering and machine tampering. Last month, Commissioner Bergin unveiled that the operator’s casino facilities have been infiltrated by organised crime and the company had violated a number of gambling laws.
But the report issued by Ms Bergin was not the only thing to worry about. The Australian gambling giant faces investigations associated with the operations of its facilities in Melbourne and Perth, following allegations of illegal money laundering activity.
Following the NSW Commissioner’s report, regulators in Victoria and Western Australia have also started investigating the company’s operations, with allegations of money laundering and criminal activity in Crown Resorts’ Melbourne and Perth casinos emerging. Only a week ago, the Victorian Government established a Royal Commission’s probe into Crown Resorts and on March 1st, the board director and chairman of Crown Perth John Poynton became the fifth executive leaving his job at the Australian gambling operator.
Crown Resorts Faces Fair Work Ombudsman’s Investigation over Underpaid Wages
Apart from the rest of the problems it has been lately dealing with, the Australian casino giant is also facing an investigation by the Fair Work Ombudsman. According to reports, Crown Resorts underpaid the wages of hundreds of employees working at its venues, becoming the latest big conglomerate in the country that has admitted to violating federal workspace laws.
Currently the biggest single-site employer in the state of Victoria, Crown Resorts took the initiative to self-report the underpayments to the regulatory body after some local media hubs reported widespread underpayment issues, especially in the hospitality sector.
The massive underpayment in the hospitality industry has been unveiled by an investigation of The Herald and The Age in 2018 and 2019. Some high-profile restaurants at Crown Resorts’ venues have also been included in the reports, such as Dinner by Heston and Rockpool Bar & Grill.
However, the underpayments at Crown Resorts that have now been put under investigation are separate from the ones of the gambling operator’s restaurant tenants. According to a statement issued by a spokesperson of the gambling giant, a small proportion of Crown Resorts’ employees are likely to have been impacted, with the majority of them not covered by an enterprise agreement.
The Australian casino company refused to disclose the underpayments’ overall size but, according to analysts, the sum could run into at least hundreds of thousands of dollars. The investigation into Crown Resorts has been confirmed by the Fair Work Ombudsman that has recently been engaged with a large number of underpayment cases.
- Author
Olivia Cole
