Australia’s Federal Court Questions Crowns Financial Truthfulness

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There are reports from Australia that Justice Michael Lee of the Federal Court is skeptical about Crown’s claims that it is financially incapable of making a one-time payment for the AUD450 million ($301 million) penalty laid out by AUSTRAC. The casino was fined due to multiple infringements of anti-money laundering and anti-terrorism legislation.

Justice Queries Crown’s Financials

During court proceedings, Justice Lee underlined that the penalty is already at the lower end of the spectrum of what would be deemed appropriate for Crown’s “extremely egregious” violations. The operator’s proposal of paying the fine over two years would diminish its net present value to AUD406 million ($271.6 million), considering interest rates.

Philip Crutchfield, KC, Crown's legal representative, stated that the company “cannot pay more than the agreed amount.” Nevertheless, Justice Lee questioned the truthfulness of Crown’s financial straits, pointing out that there is a shortage of substantial proof other than an affidavit from Crown’s CFO, Alan McGregor. He also indicated that AUSTRAC's failure to cross-examine McGregor compromised the verification process of Crown's claims.

Justice Lee focused on the importance of accountability and implied that insufficient examination of witnesses' affidavits might compromise their truthfulness. He expressed worries about the penalty not taking into account past dividend payments made to Crown shareholders, insinuating that penalties should be hefty enough to deter similar unlawful practices.

Justice Lee to Publish Ruling Today

Justice Lee's final ruling on the matter is expected on the afternoon of July 11. Although he showed a predisposition to approve the penalty, he also entertained the idea of commissioning a neutral party to analyze Crown's financial condition. Alternatively, he contemplated accepting a payment schedule, provided there were stipulations for earlier payment if Crown's financial state improved.

The court proceedings also cast doubt on Crown’s expression of remorse. Even though the company apologized for its violations and underwent a comprehensive transformation of its board and top management, Justice Lee questioned the sincerity of the company's remorse. He clarified that true remorse should be reflected in a fundamental change of mindset, not merely by replacing those involved in the malfeasance.

The case's outcome will resonate significantly with Crown and the overall gambling sector. Australia is about to introduce substantial reforms to its gambling industry, with plans for a nationwide gambling regulator and a prohibition on all types of gambling advertising.

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