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James Packer’s Crown Resorts staff jailed in China on gambling charges

TESTING times for James Packer culminated today with three Australian Crown Resorts employees handed jail sentences for promoting gambling in China.

Senior executive Jason O’Connor was given ten months backdated to his arrest last October, while Jerry Xuan and Jane Pan Dan received nine months including time served.

Crown will pay a fine of $1.67 million, issued to 16 of its 19 current and former employees detained in China last year.

The employees could be released from detention in Shanghai as early as next month, a welcome result after a tumultuous year for the company and casino mogul Mr Packer.

The arrests in China came last October, just weeks after the 49-year-old billionaire’s very public split with pop star Mariah Carey. As Crown share prices plunged, Mr Packer scaled back his interests in the country.

media_cameraIt’s been a difficult year for James Packer after a public split from Mariah Carey and the arrest of 19 current and former Crown Resorts employees. Picture: Diimex
media_cameraSenior Crown executive Jason O’Connor has received a ten-month jail sentence for promoting gambling in China. Two other Australians employed by the resort chain received nine months each.

He was then named in relation to a corruption inquiry into Benjamin Netanyahu, with claims he gave expensive gifts to the Israeli prime minister, who has strongly denied all allegations.

However such claims have not been substantiated, and there’s no suggestion of wrongdoing by Mr Packer.

The Australian businessman has been notably absent from public life for the past few months, although he reappeared on his superyacht in Tahiti late last week for a luxurious holiday with a group of friends. He was joined on board Arctic P by staunch friend Karl Stefanovic and the Today host’s girlfriend Jasmine Yarbrough, as well as her fellow Sydney model, Rose Ashton.

Mr Packer looked calm as he sailed the waters of Bora Bora just days before the culmination of a nightmare eight months in the personal and professional life of the casino mogul.

CROWN ON TRIAL

Shares in Crown Resorts plummeted to a year-low of $9.71 after the news of the detention of the staff members, three of them Australian. There were fears they could be accused of money laundering, which carries up to a ten-year sentence — but it emerged earlier this month that they would face the less serious charge of promoting gambling on China’s mainland, where betting and the promotion of it are illegal.

media_cameraThe Australian billionaire had been absent from public life over the past few months. Picture: Justin Chin/Bloomberg
media_cameraThe Crown Resorts employees were detained at Shanghai City Detention House. Picture: Supplied

Overseas casinos have been playing a risky game for several years in order to tap into the lucrative Chinese VIP market. They usually rely on “junkets” — middlemen exploiting a legal grey area that allows them to promote a resort’s hotels and facilities — to entice wealthy customers, but some later began sending their own staff.

This proved disastrous for Crown, whose 17 current and two former employees all pleaded guilty in a closed courtroom at Shanghai’s Baoshan District Court today. The accused —three of them Australian, one Malaysian and the rest Chinese — will have been desperate to limit jail time after having been held in grim conditions for almost nine months.

They risked facing three years in jail, and Crown Resort a much bigger penalty, after pharmaceutical giant GlaxoSmithKline was fined $492 million to settle its China bribery case in 2014.

Peter Humphrey, who spent two years in a Chinese jail as part of the GSK investigation, said in US court filings that there was no private toilet, clean bedding, hot water or furniture in his cell, and he spent hours sat on the floor in extreme pain, deprived of fresh air and sunlight for months at a time.

media_cameraThe Sydney-based 49-year-old has taken a step back from his interests in China to refocus on his Australian casinos. Picture: William West/AFP
media_cameraMr Packer’s latest $2 billion Crown casino is under construction at Barangaroo on Sydney Harbour. Picture: Brendon Thorne/Bloomberg via Getty Images

‘OPERATION CHAIN BREAK’

Crown is in a tight spot, one some have suggested could have been avoided with more prudence.

The Crown arrests came after Beijing cracked down on foreign casino operators with “Operation Chain Break” in early 2015, putting some high-rollers off the gambling enclave of Macau, where gambling is legal. In June of that year, 13 staff from two South Korean gaming companies were detained, along with dozens more local employees.

Mr Packer’s former business partner, Macau casino mogul Lawrence Ho, told the Financial Times that overseas gambling havens in general had not been careful enough. “You had casino sales people running around offering credit, talking about collection … it wasn’t discreet,” he said.

“That’s what caught their attention.”

media_cameraHe was seen relaxing on his yacht alongside friends including Karl Stefanovic and girlfriend Jasmine Yarbrough with her fellow Aussie model Rose Ashton
media_cameraMr Packer, pictured with former business partner Lawrence Ho, has withdrawn from China following the detention of his staff. Picture: Justin Chin/Bloomberg

Since the detentions, Mr Packer has backed away from his plans for an international casino brand, offloading his interests in Macau and abandoning a multibillion-dollar casino project in Las Vegas.

Crown’s offices in eight Asian countries from Macau to Indonesia, which helped attract gamblers in the region to its resorts in Australia, appeared to have quietly closed, a Bloomberg investigation discovered.

The Australian businessman is instead refocusing on his ventures at home, particularly the $2 billion casino under construction at the glittering new location in Barangaroo on Sydney Harbour, which will need to attract high rollers in order to flourish.

And he has two major departures to add to his woes, with chief executive Rowen Craigie leaving in February and director and former chairman Rob Rankin stepping down from the board.

Crown Resorts said in a statement today that “17 current and two former employees of the Crown group were today convicted” of the gambling offences. “Of the 16 defendants who were fined, 11 were also sentenced to a period of incarceration of nine months and five to a period of ten months, with time in detention since 14 October to be taken into account for all,” the statement read. “The remaining three defendants, who were bailed on 11 November 2016, were not fined or sentenced to a period of incarceration.”

Now all that remains for Mr Packer is to hope his next big gamble pays off.

Originally published as Packer saga’s dramatic conclusion

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