Crown hid possible $ 200 million tax tax, investigation finds
“There is no excuse or explanation for this failure… especially since you have accepted that it is likely that your request to prepare the statement took place immediately after the announcement of the royal commission?” asked Mr. Kozminsky.
Mr. Mackay agreed.
Crown’s failure to alert the commission to a possible violation will be closely scrutinized by former Federal Court Judge Commissioner Ray Finkelstein QC as he considers Crown’s commitment to reform after years of combative relations with regulators and government.
Mr Mackay explained that Crown Melbourne chief executive Xavier Walsh asked him to prepare the document, which shows how Crown pocketed $ 167 million between 2014 and 2019.
The spreadsheet showed that Crown had deducted the costs of running its poker machine loyalty program, including items such as valet parking, accommodation and hospitality, from the tax on its profits. poker machines.
“There would be no real reason for Crown to realize tax savings from free parking in 2014 other than a concern about the problem that came to light during the commission, right? ? Said Mr. Kozminsky.
“Not what I can think of,” Mackay said.
He “completely” agreed with Mr. Kozminsky when asked: “It was obvious to you and Mr. Walsh that if these amounts were not deductible, it was the potential exposure of the company. … Was over $ 167 million? “
Mr Mackay conceded during cross-examination of Commissioner Finkelstein that the amount of tax owed could reach $ 200 million if the spreadsheet was updated to include 2021 profits.
Mr Kozminsky said Crown Melbourne should pay its state gambling tax on “gross gambling revenues”. That’s the revenue generated by his 2,682 poker machines minus his losses – that’s what he pays customers in winnings.
“Do you agree with me that the benefits of the loyalty program are not earnings?” Asked Mr. Kozminsky.
“The definition of winnings is where the ambiguity lies,” Mackay said, conceding “they are not from a slot machine event”.
Commissioner Finkelstein asked if Crown wanted to hide the classification of “gains” from the Victorian regulator.
“The answer is yes,” replied Mr. Mackay.
Mr Mackay told the inquiry he did not raise the potential underpayment with the board of directors, Crown executive chairman Helen Coonan or chief compliance officer Steve Blackburn.
But he discussed it with chief strategy officer Peter Herring and chief compliance officer Michelle Fielding, even though he was unclear on the timing.
“I can’t understand how it can get away from you so easily. And this is not an old conversation, it is a conversation that has taken place in recent times, ”said Commissioner Finkelstein.
But Mr Mackay said: “I don’t remember if this was related to the royal commission’s request for documentation, or if it was for some other purpose.”
A private session was held in the early afternoon to hear legal advice from the Crown on its deductions.
In a statement to ASX on Monday, Crown admitted breaking Victorian law at its Melbourne casino by allowing customers to buy $ 160 million in tokens with eftpos and credit cards.
Crown said that until November 2016, it had processed more than $ 160 million through the hotel card process – from international guest debit or credit cards at Crown Melbourne’s Crown Towers Hotel – with the funds then available for customers to play at the casino, in violation of section 68 of the Casino Control Act.
The $ 8.6 billion company also revealed that the financial crimes watchdog has expanded its investigation into money laundering at Southbank Casino to include Crown Casino in Perth.
The investigation continues Tuesday with Crown’s chief executive for VIP customer service, Peter Lawrence, in the witness stand.