Will Crown Resorts Decade Long Tax Fraud Impact Potential Merger?
Just as you start to think that Crown Resorts had dealt with all of its shortcomings, you find that there are more skeletons in the Crown closet. The troubled Australian casino operator has now been accused of fudging its tax bills for nearly a decade and cheating the Australian Tax Office (ATO) of more than $200 million.
Nigel Morrison who is a non-executive director at Crown Resorts admitted that on June 7 he was made aware that Crown Resorts had been underreporting its taxes to the Victorian Commission for Gambling and Liquor Regulation (VCGLR) for years.
Morrison said that Crown chairman Helen Coonan was made aware of this matter a lot earlier but did not say anything to the board.
Morrison said that from his understanding it appeared that Crown Resorts owed the ATO as much as $272 million but Crown COO Alan McGregor had told him that the actual amount was $8 million. One of the methods that Crown Resorts used for years to underreport its taxes was by categorizing the bonuses that it paid out to its players as losses.
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Morrison admitted that it surprised him to see that Crown Resorts adopted such an attitude as it felt like that they were certain they could get away with underreporting their tax bill and did not make an effort to have an open and transparent relationship with the VCGLR.
The Victorian Royal Commission is now delving deeper into the matter and will do a thorough investigation. Morrison said that he would support any move that looked to get rid of all the board members who were privy to the fact that Crown Resorts was deliberately underreporting their taxes.
Crown Resorts has now sought legal counsel on this new investigation and charges. This is not the first time Crown Resorts has faced issues with Tax with a previous settlement reached in 2019 regarding Crown Resorts attempted venture in the USA.
Will It Impact Potential Star Entertainment Merger?
Crown Resorts is currently reviewing a non-binding acquisition bid made by rival Star Entertainment who is keen to acquire Crown Resorts and become the biggest casino operator in the Asia-Pacific market. We will have to wait and see if Star Entertainment still wants to proceed with the bid and go with the same offer after these new charges against Crown Resorts.
Crown Resorts is facing multiple investigations over the operations of its Perth and Melbourne casinos. The VCGLR is in the process of reviewing whether Crown Resorts is fit to hold a license and operator its Crown Melbourne casino.