Australian Financial Review highlights Harsha’s case against Crown casino
Monday, 30 September 2013 01:23
Australian Financial Review: James Packer’s fiercest critic in Sri Lanka, Opposition Spokesman Harsha de Silva, has called for greater transparency of Crown Ltd.’s proposed US$ 400 million casino and hotel for the country’s capital.
The proposed Colombo development received Sri Lankan Cabinet approval last week and is almost certain to be given a full green light, as the Government has close to a two-thirds majority in the Parliament.
But de Silva, an economist and member of the opposition United National Front, wants the Government, Crown and its local partner Rank Entertainment Holdings to come clean on the conditions of the licence under which the casino will operate.
“I want to know what is the duration of his licence, what is the fee, what are the conditions of the licence and what recourse does this country have if he violates those conditions,” de Silva told The Australian Financial Review.
“I am asking these questions on behalf of the people of my country.”
De Silva said his calls for the Government to put in place a casino regulator before approving the proposal had been ignored. He has also previously criticised the awarding of tax concessions to Crown, which he believes could be worth $1 billion over 10 years.
The Government has the proposal is for a “mixed use” development and there will be no new casino licences. Rank Entertainment Chairman Ravi Wijeratne has said he is able to transfer a licence from a casino that he already operates, but de Silva questioned the legitimacy of this scenario.
De Silva said Wijeratne, along with the rest of Sri Lanka’s casino operators, run their ventures under legislation that is a set up to collect tax from gambling operators but doesn’t confer legal status.
A 2009 report from the Financial Action Task Force, an intergovernmental body set up to protect against money laundering, noted that Sri Lanka’s nine casinos are “not clearly regulated” by the Government and there are no “fit and proper” tests for licensees.
In November 2010 the Government moved to clarify its position and put in place the Casino Business Act. The new regulations decreed that from January 2012 casino operators had to operate with a licence and that notifications of new licences would be published in a newspaper in the country’s three main languages, Sinhala, Tamil and English. Illegal operators could be fined, or jailed for up to five years.
But January 2012 has passed without the Government putting forward complementary legislation that sets out the terms for licences, so the legal uncertainty around current casinos persists.
“There are no casino operators in Sri Lanka with a licence,” de Silva said.
If the Crown proposal is passed it will require a period of development, when the Government could sort out its regulatory issues.
Nonetheless the uncertainty could cause problems for Crown back home. In August the Victorian gambling regulator, in its five-yearly review of Crown’s Melbourne casino licence, warned the company of the dangers of bribery and corruption as it expands its casino empire into new Asian markets.
The regulator said it would keep a close eye on any investments in Sri Lanka, as well as a new casino development in The Philippines that Crown is linked to via its 33.7% stake in Hong Kong-listed Melco Crown.
The Sri Lankan Cabinet approved Crown’s plans for two 36-storey towers that would include 400 hotel rooms, as well as retail, entertainment and conference facilities. The Government had raised questions about the building designs and for a time was calling for a height reduction or the construction of just one tower, but seemed to have backed down. De Silva said the Government should have much higher priorities than the design of the building.
“It is like worrying about having a pimple or acne when you have cancer,” he said. “What kind of nonsense has the design got to do with it when the casino has no licence, no regulator and is tax-free?”
De Silva said he is not completely opposed to Crown’s proposal, but believes it should operate as it does in other jurisdictions like Australia and Macau. “I have been trying not to oppose the casino on all grounds. My position is that there has to be a regulator, there has to be a licence, and Packer has to pay tax.”
A spokesman for Crown said the Government’s approval process was still under way. “The process will also include a legislative debate in the Sri Lankan Parliament.”