Crown settles arrest action
Casino operator Crown has settled a class action lawsuit brought by thousands of shareholders.
Legal action was launched by law firm Maurice Blackburn after the company’s share price fell by close to 14 per cent in October 2016.
The share value sunk after it was confirmed 19 Crown employees had been detained in China on suspicion of engaging in illegal marketing of gaming.
The lawsuit has now been settled for a reported total of $125 million.
Maurice Blackburn senior associate Michael Donelly this week said it was the only way everyday shareholders could take action against Crown.
“Crown’s alleged failures in our case were part of what has become one of the most serious and comprehensive breakdowns in corporate governance in Australian history,” Mr Donelly said.
The settlement was made “without admission of liability”.
The 19 Crown employees pleaded guilty to gambling offences contrary to Chinese law and were convicted by the Baoshan District Court in June 2017.
The class action sought to show that Crown breached its disclosure obligations in regard to the developments in China.
Crown allegedly knew its employees were acting illegally in China and that it even conducted countersurveillance activities, including “using code words on telephone calls, removing logos from its private jets and misleading Chinese authorities”.
Crown expects to claw back a significant portion of the $125 million settlement from its insurers.
“Crown’s board of directors determined that the agreement to settle the proceeding was a commercial decision made in the best interests of Crown and its shareholder,” the company told the Australian Securities Exchange.