The New South Wales Independent Liquor & Gaming Authority said Aug. 8 that it will launch an inquiry into Hong Kong-listed Melco Resorts & Entertainment Ltd.'s proposed A$1.76 billion acquisition of a 19.99% stake in local casino operator Crown Resorts Ltd.
The move comes after a number of Australian newspapers reported allegations of money laundering operations and other criminal activity at Crown Resorts.
According to the reports, one of Crown Resorts' partners, Tom Zhou, leads a network of junket operators that allegedly launders money for crime syndicates, drug traffickers, sex traffickers and Chinese communist parties through the Australian casino. Crown reportedly allowed Zhou to run the scheme in exchange for attracting wealthy gamblers from China.
The newspapers cited "dozens" of court documents and leaked Crown Resorts data.
The regulator has issued notices to Crown Resorts and other relevant parties to provide documents and information that will help in the probe. It said the inquiry will take evidence in public, with the capacity to conduct private hearings to receive confidential information from law enforcement or other sensitive information.
The probe is to ensure that the management and operation of a casino "remain free from criminal influence or exploitation, that gaming in a casino is conducted honestly and controlling the potential of a casino to cause harm to the public interest and to individuals and families," the gaming authority said.
Crown Resorts said in a statement that it will fully cooperate in the investigation.