Crown and corona: how the flow of Wuhan high-rollers stopped just in time

Did investigative journalists help Melbourne and Australia dodge another bullet?

A central piece of the ongoing Crown Casino revelations is a local network of wealthy and well-connected businessmen from Wuhan associated with gaming, racing, hunting and golf in Melbourne.

Following in-depth media investigations of mismanagement at Crown, the largely unregulated movement of people and money from Wuhan came to a halt just ahead of the outbreak of the coronavirus.

The impact of last year’s powerful 60 Minutes exposé of mismanagement at Crown Casino — along with continuing revelations in The Sydney Morning Herald and The Age about the casino’s links to money laundering, organised crime, and fast-tracked visas — has taken a toll on Crown Resorts. 

Year-on-year turnover from overseas VIP high-rollers fell by 26% to $38 billion in 2019.

The longer-term impact is even more revealing. Crown VIP turnover has fallen by around one half in dollar-adjusted terms from the heady days of 2015 when it exceeded $70 billion.

To be sure, the arrest of Crown employees in China in 2016 dealt a serious blow to turnover. And yet by 2018 it was picking up again.

The revelations have taken an especially heavy toll on visiting high-roller VIPs from China, particularly visitors from the city of Wuhan. Recent allegations in Australian media, combined with tightening foreign exchange controls in China, have worked to reduce high-roller turnover and VIP visits from China to a trickle.

VIP guests from China accounted for a good part of Crown turnover.

According to reports in the Australian Financial Review, documents tendered in Shanghai’s Baoshan district court showed that Crown distributed $35.8 billion in “rolling chips” to Chinese VIP clients in 2016. This represents 55% of total high-roller turnover of $65.1 billion that year.

Assuming these figures are correct, VIP turnover from other (non-China) markets in 2016 would have come in at a little under $30 billion. So the collapse in VIP turnover from an earlier high-water mark in the $70 billion range, to the current $30 billion range, can be put down to a collapse in Crown’s China market and retention of the residual non-China portion.

What has this to do with Wuhan and the coronavirus? Wuhan is after all just one of a dozen cities in China of comparable size, and it has had few historical or commercial links with Melbourne until recent times. Why the mention of Crown and Wuhan in the one breath?

Here we can thank China’s much-maligned justice system for supplying additional information. One of the more surprising findings to emerge from the trial of Crown employees detained in Shanghai in October 2016 was the high premium Crown placed on its Wuhan-Shanghai field of operations for maintaining the company’s high-roller turnover in Australia.

Of the $35.8 billion in “rolling chips” paid out to Chinese VIP clients in 2016, clients from the cities of Shanghai and Wuhan between them accounted for $15 billion, or 42% of overall China high-roller turnover.

For Crown’s reporting purposes, Shanghai and Wuhan are listed together as a single field of VIP operations. But most of the recorded turnover appears to have involved VIP gamblers from Wuhan.

Wuhan stands out on account of the role played by “junket” operators tied to that city in the recruitment of VIPs for Crown’s Australian operations.

Philip Wen reported in The Age that the bulk of Shanghai-Wuhan clients were recruited through go-between junket operators who accounted for 70% of Crown’s China VIP turnover in 2016.

And the undisputed king of Crown’s junkets was Wuhan native Tom Zhou, who cut a figure around Melbourne as “Mr Chinatown”.

Zhou moved to Australia over ten years ago and by 2013 had settled into a $15 million mansion in Toorak. In 2011 he was a defendant in civil proceedings in Hong Kong and in criminal proceedings in Wuhan relating to breach of contract and fraud over the sale of an agricultural products market in Wuhan. 

In the Wuhan case, where his name is recorded as Zhou Jiuming, he was found guilty and failed in the appeal against his conviction. In the Hong Kong case the plaintiff alleged Zhou “would resort to extreme measures to resolve his problems” and was behind an acid-attack on a business rival.

And yet within Australia Zhou was regarded as a prize Crown asset before The Age and 60 Minutes revelations.

Earlier this year, while visiting Fiji, he was detained and extradited to China to face historical charges. Still the revelations keep coming. Last month journalist Nick McKenzie reported that a senior Crown executive allegedly authorised a casino staff member to transfer $500,000 to a Melbourne drug trafficker without notifying authorities of the transfer as required. There is no suggestion the executive knew the recipient was a drug trafficker.

The source of the money was Zhou.

Zhou’s Wuhan junket operations were only part of his Australian business portfolio. He owned an extensive hunting lodge in the foothills of the Yarra Ranges, northeast of Melbourne, where visitors were invited to take aim at local wildlife including wombats. He was also patron of a celebrity golfing tournament.

In Melbourne Zhou served as patron and honorary president of a host of community organisations linked to his home city of Wuhan and home province Hubei. He was a key figure behind the Hubei Association of Melbourne and the Australian Hubei Chamber of Commerce, arguably the most prominent local Chinese-Australian chamber of commerce in Melbourne.

A number of its leading members pooled their resources to purchase the former Equity Chambers building in Bourke St which houses the two Hubei associations. 

Both organisations have been generous in their support of charitable and cultural activities including support for Beijing’s “soft power” operations in Australia.

In November 2018 they hosted a controversial tour of the PLA-inspired drama “Red Guards on Honghu Lake”, a revolutionary musical from the organisations’ home province of Hubei that extols the virtues of the Chinese communist party. The performance attracted heated criticism from Chinese Australians less fond of China’s Red Guards.

We don’t in fact know how many high-risk gamblers from Wuhan visited Melbourne over this period. Turnover is only a proxy for people. What we do know is that they came in considerable number and were treated like royalty.

Writing in The Age, Philip Wen reported that another Wuhan junket operator regularly arranged for Crown’s private helicopter to ferry clients to and from the casino and his private race-horse resort.

They were not a savoury lot: one of the junket’s clients from Wuhan lifted his shirt to reveal gunshot scars to express contempt for his loss after throwing away $20 million at a sitting.

In light of their association with criminal elements and party authorities in China, many people in Chinatown were happy to see the back of Tom Zhou and the Wuhan junketeers well before the outbreak of the coronavirus. 

After the outbreak, all Australians have additional reason to appreciate the work of investigative journalists in throwing a spotlight on corporate irresponsibility and domestic vulnerabilities in the face of international criminal networks.

High-risk visitors from Wuhan are no longer able to flout normal visa procedures to gamble with their own lives and with the lives of others.

John Fitzgerald is a China specialist and an Emeritus Professor at Swinburne University of Technology.