Casino Executive’s Arrest Shows Perils of Doing Business in China

gettyimages-534497226-compressorBillionaire James Packer’s Crown Resorts, which is one of Asia’s biggest casino companies, confirmed today that it believes 18 of its employees have been detained by Chinese authorities. One of them is Jason O’Connor, the company’s Executive Vice President VIP International. Chinese authorities have accused them of suspected gambling offences, without being more specific.

American companies perceive the business environment getting tougher in China, according to a recent survey of 496 companies conducted by the American Chamber of Commerce in China. More than half (57%) said their biggest challenge was inconsistent regulation and unclear laws.

Anti-foreign sentiment also seems to be growing, with 77% of respondents saying they felt less welcome than they did a year earlier, and 10% saying they planned to move or had moved a portion of their business outside of China due to regulatory obstacles.

And it’s not just company finances that could be hurt.

“Anti-foreign sentiment in China seems to be growing, with 77% of respondents saying they felt less welcome than they did a year earlier.”

Mark Reilly, the former head of drug company GlaxoSmithKline’s Chinese operations, was imprisoned in 2013 after being accused of bribing doctors to buy the company’s drugs. Stern Hu, an executive at mining giant Rio Tinto, was sentenced to 10 years in prison in 2010 for stealing commercial secrets and receiving bribes.

In Crown’s case, the Melbourne-based company said it hasn’t yet been able to speak with its employees and is working closely with Australian authorities to ascertain their welfare. “Crown is yet to be provided of details of why its employees have been detained,” the company said in a statement to the Australian Securities Exchange.

China’s foreign ministry issued a statement to media outlets confirming that Australian nationals had been “criminally detained by Chinese authorities for suspected gambling offences”, adding that the case is under investigation.

The Australian Financial Review newspaper reported that the raids were part of a crackdown on Crown’s attempts to lure wealthy Chinese gamblers to its Australian casinos.

The Chinese province of Macau may be the world’s biggest gambling hub, but casino gambling is illegal on the Chinese mainland. Local laws there prohibit agents from organizing large groups of citizens to gamble abroad.

The crime is punishable by up to three years imprisonment, but the gambling industry has been known to shirk the ban while touting tour packages, according to the Associated Press.

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Ross Kelly
Ross Kelly is a London-based business journalist. He has been a staff correspondent or editor at The Wall Street Journal, Yahoo Finance and the Australian Associated Press.

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