Leading class actions law firm Maurice Blackburn Lawyers has reached a $125 million settlement with Crown Resorts Ltd (ASX: CWN) after the company’s share price fell on revelations that 19 Crown employees were detained in China on suspicion of engaging in illegal marketing of its VIP gaming services.
The settlement means that thousands of shareholders will be compensated after Crown shares fell nearly 14 per cent in a day, on 17 October 2016, following confirmation of the detention of Crown staff in China.
Maurice Blackburn Senior Associate Michael Donelly said a class action was the only way everyday shareholders were able to take effective 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.
“This case demonstrates the importance of class actions, whistleblowers and investigative journalism in holding corporations to account. Without those things, we doubt that the three separate Royal Commissions into Crown would have been established.”
Following their initial detention, the 19 Crown employees pleaded guilty to the commission of gambling offences contrary to the Criminal Law of the People’s Republic of China, and were convicted by the Baoshan District Court in June 2017.
The class action alleged contraventions of the ASIC Act and the Corporations Act, in seeking to establish that Crown engaged in misleading or deceptive conduct and/or breached its ASX disclosure obligations with respect to its operations in China.
The proceeding alleged that Crown knew its employees were acting illegally in China and were subject to a Chinese government crackdown, and that Crown enacted a range of countersurveillance activities including using code words on telephone calls, removing logos from its private jets and misleading Chinese authorities.
“It’s important to understand that if the Morrison government changes to the Corporations Act and class action laws are fully implemented, this is precisely the case that would be unlikely to occur. Rather than taking orders from business lobbyists, the government should be focussed on protecting investors’ rights to take action against corporate wrongdoers,” Mr Donelly said.