Clubsnsw And Clubgrants Face New Problems And Allegations
It seems likely that ClubsNSW would like to stay out of the news for a bit, but each month seems to bring a new scandal for the industry. As the representational body awaits word on a court order to gag a whistleblower from revealing more scandalous information, the news turns to ClubGrants. While ClubGrants should symbolize the good that can come from gambling clubs via charitable donations, it is now also the focus of a scandal.
Let’s sort through it and see where everything stands.
Crown Casino Impact
It is no secret that Crown Resorts has been under scrutiny for years. The spotlight shown bright on Crown after the July 2019 exposé by the Sydney Morning Herald, the Age, and 60 Minutes. Their report stemmed from a six-month investigation and revealed evidence of corruption. It included everything from Crown executives turning a blind eye to junket operators and high-stakes gamblers tied to money laundering schemes and drug and human trafficking rings.
This prompted numerous inquiries around Australia as to the competency of Crown to maintain their gambling licenses. Further, the goal was to uncover the truth behind the allegations, following the paths wherever they led.
In January 2020, the first inquiry began. The New South Wales Independent Liquor and Gaming Authority (ILGA) took center stage as former Supreme Court Judge Patricia Bergin oversaw hearings. It didn’t take long for testimony to make headlines, from then-CEO Ken Barton being unaware of junket activities to the unprecedented power of non-executive directors. Every hearing seemed to intensify worries about Crown.
More than a year after the start of the NSW inquiry, Commissioner Bergin released her findings in an 800-page report. She determined that Crown was unfit to hold a casino license in Sydney. Problems with the company included money laundering at Melbourne and Perth casinos, partnerships with junket operators linked to organized crime, poor corporate governance, and a poor corporate culture overall.
That led to a governance shakeup inside Crown. At the same time, the WA Gaming Commission considered an investigation of its own into Crown Perth, and the Victorian government established a royal commission to look deeper into Crown Melbourne.
One of the many results of the Crown inquiries and investigations has been an intensified spotlight on gambling and associated establishments throughout Australia.
Crown Investigations Impact on ClubsNSW
The connection between Bergin’s report and ClubsNSW isn’t complicated.
Soon after Bergin released her report, the Australian government began examining potential gambling reforms. Not only have many been fighting for more oversight into the gambling industry for years, their concerns gained much more validity via the report. One of those reforms is a government-issued gambling card. Anyone who wants go gamble at Australia’s casinos and clubs would need to use a card – registered with the government – to do so. This will keep known criminals away from the Aussie industry and allow the government to monitor everything from suspicious activities to indications of gambling harm.
Not all government officials support the idea of a gambling card, however. Some stand on principle regarding government involvement in private affairs, personal freedoms, etc. But others may be echoing the opposition of lobbying groups like ClubsNSW.
A spokeswoman for ClubsNSW did try to distance that organization from the Bergin report and the gambling card. She told the Guardian in February:
“The Bergin inquiry was not about clubs or pubs – it was an inquiry into Crown and its appropriateness to operate a casino license at Barangaroo. In relation to the idea of a cashless gambling card, it is a non-starter. Commissioner Bergin made a passing reference to it in her 800-page report on Crown, and while it might sound to some like a harmless regulatory intervention, a mandatory gambling card would present considerable unintended consequences.”
ClubsNSW is the primary lobbying organization – they prefer the term “representational body” – that represents the interests of NSW clubs. With more than 1200 clubs as members and having just celebrated its 100th anniversary in 2020, ClubsNSW has clout.
Too Much Clout?
As a former insider, Troy Stolz speaks from a place of knowledge. He once worked as the ClubsNSW anti-money laundering and counterterrorism finance manager, also known as the AMLCTF compliance manager. When he ended contract with ClubsNSW after nine years, he blew the whistle.
Stolz started speaking out publicly in early 2020 about money laundering through pokies, also known as poker machines or slot machines – not related to the game of poker. He claimed that the noncompliance with money laundering laws was not only “massive” but “alarming.” In fact, he said that as many as 95% of clubs in NSW operated in this way. And he testified to the Australian Parliament about it.
He was the source of a document leaked in 2019 that revealed the extent to which ClubsNSW knew of the dangers and acknowledged the noncompliance.
Stolz became known as the ClubsNSW whistleblower. And when the Bergin report spurred talk of the aforementioned gambling card system, Stolz said it would never happen. “My view is that the likelihood of any reasonable or practical reform is dead in the water before it gets off the ground,” he told the Guardian earlier this year, “because the clubs will run a campaign with the hotels association…” He said that ClubsNSW would launch a massive lobbying effort to combat the gambling card idea.
Legal Battles for Whistleblower
According to Stolz, ClubsNSW immediately and forcefully began the attacks on his character. He said ClubsNSW then-CEO Anthony Ball was one of the people ruining his reputation in the industry, preventing him from obtaining employment elsewhere. He had been blacklisted and bullied. So, he sued ClubsNSW in March 2020 in the federal circuit court on those bases, as well as claims like underpayment and breaches of the Fair Work Act.
At the same time, ClubsNSW (as Registered Clubs Association of New South Wales) sued Stolz, claiming that he illegally provided internal documents to Independent MP Andrew Wilkie. In doing so, he breached a confidentiality agreement with the organization. They asked the court to demand that Stolz turn over all communications pertaining to that leaked information.
Wilkie claimed that the Parliamentary Privileges Act should protect Stolz’ whistleblowing moves because the document became a part of parliamentary proceedings.
In the beginning of June of this year, the federal court ruled that Stolz must release the documents requested by ClubsNSW.
The media, specifically Australian Broadcasting Corporation (ABC) and the Sydney Morning Herald, in receipt of some of the leaked documents has opposed the ruling to turn over communications with Stolz. ClubsNSW, however, wants those emails as well as $150K for legal costs. The group found out that Stolz sold his family home and wants $150K of the money from the sale to ClubsNSW.
Stolz Turns to Fundraising
The $150K on top of his own legal bills and another court judgment against his wife for a suit she filed against ClubsNSW puts the total at about $600K, according to the Guardian in mid-June. He started a GoFundMe account to raise funds, though it currently stands at just $16K of the $150K he hopes to raise.
Stolz is still fighting numerous court battles. Therefore, in a situation in which he may prevail, he will use any funds raised for his own legal costs but donate anything beyond that to the Human Rights Law Centre, which aims to protect whistleblowers.
To complicate matters, ClubsNSW was back in court in July to silence Stolz further. The group requested a gag order to prohibit Stolz from speaking to the media or publicly about the situation. They also want all descriptions of the court battles removed from his GoFundMe page.
Meanwhile, MP Wilkie has yet to step in with any type of parliamentary privilege to help Stolz, though he continues to assert his ability to use that privilege. Even so, it has yet to work in Stolz’ favor in relation to any of the court proceedings.
ClubGrants Faces Allegations
The latest in the series of dramas involving NSW pokies and clubs pertains to ClubGrants. With government oversight and proceeds from NSW clubs, ClubGrants oversees the distribution of funds to nonprofits, charities, community groups, and local sporting organizations. Since 1998, ClubGrants has distributed more than $1B. At this point, they distribute about $62M per year.
Clubs, such as the ones that are members of ClubsNSW, give to ClubGrants or direction to local community organizations in exchange for tax rebates.
Enter ABC Investigations. They just reported favoritism.
One of the investigations undertaken was a request for $10K from Community Access Western Sydney (CAWS). They wanted to supply more meat with their food packages for vulnerable and disabled populations, since they rarely receive meat-based donations. Chris Laurie manages CAWS and applied for a grant but was denied and given no reason for that denial.
What ABC Investigations discovered was that CAWS was ranked as a “highly recommended” organization to six large clubs in her area, a strong recommendation for a grant. CAWS was among 33 applicants with that same ranking.
West HQ is the wealthiest club in that area but didn’t award money to any of those 33 applicants. Rather, it donated more than $500K in grants to applicants with close ties to West HQ and its leadership.
While this is technically legal, ClubGrants expects awards to go to organizations based on merits and rankings. An anonymous whistleblower told ABC, “West HQ would divert funding to areas that they thought would drive as much revenue to the business as possible, as opposed to whether it was aligned with the funding requirements for ClubGrants.
This was only the tip of the investigation’s iceberg. ABC’s article revealed many more concerning situations and revelations.
Investigation Fallout
The NSW government noted that it knew ClubGrants lacked transparency, but it didn’t seem to know the extent to which favoritism played a role in the distribution of funds.
The NSW Council for Social Services issued a statement to its alliance of 450 members, all representing organizations and individuals who work toward helping disadvantaged peoples in NSW. The message was clear: NCOSS will no longer play a role in ClubGrants operations. It had worked with the government and ClubGrants to maximize the donations and their benefits to the community, but due to a lack of transparency and governance frameworks, it would no longer work with ClubGrants.
NCOSS CEO Joanna Quilty said, “It is clear that there are a range of governance, accountability and transparency issues that need to be addressed.” She also added that her own organization has never been fully funded or resourced.
It is unclear if there will be more fallout from the ClubsNSW and ClubGrants scandals. While it may have a snowball effect to spur greater change, the entirety of the situation may be too broad to address. If government officials find little support for change and become overwhelmed with the task, they could drop the ball for now.
