The things casinos, banks and governments all have in common

With the Crown Casino inquiry, among the words used by Royal Commissioner Ray Finkelstein were "disgraceful", "illegal, dishonest, unethical and exploitative" ... "serious misconduct ... so callous that it is hard to imagine that it could be engaged in by a regulated entity whose privilege to hold a casino licence is dependent upon it being, at all times, a person of good character, honesty and integrity".

Crown Casino defrauded the Victorian Treasury of several hundred millions in tax by concealing from the regulator the true nature of deductions it was claiming. Its own internal and external lawyers had advised that what it was doing was almost certainly illegal. It was breaching Australian laws, but also conniving with rich gamblers from China to break Chinese currency laws. It displayed "indifference to acceptable conduct". It bullied and deceived the regulator, and did all that it could to frustrate any investigations into the conduct of the casino, its management or its board.

It pretended to have world's best practice approaches to problem gambling by vulnerable people, but nothing could have been further from the truth. Many customers had their lives ruined by gambling that should not have happened if the casino had enforced its own rules. The cost to the community was enormous, and not only to gamblers themselves but to many other people and institutions, he said.

Its board, at all stages dominated by well-known men and women of ostensibly high repute, failed to carry out one of its prime responsibilities - to ensure that the casino met its legal and regulatory obligations. Either the boards were not told what was going on, or its members fell asleep at the wheel.

Many senior executives involved in the misconduct were indifferent to their ethical, moral and legal obligations. Some were motivated by a drive for profit; others did what they did because they could. Lawyers hid behind the fiction that their only role was to advise what the law was, rather than to counsel; and advise adherence to the law.

Ray Finklestein had no hesitation in finding that Crown was unfit to hold its casino licence. But then came the big problem. As the board itself had advised the government, in an effort to intimidate the commission, Crown had become too big to fail. Were it to have its licence taken away, thousands of Victorians would lose their jobs, and the state government which had become hooked on, and morally compromised by its close relationship with the casino, would lose hundreds of millions in revenue. Instead there is to be a complicated (and in my view unworkable) arrangement by which a former Victorian regulator can stand over the board and management for several years until it cleans up its act.

In short, pretty much what one would expect. Justice Paddy Bergin had more or less found the same thing about NSW aspects of Crown's operations, and much the same is coming out of Western Australia, another site for Crown Casinos. All are determined that the baleful influence of James Packer, and the squads of senior executives who carried out his every whim, must be removed from any aspect of casino management and control, with Packer required to sell down his substantial interests.

It would suit everyone if all of the management and past board greed, cultural problems, indifference to the law and to any notion of social licence could be laid at the door of James Packer. It might even be easy, given the physical and verbal aggression, and sad background of James. His close associates, themselves bullied, became bullies too, bulldozing over any opposition, political, or legal. Not for nothing has Crown Casino become the favoured post-career destination of political party organisational folk - ever eager to prostitute their knowledge, access and experience in pulling strings into lobbying for the private business interests of a man with no interest whatever in the public interest.

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Blaming Packer helps, at least slightly, to disinfect the reputations of some of those (pre-Packer) who conceived of the casino as a great tourist, culinary and social mecca and architectural feature on the horizon, part of the Kennettesque vision of taking Victoria into the 20th century with Grand Prixes, beggar-my-neighbour events, that mixture of glitz, chintz and tackiness that is such a feature of casino cliché. As some of the lyrical might describe this period, this casino was only incidentally a money churn gouging the poor and the disadvantaged, or even the fabulous "whales" or high rollers from overseas. And, provided it was kept in proportion, who cared, given the restaurants, the entertainment and the ambience?

By this account, the scope for money-laundering, room for organised criminals to horn in on junkets, ways of turning drug money into "winnings," scope for prostitution and "favours" for pet clients, and money-lending rackets simply did not exist. This was because "world's best-practice casino regulation'' would have made it impossible. I have never heard of a casino - actual or prospective - anywhere in Australia or the world that has not claimed word's best-practice external supervision, smart, effective and incorruptible regulators, scrupulously honest operators and proper arms-distance from politicians. Alas most of the evidence suggests that regulator-capture, politician capture and the use of casinos as bases for organised crime is intrinsic to the "industry" - which, depending as it does on human weakness and greed, is never quite honest, never quite clean and is mostly fairly morally disgusting.

Blaming the Packer era also serves as an alibi for the modern board, most of whom can claim, with some reason, to have been innocent of conscious involvement in what the casinos had become, initially over-dependent on what they were told by managers, and, in some cases, a bit over-impressed by press statements drafted by company lawyers and board managers denying any improprieties and threatening critics. Paddy Bergin seems to have thought that some of these newer board members, such as former federal minister (and wife of former NSW Supreme Court judge) Helen Coonan, could be the nucleus of a management-rescue that could turn black into white. But she, alas, has found the task too onerous, or distasteful. Jane Halton, a former top Canberra departmental secretary, has so far lasted the distance.

Those who read the casino report, or reports, will think immediately of the Hayne Royal Commission report into the banks three years ago. Remember that? It was initially resisted for several years by then prime minister, Malcolm Turnbull, well informed about the banking end of town, and his redoubtable Treasurer, Scott Morrison. Both (along with the Treasury and other financial regulatory agencies) insisted that an inquiry was completely unnecessary. First, if there had been bad practice, Morrison and Turnbull had already picked it up and acted. Second, an inquiry might be dangerous because it could shake international confidence in the Australian banking system.

But the commission was forced on the government because a host of rebel National Party members were incensed by reports of abuses they had heard from constituents. Once the commission got going, it became clear that those abuses were but the mere tip of an iceberg. Indeed that banks, like modern governments, were being treated as if they were casinos, run by scoundrels if anything less honest. Modern police consorting squads, now focused on bikies and drug dealers, might have seemed, for a while, better deployed against members of banking boards.

The whole barrel was rotten. Corrupt and dishonest practices were not the work of a few rotten apples but fundamental to the whole system - at board level, with senior management, and all the way down the line. Bankers of great repute were personally implicated in devising, implementing, and, if needs be, covering up completely dishonest practices. They lost no caste for their rapaciousness or greed, or even for the giving of advice to some that they should deposit any moral qualms at the door.

A culture of profit at any cost had taken over institutions once regarded as fiscally and morally conservative and honest. So also seemed to have disappeared any concept of social contract (in exchange for the great boon of a banking licence), fiduciary duty or trust to clients, particularly ordinary people at a disadvantage in dealing with great institutions. Some of the headline stories - about charging fees to dead clients, or, in the financial services section of the industry selling funeral benefits for indigenous babies, were shameful enough, but so was a whole culture of fee-gouging, ripping off clients, and promoting schemes not for the best interests of customers but so as to maximise personal commissions and bank profits.

It also became clear that the banks, major donors to Liberal Party campaign funds, had demanded and received a quid pro quo in the form of the effective repealing of legislation designed to make the financial services industry more honest and efficient, and, in particular, obliged to discuss kickbacks and other inducements to recommend poor investments. This was almost by itself enough to explain why most banking financial service investments provided such poor returns compared with industry-based superannuation funds.

It shouldn't surprise that casinos, banks and modern governments are so similar in their dishonesty and lack of concern for decency and the public interest. Their managers and their boards come from the same stock, often educated in the same Christian private schools, studying the same subjects at universities and moving interchangeably between sectors, as well as in other layers of government (such as regulation, ministerial advising, consultancy, and the modern bureaucracy). It is by no means clear that Morrison and his ministers are the pick of the bunch.

Scott Morrison, who discovered the money tree and magic pudding when the pandemic struck 18 months ago, has discovered that it can be harvested with the morals and the ethics of the modern banker or casino operator. Over the past week of grandstanding about his plan to have a plan to make emissions go away without new policies, Scott Morrison was making much of an argument that voters at the last election, in May 2019, had rejected Labor's policy of a 45 per cent cut in emissions by 2030, preferring the coalition promise of only a bit over half. This was mandate stuff, the electorate's endorsement of his plan, he was asserting.

We did not hear so much about another big issue of the 2019 campaign. Labor campaigned strongly on promises to implement all of the recommendations made by Hayne, asserting that the coalition, implicated in some of the rorting, simply could not be trusted to implement the recommendations. This was strongly denied by the new Treasurer, Josh Frydenberg, who insisted that he would implement all of the recommendations.

The public was conned. Nearly three years later, most of Hayne's concrete recommendations are not implemented. Some have been formally abandoned. Others lie at the wayside with no plan for doing anything. The government, and Frydenberg seem to have lost all zeal to reform the sector - one which, accordingly, continues to shower the coalition with donations. If the National Party has become a wholly-owned subsidiary of the fossil fuel industry, the ideas and ideals of the banks and the financial sector now seem to govern the Liberal Party. The pandemic provides some cover and some distraction, but it could hardly be said to have changed the moral or financial arithmetic, given that the banks are awash with free cash provided by the government. On the key performance indicator Frydenberg set for voters to judge him in 2019, he scores less than 50 per cent. He's also the steward who handed out $40 billion to businesses and private schools which, contrary to their initial claims, they didn't need, but who were told, airily they could have it anyway. Perhaps because we could retrieve the money through another bout of robo-debt on the undeserving poor.

Some Hayne recommendations of mostly rhetorical flourish can be said to have been promulgated, but very important ones - focused on the robber-baron culture which had developed - have simply been abandoned. The robber barons are back in charge - or in some cases, a new generation of the same DNA and business morality. Disgraced but unshamable bankers are again seen at the best clubs, and offering apparently disinterested advice about the economy and "over-regulation". One could be forgiven for thinking that the royal commission never happened. One can be reasonably sure that Kenneth Hayne will never get another opportunity to refuse to shake Josh Frydenberg's hands, a preventive pre-pandemic measure to avoid the risk of contamination from a government which had helped create the mess in the first place.

Pretty well all of the conditions exist for a repeat of the circumstances which saw Australia's major banks and financial institutions appropriate billions of taxpayer dollars to their own interests, in conduct that a future inquiry could call "disgraceful", "illegal, dishonest, unethical and exploitative" and "callous".

Those who write the terms of reference for royal commissions are always careful to exclude constant but embarrassing factors at the heart of the problems. With the banking scandals, with Crown Casino and in half a dozen other systemic scandals of modern business ethics and conduct one can see that the cover-up begins with government, now skilled at evading accountability.

There is regulatory failure, and, in some cases (including at Crown) regulatory capture. This does not usually happen by accident. It occurs because those who are supposed to secure the public interest are deliberately starved of funds and staff, regarded by their own government (especially by bureaucrats in departments of finance) as examples of red tape and over-regulation. Victoria is replete with examples of the bullying capacity of a casino too big to be allowed to fail: if anything inconvenient to casino management emerged, a call to the responsible minister or the premier - probably with menaces from an old ALP apparatchik - would mostly do the trick.

Regulators have not only been deprived of resources. They have been deprived of truly independent power to protect the public interest. And, in some cases, government has chosen regulators not for their will to carry out the letter and the spirit of the law, but for "understanding the industry", "believing in a light touch and persuasion rather than forcefulness and fines," for being chosen from the corps of mates, cronies and nominees of the regulated. Some skate between being foxes and hounds, or who are given reputations they have yet to deserve. I would have thought, for example, that if the former Victorian Ombudsman - the person chosen to lead Crown out of the morass - was such an outstanding regulator, Victoria would not have so many chronic problems of small g government.

Inquiries rarely look at the direct relationships between banks, or casinos, or wheat boards, with government ministers and government agencies. But they are almost invariably too intimate, and, were inquiries allowed to ask, would implicate ministers in the mismanagement, misbehaviour and misconduct. The vacuum leaves fertile space of corruption commissions of wide ambit.

In theory Scott Morrison will be talking about the environment for most of the next week. But even if he cannot contribute much to world, or national, or local debate on the physical environment, he might spend some of his time contemplating the moral environment in which we now all live.

It is pointless to ask whether the banks learnt their ethics from the casinos or vice versa, or whether both learnt them from the examples of integrity provided by modern politicians. But all are rotten, and it is a major problem of future good government. Indeed, I do not think we could have the mendacity we have seen on display in parliament this week had we not all been wading in the same sewer.