KEY POINTS:
Police and the Department of Internal Affairs admit New Zealand casinos have a problem with organised crime, particularly money laundering and loan sharks.
A report made public by Minister of Internal Affairs Rick Barker yesterday revealed both departments have been investigating criminal activity at Auckland's SkyCity casino and
other casinos for at least 10 months.
It said the department and police had "a significant amount of evidence" that demonstrated organised groups, predominantly Asian, "were frequenting New Zealand casinos for the purposes of criminal networking, money laundering and social gambling using illegitimate funds".
The report said ethnic gangs like Black Power, motorcycle gangs and "international crime entities" were also using casinos for the same purpose. It named the Asian syndicates as Chinese, Vietnamese, Thai and Malay in origin.
It also said casinos would become a "particular focus of attention" as New Zealand moved to meet its international anti-money laundering and terrorist financing obligations.
The report marks the first time since casinos opened in New Zealand 13 years ago that police and Internal Affairs have publicly admitted loan sharks and money laundering are a problem.
Mr Barker said he had ordered his officials to do more work on both areas and would pursue recommendations to give them more powers.
He said the report raised "a number of questions" about the casino industry and how the Government monitored them.
He conceded that departments like his own could operate "more effectively".
The report, by Internal Affairs Deputy Secretary Keith Manch, was ordered after two former Christchurch Casino executives made allegations about alleged impropriety there. It failed to substantiate many of their claims but did find problems in the broader casino industry.
It noted the "intrinsic tension" faced by casinos: "They have an incentive to maximise that expenditure, rather than focusing on the source of the money."
It also noted difficulties as to whether responsibility to investigate certain casino-related crime first sat with the police or Internal Affairs.
Last night SkyCity's general manager corporate, Alistair Ryan, noted Mr Barker's comment that "when casinos become aware of unlawful or socially harmful behaviour, they take action."
Mr Ryan said anyone found to be practising loan sharking or undesirable behaviour was barred.
The Weekend Herald investigation found that loan sharks were operating inside SkyCity Casino, with reports of them operating openly in the VIP room, charging 7 per cent interest a week on loans in the tens of thousands.
It also found that although casinos were suspected of being New Zealand's prime money-laundering machine, with money being "cleaned" simply by cashing chips, then leaving with a cheque marked casino winnings, neither police nor Internal Affairs could name one related prosecution in the past five years.
The investigation also found that at least 331 lost Chinese passports, possibly used for identity fraud, were feared to be linked to casino loan sharks who had taken them as security for loans.
Crackdown
To combat illegal activities in casinos, Internal Affairs wants:
* Inspectors to have more powers to investigate and prosecute organised crime and deal with money laundering.
* An education programme on loan sharks and the legal remedies available.
* Changing casino licence conditions to explicitly require them to minimise loan-shark activity.
