Trump Casino Plans Ended Due to Mob Connections

Trump Casino in Australia Killed due to Mob Connections

Donald Trump’s plan to build and operate Sydney’s first casino was killed off in 1987 by the NSW government on the back of a high-level police report that warned against the now-US President’s bid because of his “mafia connections’’.

The secret report by the NSW Police Board into the suitability of tenderers for the inner-city ­Darling Harbour casino project cautioned that it would be “dangerous’’ to go ahead with Mr Trump’s joint venture with the Queensland-based Kern Corporation, headed by the late developer Barry Paul.

Documents show that the ­Unsworth Labor cabinet met in May 1987 to discuss the assessment of the four tenderers for the project, which also included a fin­ancial report that concluded Mr Trump’s consortium had overstated projected revenues from the ­casino. At the time the Kern-Trump consortium was making its play, Mr Trump owned two ­casinos in Atlantic City — Trump Plaza and Trump’s Castle — and was about to open a third with the Trump Taj Mahal.

Mr Trump had been ­approached by the Kern Corporation — a then successful developer of shopping centres, with strong ties to superannuation funds — to front and operate the casino.

Cabinet minutes from May 4, 1987, contain a summary of the Police Board’s position and show they considered the Kern/Trump bid to be unacceptable. “Atlantic City would be a dubious model for Sydney and in our judgment, the Trump mafia connections should exclude the Kern/Trump consortium,” the report concluded.

The documents show cabinet considered casino bids from three other companies: Australian Federal Hotels and Sabemo; Malaysia’s Genting Berhad with Civil and Civic; and Hong Kong Macau Sydney consortium.

The Police Board investigation cautioned against all the bidders — except Genting — which were then eliminated from the tender for the project, later abandoned.

“The board is firmly of the view that on tests of sound repute, probity and integrity, none of the three consortia discussed above (HKMS, Kern/Trump, Federal/Resort/Sabemo) can be considered acceptable; indeed each would be dangerous,” the Police Board found.

A retired businessman ­involved in the bid — and who originally met with Mr Trump in New York to negotiate the joint venture — last night said he was unaware of the findings of the police probity check. “All of us had to undergo police investigation; we were told that everyone had to be cleared from a police perspective,’’ he said, before declining to be named.

“The plan was for the Kern Corporation to build the casino, and for Trump to run it because he had the licence and experience in Atlantic City. I was not aware of the police report; it is the first I’ve heard of any mafia connections.’’

Bob Hammond, the then ­recently retired chairman of the Commonwealth Government Superannuation Investment Trust, was also involved in negotiations with Mr Trump and would later be appointed as a director in the consortium.

The NSW Police Board was created following the 1981 Lusher inquiry and consisted of two government appointees and the police commissioner, John Avery.

Mr Trump boasted about his bid for the casino before cabinet reached its decision. “If our design is chosen, it will not only be the largest, but one of the most magnificent, one of the most beautiful hotels anywhere in the world,” he told The Australian in February 1987. A month before the cabinet decision, he pulled out of the cas­ino race but three days later announced he was still a contender.

According to the cabinet minutes, a report by Canadian Imperial Bank of Commerce Australia found the Kern/Trump proposal was financially viable on the basis that the projected financial structure put forward by Kern/Trump was reasonably based.

“However, the projected casino revenue estimates are not soundly based and the quantum of the ­potential overstatement is so mat­erial that the tender is not financially viable,” the CIBC report found. “Also, the tender is not fin­ancially viable on the basis of expected returns to equity investors.”

Questions about the police report were referred yesterday by the White House to the Trump Organisation, which did not ­respond.

While the police were against the Trump bid, the regulator of the proposed casino — the Casino Control Division of the NSW Treasury — gave the US-Australia consortium the green light. “It is certified that the Trump organisation in the Kern/Trump consortium is acceptable as an ­operator and has the capacity to operate a casino in accordance with the law of NSW and the requirements of the Casino Control Division of the Treasury,’’ it said in its report.

In June 1986, the Wran government approved a casino to be built and operated at Darling Harbour by the Hooker-Harrah ­consort­ium, but a Police Board report uncovered “undesirable dealings” by some executives, and it was scuttled by the Unsworth government.

Former premier Barrie Unsworth, who led the NSW government in 1986-88, said the gov­ernment approached the granting of a new casino licence after the Hooker-Harrah decision with caution. “We had difficulty with the decision made by the Wran government to approve a casino license in the first instance, and then the cabinet of my government had to reverse that decision,’’ he said.

“We had to take special care … about a ­casino license because it was a very sensitive issue.”

Former NSW minister for public works Laurie Brereton, one of the ministers directly involved in the project, said the cabinet documents speak for themselves.

“Ken Booth (the late NSW treasurer) had carriage of it in cabinet,’’ he said. “There were four bodies who had a role in giving advice. Darling Harbour on design and integration into the development. Casino Control was basically a new body to consider probity and this would have been the first task it undertook. (CIBC) would have given independent advice to Treasury. The Police Board had their say to complete the picture. And Ken Booth’s minute speaks for ­itself.”