‘State of war’: the battle behind the scenes that led to a second inquiry into The Star

‘State of war’: the battle behind the scenes that led to a second inquiry into The Star

Former CEO of The Star Entertainment Group, Robbie Cooke 

A siege mentality that amounted to a “state of war” between former CEO Robbie Cooke and special manager Nicholas Weeks has exposed the dysfunctional relationship between The Star Entertainment Group’s (ASX: SGR) management and the NSW casino regulator leading to a second inquiry into the company’s suitability to hold a casino licence.

In extraordinary revelations before Adam Bell SC, the opening day of the second Star inquiry today was told of a pushback from Cooke and chairman David Foster to recommendations presented by Weeks late last year following his appointment by the NSW Independent Casino Commission (NICC) in October 2022 to oversee the casino’s operations.

The inquiry, which is a sequel to Bell’s original 2022 probe of The Star which found shortfalls in the company’s oversight of money laundering and anti-terrorism laws, was also told that the acrimony reached a point where it led to a communication between Cooke and Foster discussing the possibility of a class action by shareholders against Weeks and the NICC.

Cooke resigned as CEO on 22 March, ahead of the start of the second inquiry, with Foster taking on the executive chair’s role while the company searches for a replacement CEO.

His resignation coincided with the announced departure of CFO Christina Katsibouba who the inquiry was told had "lost faith and confidence in the integrity of the CEO".

The level of dysfunction between Cooke and Weeks was laid bare this morning when Weeks told the inquiry that he only learned of Cooke’s resignation after reading it in The Australian Financial Review.

While Cooke’s decision to quit as CEO did not surprise him, Weeks said that as special manager he expected to have been informed of the decision ahead of the public announcement.

Weeks revealed that in early December last year, when he was presenting the board with his findings and recommendations, The Star’s board was made aware that the NICC had lost confidence in Cooke’s ability to implement the reform it required for the casino to restore its casino licence. Weeks is currently holder of the company’s casino licences in NSW and Queensland, where he is also manager of The Star’s Brisbane and Gold Coast casinos.

But it was a meeting between Weeks and the NICC, including lawyers from Maddocks and Corrs Chambers Westgarth, scheduled for February 1 this year that exposed the extent of suspicion that was arising from Cooke over Weeks’ oversight of the casino’s operations.

A message from Cooke to Foster ahead of the meeting is said to have read: “They are up to something."  A subsequent message read: "We're meeting Monday to get ready for war.”

In light of Cooke being aware of the meeting, Caspar Conde, counsel assisting Bell, asked Weeks if he agreed that these messages “suggest a degree of monitoring of you?”

Weeks agreed, adding that this was “extraordinary” in light of the circumstances where the group's casino licence is suspended. 

'Monitoring my diary entries'

"In circumstances where this casino's licence is suspended, and I've been appointed to manage the casino, one of the fundamental objectives of Star is to regain trust and confidence with the regulator, including me as manager," Weeks told the inquiry. "That they were monitoring my diary entries and investigating people I was meeting with, I find to be extraordinary.”

Conde put it to Weeks that the reality of the relationship with the casino regulator was at odds with The Star’s public announcements to the ASX that it was working closely with the NICC to secure a decision in favour of its suitability to hold a casino licence.

“It's difficult to reconcile everything that the company has told me and everything it tells the market and everything it tells the regulator in relation to its motivations to reform and to work co-operatively with the regulator. To suggest that they want to go to war with the regulator and me in circumstances where their licence is suspended, and there is a decision about that suspension scheduled to occur in June this year, is extraordinary,” said Weeks.

When questioned by Bell if he understood himself to be in a “state of war” with the CEO at the time, Weeks replied: “Not at all. I was still meeting with Mr Cooke, meeting with Mr Foster and the management team trying to do the job that I was appointed to do.”

The special manager of The Star was asked by Conde to respond to a text message between Cooke and Foster in February seeking possible grounds for a class action from shareholders against Weeks and/or the NICC.

“I find it extraordinary that the chairman of a listed company and the CEO exchanging messages contemplating a class action from shareholders against me personally, and the NICC in circumstances where their public position and position with me is that they're working cooperatively to address deficiencies they need to address,” said Weeks.

Earlier this year, in January, a response prepared by The Star to the NICC following the 7 December meeting where Weeks presented his findings to the board, is said to have rejected many of the proposed recommendations.

Weeks said that he was both “surprised and disappointed” by The Star's response which took issue with many of his findings. He claimed the reaction was contrary to the board’s response to the initial report issued to The Star following the first Bell inquiry.

'Impediments to reform'

“There was an extensive amount of commentary and rejections of findings in that report. I had several meetings, both with the board and with Mr Cooke in relation to the report where very few questions were asked," said Weeks.

“So, I was surprised when there was as many comments received back as I did. I was disappointed because the purpose of providing that report to the company was so they could be clear about those things that I considered to be deficiencies and areas that needed to be addressed and the way they are characterised in the report was potential impediments to reform.

“I was disappointed because the company's rejection of my assessment of many of those deficiencies seemed to say that there was an enhanced or increased chance that the company was not going to take steps to address those findings and observations which I regarded to be accurate and legitimate.” 

The inquiry was told that an email from Foster to Cooke in January this year ahead of The Star issuing its response to the NICC, Foster suggested that if it is “done right, could be a catalyst to get rid of Weeks”.

Weeks’ response to questioning from Conde on this matter revealed his concern about ”getting rid of me instead of delivering a response to important matters”.

“This was a really important response from the company that was going to be delivered four months ahead of a date by which the NICC had said they would reconsider the licence for The Star,” said Weeks.

Prior to this, Weeks said he had considered that The Star was adhering to its public statements of enjoying a strong working relationship with him as special manager on behalf of the NICC.

Conde put it to Weeks that after the 7 December board meeting, it was his understanding that if Foster may have been looking to “get rid of anyone, it was the CEO, not you”.

Weeks said that he did not get involved in the board’s assessment of Cooke but instead focused on his oversight of the company’s operations.

When Cooke resigned as The Star’s CEO last month, the company said the decision was made after the CEO and the board decided that his leadership would not be conducive to a positive casino licence suitability determination by the regulator.

Cooke’s resignation was accompanied by the departure of Christina Katsibouba as CFO. While Katsibouba is said to have decided to leave the company in mid-2023 "to prioritise her wellbeing", Weeks revealed that part of the reason she had shared with him was that “her working relationship with the CEO and the board had deteriorated”.

He noted that the former CFO had told him that she considered the group’s leadership team to be “dysfunctional” for some time and that “she had lost faith and confidence in the integrity of the CEO”. 

The Bell inquiry continues.

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