Lawyer submits The Star Sydney ‘not suitable’ to hold casino licence, board misled the ASX

Lawyer submits The Star Sydney ‘not suitable’ to hold casino licence, board misled the ASX

Naomi Sharp SC

Legal counsel assisting the Independent Liquor and Gaming Authority (ILGA) of New South Wales’ review into The Star Entertainment Group (ASX: SGR) has today submitted that the gambling and resort business is not suitable to hold a casino licence in Sydney and that it misled shareholders back in October last year.

The revelation, which was made early on in Naomi Sharp SC’s closing submissions to Adam Bell SC who is overseeing the proceedings, is an indication of where The Star may find itself at the end of this process, the public hearings of which commenced in mid-March this year.

While Sharp only made a slight dent in her complete closing submission to the review today, getting through just eight topics out of 26 that she hopes to address this week, the headline submission is the culmination of 36 days of gruelling interrogations by the lawyer who must now establish exactly why The Star shouldn’t keep its casino licence.

“We submit that The Star and Star Entertainment are really only at the beginning of their journey about what has gone wrong within this organisation,” Sharp said.

“And we submit that there has not yet been the period of deep reflection, which of course will be necessary in order to develop a concrete plan about what, if anything, can bring these corporations into a position of suitability.

“We submit that the evidence in the public hearing establishes that The Star is not suitable to hold the casino licence.”

To date, the review has forced the hands of many of the company’s senior management personnel and board members, including former CEO Matt Bekier and chairman John O’Neill.

It has also uncovered a number of damning admissions including that management made “deliberately deceptive communications” to National Australia Bank (ASX: NAB), and that up to $900 million was filtered through the casino between 2013 and 2020 from Chinese high rollers hosted by junket operator Suncity Group.

In addition to submitting that The Star is not suitable to hold a casino licence in NSW, Sharp also submitted today that the company’s board misled the ASX when issuing a statement to shareholders attempting to brush off media reports from Channel Nine’s 60 Minutes program, as well as newspaper articles.

These reports detailed a range of allegations about the company’s dealings with junket operators and Chinese high rollers, and claimed the company attempted to bury a damning report from KPMG.

The two statements, issued in October following the airing of the 60 Minutes piece and a number of follow-up articles in major mastheads, claimed the reports were “misleading” and “incorrect”.

While Sharp today submitted that, generally speaking, the board members which gave evidence to the review be “accepted as witnesses of the truth”, she clarified that there was a “broad spectrum” amongst the board members as to whether the two ASX statements were misleading.

“We submit they were misleading,” Sharp SC said.

“That ought to have been apparent to the directors at the time.”

As part of Sharp’s closing submissions, she spent most of today advising Bell about whether or not to believe certain witnesses that presented evidence over the past two months.

Over the course of 36 days, Sharp grilled a variety of witnesses, including current and former board members, the highest ranking members of The Star’s management team, top shelf employees, employees of The Star’s bank NAB (ASX: NAB), and those that prepared the damning KPMG report.

Many witnesses received a glowing review from Sharp, such as NAB employee Tanya Arthur who the lawyer submitted was misled by The Star employees, and KPMG’s Alexander Graham who was described as “a frank and credible witness” by the counsel assisting Bell.

However, those damned by Sharp include former general manager of finance Michael Whytcross who was “not forthcoming as a witness” and the former group investigations manager Kevin Houlihan who the SC submitted was “not credible and lacked candour in his answers to Mr Bell”.

The former chief financial officer Harry Theodore was similarly criticised by Sharp, who said he was "very reluctant to make concessions in his evidence when they were fairly called for", and took a "long time" to make concessions about unethical conduct when grilled by the SC.

While Sharp described The Star’s three top lawyers as “unethical” and “dishonest”, it was former chief risk and legal officer and company secretary Paula Martin who slammed hardest, described as a “highly unsatisfactory witness”.

“In her oral evidence, she was extremely pedantic and technical and evasive and non-responsive,” Sharp said.

“She almost entirely failed to make appropriate concessions or take any personal responsibility for conduct.

“We submit that some of her answers were plainly untruthful.”

Of all the directors on the Star’s board, Sharp made it particularly clear that she believed Sally Pitkin was the only one who had done any real soul searching before stepping up to the stage.

“We wanted to single out the evidence of Ms Pitkin because of all the directors Ms Pitkin was the director who has reflected most deeply and critically about what has gone wrong within this organisation,” Sharp said.

“We submit that credit should be given for the fact that she did provide helpful evidence to this review to try to understand what has gone wrong.”

As mentioned earlier, Sharp has only given a small portion of her entire submission, and will return tomorrow morning to resume her closing remarks which will begin with a summary of the China Union Pay situation which embroiled the company’s executives at the very top of the ladder.

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