The Star director denies board misled investors over media reports of money-laundering risks

The Star director denies board misled investors over media reports of money-laundering risks

The Star Entertainment Group director Ben Heap.

The Star Entertainment Group  (ASX: SGR) director Ben Heap has denied the company’s board misled shareholders in an ASX statement issued last year following media reports that the casino giant was enabling suspected money laundering and organised crime activities through its VIP operations.

Heap, appearing before the review by the Independent Liquor and Gaming Authority (ILGA) of NSW to determine the company’s suitability to hold a casino licence, was questioned about the board’s response to the allegations.

In particular, the review inquired about an ASX statement issued on 10 October 2021 after revelations were published by The AgeSydney Morning Herald and 60 Minutes quoting sources from within the casino group and law enforcement claiming that The Star’s junket business ‘cultivated high-roller gamblers’ who were allegedly associated with ‘criminal or foreign-influence operations’.

Counsel assisting the inquiry Casper Conde asked Heap, chairman of The Star’s risk, compliance and regulatory performance committee, if the board took the allegations seriously, noting that the ASX statement said The Star considered ‘a number of assertions’ within the media reports were ‘misleading’.

“I think the point we were trying to achieve with this announcement was to make sure the market understood that we didn't accept all of the findings,” Heap told the ILGA inquiry, which is led by Adam Bell SC.

“We were simply seeking to make sure the market understood that we didn't agree wholly with what was in the media assertions, and to make clear that we would be working with the Bell inquiry in terms of addressing the matters.”

While Heap said the board did not seek to define the assertions that were accurate, he had earlier told the review that he had accepted that the allegations were ‘substantively accurate’.

“Are you concerned reading this now that by focusing on the matters you consider to be misleading, as opposed to the matters you consider to be substantively accurate, the ASX announcement of 11 October was itself misleading?” Conde asked Heap.

“I don't believe it was, Mr Conde,” he replied.

The media reports named a number of high rollers who were regulars at The Star’s casinos in Sydney, Brisbane and Gold Coast, including Australian-based identities as well as Chinese players, several of them with alleged organised crime links.

The ASX statement issued by The Star at the time said there were ‘constraints on publicly discussing specific individuals’ and that the company would take ‘appropriate steps to address all allegations with relevant state and federal regulators and authorities’.

Heap told the inquiry there was a ‘level of sensationalism’ in the media articles that ‘didn’t reflect the way we saw it’, and he noted there was a ‘series of inaccuracies’ in relation to the use of China Union Pay (CUP) debit and credit cards to fund gambling at The Star’s casinos.

The media investigation first uncovered CUP cards were being used at The Star by Chinese high rollers between 2014 and 2018 to withdraw hundreds of millions of dollars in funds from the company’s hotel properties in a way that disguised their gambling activity as hotel expenses. The inquiry has since discovered the cards were still in use until early 2020 and that their use for gambling contravened both their conditions of use and Chinese government regulations aimed at preventing capital outflows from mainland China.

Heap told the inquiry that by the time the news articles were published, he was aware of the practice of CUP card withdrawals being used for gambling following a report presented to the board a month earlier.

Former CEO Matt Bekier, who quit in March following damning revelations at the review, had previously told the ILGA inquiry that the board had been kept in the dark by senior management as to the extent of compliance problems surrounding the company's junket operations.

The review continues.

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