"Shocking": The Star forced to plead case to save casino licence after blistering attack from NICC

In a blistering attack on the casino group, NICC chief commissioner Philip Crawford says The Star exposed its operations to key risks including money laundering, allowing criminals to gamble in their casinos, and the infiltration by organised crime while paying ‘scant regard to proper harm minimisation criteria’.

Crawford also revealed that there were signs The Star is slow in making the necessary changes despite mass resignations from the board and its senior management ranks.

The chief commissioner describes the report handed down by the inquiry conducted earlier this year by Adam Bell SC into the casino group’s operations as ‘quite frankly, shocking’.

“It provides evidence of an extensive compliance breakdown in key areas of The Star’s business,” he says.

“Not only were huge amounts of money disguised by the casino as hotel expenses, but vast sums of cash evaded anti-money laundering protocols in numerous situations, most alarmingly through Salon 95 – the secret room with a second cash cage.”

Crawford says the report has not only revealed the ‘very real risks of criminal infiltration and the concealment with which senior staff conducted business’, but it also details cases of patrons who were exposed to the harms of gambling.

“The Star offered free alcohol to VIPs as an inducement to gamble and allowed vulnerable patrons to gamble continuously for more than 24 hours at a time, without intervention. These personal accounts are jarring and illustrate how unrestrained gambling can go from entertainment to exploitation.”

Crawford says the NICC is assessing the nature of penalties it can impose on The Star as a result of the report, including revoking or suspending its casino licence or imposing a fine – or a combination of both.

“I can say that from the contents of the report, doing nothing is not an option,” he says.

In assessing what had gone wrong at The Star, Crawford concedes there was ‘no one individual who was masterminding the conduct and attitude of The Star casino in operating its casino licence’.

The problems, he says, are rooted in a lack of ‘fresh eyes’ due to the longevity of board members, including chairman John O’Neill who had been in the role for about 15 years.

“That having been said there's no doubt the board was kept in the dark and [sic] what senior management and senior executives were doing,” he says.

The Bell inquiry has since led to the resignation of most of The Star’s senior management team and the board, including O’Neill and former CEO Matt Bekier. Senior management who fell on their swords include former CFO Harry Theodore, former chief NSW casino officer Greg Hawkins and former chief legal and risk officer and company secretary Paula Martin.

Crawford says the issue at the heart of The Star’s shortcomings is a culture that focused on accommodating clients rather than determining whether their actions were ‘the right thing to do’.

“They tended to ignore the risks inherent in a lot of their conduct and then they tried to hide their conduct,” he says.

“Financial goals seem to have been the main driver of their conduct.”

Apart from exposing the group to money laundering activities and infiltration by criminal organisations, Crawford says The Star’s senior management took ‘deliberate actions to mislead and deceive their own bank, their own board of directors and the regulator’.

“What's been of concern to us is that this dubious conduct has been continuing even as long ago as when we set up the Bergin inquiry,” he says.

The Bergin inquiry in 2020 exposed serious compliance issues at Crown Resorts, which at the time was developing Sydney’s second casino, the $2 billion Barangaroo project. That inquiry found Crown unsuitable to hold a casino licence in NSW, leading to a delay in the opening of the Sydney property until August this year.

Crawford stunningly reveals that ‘dubious conduct’ at The Star was continuing after the NSW authorities instigated the Bell inquiry this year.

“In fact, the submissions made by a number of individuals from The Star at the commencement of The Star inquiry have by the end of the inquiry proved to be completely false and an attempt to mislead Mr Bell in the conduct of the inquiry,” he says.

Crawford is concerned that procedures still haven’t changed at The Star despite the weight of damning evidence exposed during the Bell Inquiry. He has referred to a similar inquiry into The Star’s operations recently conducted in Queensland, where interim CEO Geoff Hogg revealed a person banned from gambling at NSW and Queensland casinos for 15 years had been subsequently allowed to gamble at the company’s Queensland properties.    

“That's a sort of graphic example to me of the fact that the institutional arrogance of this company has been breathtaking and their willingness to take risks and pursuing financial goals has been appalling,” says Crawford.

He says the NSW regulators took 18 months to pull Crown into line following the Bergin inquiry, and he believes The Star could take just as long ‘if not longer’ to do so.

“It’s a very big job,” he says, adding that the company has yet to make a root cause analysis of the problems.

The NICC will look into the continuing roles of a number of people at The Star identified by the Bell inquiry and determine their fitness to continue their association with the casino group.

Meanwhile, the NICC says it is not making any decisions on disciplinary action against The Star until the company has made its submissions.

“I would urge them to show leadership - there's about 8,000 people who work for this company and all of them would be concerned about their jobs,” says Crawford.

“Most of them were not involved in any inappropriate behaviour. This is a time for the board of the company to show leadership, get some external advice, get some fresh eyes and come back to us as quickly as they can with submissions for us to consider.”

However, Crawford today revealed an undercurrent of suspicion that the culture within the organisation is slow to change.

“We still have inspectors, investigators down there very frequently and I'm afraid the cultural arrogance, the institutional arrogance hasn't changed much.”

The NSW Government tightened its oversight of the casino sector this year with the passing of the Casino Legislation Amendment Bill 2022 in August.

The bill addressed all 19 recommendations of the Bergin Inquiry. Among the key initiatives of the legislation was the establishment of the NSW Independent Casino Commission as the independent casino regulator.

The legislation also eliminated compensation triggers for casino operators from any regulatory action taken by the government or the regulator. It puts the heat on cash transactions with casinos prohibited from accepting more than $1,000 in cash per day from each customer to be used for betting in their properties.

Under new laws introduced on 5 September, the NICC can impose fines of up to $100 million on casino operators for failing to comply with their obligations. The fines may be imposed retrospectively for serious breaches committed before that date in NSW. 

Board members and executives also can be liable for penalties of up to $1 million each for serious wrongdoing, or incidents of wrongdoing that they knew about but failed to stop.