The Star’s casino licence hangs in the balance after final submissions in gruelling review

The Star’s casino licence hangs in the balance after final submissions in gruelling review

The fate of The Star’s casino licence now hangs in the balance as closing submissions at the NSW Independent Liquor and Gaming Authority (ILGA) review detailed a litany of issues that are alleged to show The Star is unsuitable to hold a licence.

Counsel assisting the review, Naomi Sharp SC, highlighted ongoing ‘systems failures’ and ‘very significant cultural problems’ within the senior the ranks of the company with evidence showing they had caused the company to breach the Casino Control Act.

“Even if you do not find that the Casino Control Act has been breached, you would find that The Star and Star Entertainment courted the risk,” said Sharp.

“They took the chance in the hope of not being caught.”

Sharp also called out potential breaches of ASX continuous disclosure obligations by The Star where evidence showed former chairman John O’Neill gave a ‘selective briefing of certain investors’ after media allegations surfaced that senior management kept secret a report by KPMG detailing inadequacies of the company’s anti-money laundering systems. The briefing, she said, led to a lift in the company’s share price.

While board members gave evidence that they were unaware of the extent of oversight failures occurring within its VIP operations, Sharp singled out former CEO Matt Bekier for criticism as the only board member not to accept responsibility for ‘cultural failings’ among senior managers that exposed the group to serious risk.

Sharp said that all other directors accepted there were ‘significant cultural failings within Star Entertainment and that the board must accept responsibility for these failings’, but Bekier attributed this to a ‘subculture’ within the company’s VIP division.

The final submissions have come after 11 weeks of evidence that have at times tested the patience of Adam Bell, SC, who heads the inquiry, and Sharp who undertook most of the questioning of senior Star management and board members, as well as external stakeholders including VIP gamblers, KPMG partners and NAB (ASX: NAB) employees.

The fallout has so far led to the resignations of 15 senior executives and board members of The Star, including Bekier and O’Neill.

Sharp said the reflections of outgoing board member Sally Pitkin were the ‘most profound’ in terms of summing up the problems at The Star. In summary, Sharp said this was driven by an ‘indifference by some senior leaders to legal and ethical standards from people who you would normally describe as being of good character’, in addition to the competitive threat from Crown Resorts (ASX: CWN) entering the Sydney market at Barangaroo. Sharp also noted that Pitkin found the ‘surveillance people weren’t doing their jobs’.

“And she particularly criticised (former The Star Sydney boss Greg) Hawkins and, with respect, that criticism was well placed,” said Sharp.

The review heard repeated testimony that The Star’s VIP operations were fraught with risk as Macau-based junket operator Suncity Group operated a ‘casino within a casino’ in a dedicated gaming room where some $900 million, the source of which could not be verified, passed through an unauthorised cash cage between 2013 and 2020.

A key area of interest for the review was the extent of a systemic cover up by senior management for allowing gamblers to use China Union Pay credit and debit cards to transfer tens of millions of dollars in some instances to gaming tables in contravention of the terms of use of the cards, including the creation of ‘sham’ invoices that purported to use those funds for hotel services.

“There are also concerns about the character of The Star and The Star Entertainment because of its dealings in CUP with its preparedness to create sham documentation; its preparedness to make misleading statements in writing to NAB knowing that Union Pay would rely upon those statements; and because there is a serious question about whether a criminal offense has been committed and that is an offence under Section 192 E of the Crimes Act in NSW about obtaining a financial advantage by deception,” said Sharp.

“The reason why The Star and The Star Entertainment are unsuitable is because of their preparedness to deal with business associates bringing large amounts of turnover into the casino where they could not have been satisfied that those persons were of good repute.”

Bell adjourned the review until 14 June 2022 for further submissions with leave to appeal.

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