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Update (9 May): This story has since been updated to include new interim appointments.
Three senior executives of The Star Entertainment Group (ASX: SGR), who were singled out by former CEO Matt Bekier for governance shortcomings during a review into the group’s suitability to hold a casino licence, have resigned.
Chief financial officer Harry Theodore, chief NSW casino officer Greg Hawkins, and chief legal and risk officer and company secretary Paula Martin, have tendered their resignations which have been accepted by The Star.
The departures follow damning revelations at the review conducted by the Independent Liquor and Gaming Authority (ILGA) of NSW that revealed failures by key management at The Star which exposed the casino group to a higher risk of potential money laundering activity.
The ongoing fallout from the ILGA inquiry at The Star has now led to the loss of almost half of the company’s senior executive team and comes on the heels of Bekier’s resignation as CEO in March.
The roles of Theodore, Martin and Hawkins at The Star became untenable after Bekier, in evidence to the review last week, said he felt ‘let down’ by each of them after claiming they withheld from him the extent of compliance problems surrounding the company's high roller junket operations.
Theodore’s time at The Star was already on a countdown after the CFO confirmed during evidence late last month that he intended to resign pending the outcome of his appearance on the stand.
In giving evidence, Bekier last week described Theodore as his ‘closest colleague’ who ‘showed a moment of really bad judgement’. He was specifically referring to Theodore allowing a misleading communication with National Australia Bank (ASX: NAB) that covered up the use of China Union Pay (CUP) credit cards to fund gambling activities over many years at The Star’s casinos. CUP banned withdrawals from its cards to be used for gambling to support the clampdown by Chinese authorities to prevent capital outflows from the country.
The CUP cards were a key focus for the review because of the huge sums of money involved - estimated at $900 million over seven years to early 2020 - and the risk that the unknown source of those funds posed to money laundering activities taking place at The Star’s casinos.
In questioning Martin, counsel assisting the ILGA inquiry, Naomi Sharp, SC, accused her of behaving ‘completely unethically’ in sanctioning the response to the NAB, acting on behalf of CUP, that assured the issuer its credit cards were not being used to finance gambling activities. While Martin disagreed it was unethical, she conceded it was a ‘very poor email on my part’.
Bekier was also critical of Hawkins’ oversight of a special high-rollers’ suite, Salon 95, established at The Star Sydney for Macau-based junket operator Suncity Group. Evidence to the inquiry revealed an ongoing culture of high-risk activities at Salon 95, where it was said that Suncity was operating its own casino within a casino.
Bekier told the review he felt let down by Hawkins because he had represented to the board and to investors that ‘the things we learned about Crown could never happen at Star on the back of (Hawkins’) assurances’ that the risks posed by Salon 95 were identified. He said if the board knew of any of the suspect activities revealed by the review, ‘they would have supported me in shutting down that (junket) business a long time ago’.
The Star says an executive search is under way to replace Theodore, Hawkins and Martin. All three will work with executive chairman John O'Neill, who has taken on Bekier’s responsibilities, to transition their executive responsibilities ‘in an orderly manner’.
The search for a replacement for Bekier is also continuing after The Star reiterated this week the ‘need for accelerated board change’ in the wake of the evidence presented to the ILGA review.
Update: Interim appointments announced, rebate programs suspended
The Star has since announced two interim appointments to replace two out of the three resigned executives, with Christina Katsibouba stepping into the CFO role and Geoff Hogg named as the chief casino officer for New South Wales.
Hogg is already SGR's chief casino officer for Queensland, while Katsibouba is the current chief gaming officer at The Star. The casino notes other interim appointments will be announced once finalised following a search for permanent replacements.
"They will work with the executive chairman to transition their respective executive responsibilities in an orderly manner and an executive search firm will commence the search for permanent appointments," says The Star.
The casino operator also announced today it will immediately suspend rebate programs for both domestic and international players across all its casinos until further notice - a move it says is not expected to have any material impact on earnings for FY22.
"The Star will work with gaming regulators to address various identified risks as part of ongoing reviews of systems and processes," says SGR.
"The Star has also engaged external advisors and continues a significant program of work to further improve those systems and processes while cooperating fully with the Review."
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