Probe Finds Star Entertainment Unfit For NSW Casino Licence

September 13, 2022
The Star Entertainment Group is unfit to hold a casino licence in New South Wales (NSW) state, according to an independent regulatory review, but the state gambling regulator is yet to decide the company’s fate.


The Star Entertainment Group is unfit to hold a casino licence in New South Wales (NSW) state, according to an independent regulatory review, but the state gambling regulator is yet to decide the company’s fate.

The NSW Independent Casino Commission (NICC) released the withering report on the Bell Inquiry into Star Entertainment’s conduct today (September 13), containing a long list of alleged breaches of casino control legislation, managerial misconduct, board negligence and incompetence.

NICC chair Philip Crawford and his fellow commissioners are developing a response to inquiry head Adam Bell’s report and waiting for Star’s response to its findings.

But Crawford told reporters today that a new inquiry could be held into the suitability of new and surviving Star executives.

He added that police are probing several matters that have been temporarily omitted from the report as released.

“The police are investigating a range of issues to do with individuals, in terms of breaches of the Casino Control Act,” Crawford said.

The findings mark another stark, brutal report card for the NSW land-based casino segment, presided over by an aberrant corporate culture acting with near impunity for the best part of a decade and which, in the report’s words, “treated the [regulator] with disdain, as an impediment to be worked around”.

The report mirrors unsuitability findings for rival Crown Resorts handed down by high-level probes in New South Wales, Victoria and Western Australia states.

Unlike Crown’s probes, however, the Bell Inquiry’s terms of reference did not provide for a roadmap to securing compliance, and Crawford’s remarks today suggest that the road will be long and tightly scrutinised if Star is able to retain its licence.

Bell found that Star was likely to have breached the law on multiple occasions across a range of responsibilities, with perhaps the most spectacular being a China UnionPay cashcard scam ⁠— also used by Crown Resorts ⁠— that disguised some A$908m ($624m) of gambling funds as hotel expenses for more than 1,300 patrons.

This “inherently deceptive and unethical process” was “a means of circumventing Chinese capital flight laws”, Bell wrote.

Star hid these activities from the Independent Liquor & Gaming Authority (ILGA) ⁠— the regulator replaced this month by the NICC ⁠— and used bogus billing documentation in the process, he wrote.

The report also attacked former CEO Matt Bekier for signing off on a “temporary cheque cashing facility” that bridged the lag between fund deposits and UnionPay clearance of funds, thus allowing Star to avoid a perception of illegally providing credit to players.

Star Entertainment’s Australian bank, NAB, had raised concerns over the UnionPay transactions, but Star’s deflective responses to NAB were “false, misleading and unethical”, the report said.

Making matters worse, Star Entertainment’s board failed to act on any of these matters after being belatedly informed of them, it said.

The second major string of compliance breakdowns centred on Star’s hosting of an associate of the now-defunct Macau junket juggernaut Suncity, whose VIP room “Salon 95” operated a cage in violation of the law and despite Star’s awareness of illegal activity and warnings to the junket.

“This was a collective decision by the senior management of The Star, which reflected a culture in which business goals were given undue priority over regulatory and money laundering and terrorism financing risks”, it said.

Ultimately, Star’s relationship with Suncity terminated only after its boss Alvin Chau was arrested in Macau in December 2021, Bell wrote.

Other misconduct in the report includes Star's systematic deception of the Macau branch of the Bank of China, which was misled on the gambling nature of player deposits. The scheme started as early as 2013 but senior management only became aware of it in 2021.

Star later used Macau junket boss Kuan Koi to redirect player deposits and winnings through his own network after the Bank of China began to crack down on gaming transactions amid Beijing’s anti-corruption and anti-capital flight campaigns.

Star later used a front company, EEIS, to perform a similar function, as well as a modified version of its strategy with Kuan Koi.

Bell also excoriated Star for avoiding gaming tax in NSW by improperly changing the residency status of premium players, for shielding an unflattering review by KPMG of Star’s anti-money laundering programme from financial crime watchdog AUSTRAC, and for various auditing and responsible gambling failures.

His 30 recommendations to the NICC include acting against the company on breaches involving the Suncity cage at Salon 95, misleading submissions to the government and the regulator, staff departure non-notifications, tax avoidance. responsible gaming failures and auditing failures.

Bell recommended that gaming operations be subject to scrutiny by an independent expert, and that carded play be compulsory along with retention of key player game data.

Similar to other state recommendations for Crown, Bell recommended compulsory breaks for players amounting to a minimum 15 minutes per hour for electronic gaming machines and a maximum 12 hours of play per 24 hours.

Finally, he suggested the formation of a company Compliance Committee, with a majority of independent members, with the authority to report directly to the regulator if Star fails to act on the committee’s concerns.

A minor positive for the company is Bell’s finding that interim chairman Ben Heap and three of Star’s four non-executive directors were found to be suitable parties to manage or operate a casino.

However, short of action by police and as with Crown Resorts before them, the Star executives and board members who resigned over the course of this year’s inquiry are unlikely to be punished given the lack of interest of the Australian Securities & Investments Commission in prosecuting casino misconduct.

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