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Australia’s gambling industry has suffered a new, heavy blow with media reports that The Star Entertainment Group’s casinos allegedly enabled years of money laundering, fraud, organised crime activity and political foreign interference.
Coordinated reports by Channel Nine television and Nine Newspapers said Star Entertainment CEO Matt Bekier and chairman John O’Neill were warned in two commissioned KPMG reports in May 2018 of numerous compliance and structural failings, but that alleged company misconduct continued.
Citing enforcement and regulatory sources, the Nine reports said federal transactions regulator AUSTRAC is also “building a strong case against Star” and that the company faces “significant penalties” in 2022.
With Victoria state’s Royal Commission into Crown Resorts due to deliver its findings on Crown misconduct this Friday, the latest media reports on Star all but ensure that a long stretch of infamy for the industry will continue unbroken for years.
Star Entertainment shares plunged 22.7 percent on Monday after Channel Nine television programme "60 Minutes" on Sunday accused Star casinos of being “dirty” and a “magnet” for crime. Follow-up reports appeared in Channel Nine newspapers The Age and The Sydney Morning Herald on Monday.
The reports allege that Star Entertainment cultivated VIP gamblers who would breach compliance requirements, including alleged major cocaine importer Mende Trajkoski, who amassed rolling volume of A$175m ($128m) at Sydney’s Star casino; Canberra restaurant owner and alleged drug trafficker James Mussillon; Beijing-linked foreign interference agent Huang Xiangmo, who is banned from returning to Australia; major tax avoiders, conmen and associates of known criminal bosses; AUSTRAC-flagged brothel owner Simon Pan; and alleged organised crime identity Tom Zhou, also an alleged influencer on behalf of Beijing.
The company disregarded criminal histories of some customers and allowed customers banned in NSW and Victoria to gamble at its Gold Coast casino in Queensland state, according to the reports.
Star also chose to continue working with leading Macau junket Suncity despite its boss Alvin Chau being declared persona non grata by Australian immigration over his alleged ties to triads, they said.
Many of Star Entertainment’s alleged compliance breaches overlap with Crown Resorts failings that have jeopardised the latter’s licence suitability in at least three states, including allowing Chinese VIPs to disguise gaming transactions as hotel transactions to avoid scrutiny.
The Nine reports cited the previously unannounced KPMG-commissioned research as saying that Star failed to engage counter-terrorism financing obligations when combating risk, as well as understating money laundering risk associated with several gamblers.
Star Entertainment’s internal anti-money laundering unit was under-resourced, and it lacked a documented money laundering risk assessment methodology for junkets bringing Chinese customers, they said.
Philip Crawford, chairman of the NSW Independent Liquor & Gaming Authority (ILGA), told Channel Nine that he was unaware of the KPMG reports and their contents, but added that Star Entertainment should have informed the regulator of such matters.
The ILGA last month announced a scheduled, closed-door review for The Star casino in Sydney, helmed by Adam Bell, a former counsel assisting the Bergin Inquiry. Bell's report is due this March 31.
In a statement on Monday, Star Entertainment said it "is concerned by a number of assertions within the media reports that it considers misleading".
"There are constraints on publicly discussing specific individuals. We will take the appropriate steps to address all allegations with relevant state and federal regulators and authorities," including Adam Bell, it said.
The Nine reports are produced by Nick McKenzie and other investigative personnel responsible for the extensive “Crown Unmasked” reports in 2019.
The Crown Unmasked series was instrumental in triggering the ILGA-commissioned Bergin Inquiry in New South Wales (NSW) state, as well as ongoing federal criminal and financial probes and ongoing Royal Commission investigations in the states of Victoria and Western Australia.
The cumulative impact of the government and judicial investigations has all but purged Crown of its long-standing board line-up, punctured its market capitalisation, triggered wide-ranging reform programmes and severed control of leading shareholder James Packer over the company.
The investigations have also shocked the governments themselves, with Victoria forced to concede that its merging of gaming and liquor regulation was a mistake and to announce a standalone regulator.
Regulators in NSW and Western Australia have also been embarrassed or criticised over structural problems and, in the case of Western Australia, improper relations between individual regulatory officials and Crown executives.