After more than half a year under review, the NSW Independent Liquor & Gaming Authority (ILGA) has determined that Star Entertainment Group is still not “suitable” to hold a license there. Further cementing changes in risk management and the internal business culture are needed.
The last day of hearings into the matter saw assistant counsel for the inquiry headed by Adam Bell, SC, complaining about a failure to completely admit wrongdoing and of the limited admissions coming too late in the process. More troubling to overseers was that Star didn’t seem to have a grasp of why healthy casino management went wrong or even quite, how.
The inquiry was told by Naomi Sharp, SC, “To date, very little has been said about why these problems have happened, and why the misconduct occurred. Very little has been said about why the culture was dysfunctional to the extent that it was and why the second line of defense under the risk management framework failed so fundamentally,” according to a report in The Age.
Sharp added, “We submit, there is still the need for a further period of reflection and investigation to understand how this could have gone so wrong.”
What Has Gone Wrong…
What “has gone wrong” is a host of problems including alleged fraud, organized criminal activity, and money laundering at The Star Sydney. The inquiry into mismanagement was triggered after reports by multiple news organizations including 60 Minutes, The Age, and The Sydney Morning Herald into the alleged criminal activity.
While the casino giant has replaced top management amid a board shake-up focused on greater responsibility, Sharp disagreed that replacing the CEO and Chairman was enough to bring the entity to a level of suitability to hold a license without further work.
In the aftermath of a scandal that hit Star as well as Crown Resorts recently, Sharp expressed concerns about the company’s directors possibly misleading the board, by omission, when it didn’t inform NAB about the use of China Union Pay (CUP) cards to skirt deposit limits by using deceptive billing practices.
It was alleged in March that Star had billed nearly a billion dollars of gambling deposits as hotel expenses to get around limits on the cards. Crown Resorts was recently fined a record $80m for a similar scheme.
Other Casinos Under Review
Bell’s report is expected to be complete by end of August this year. In it, we will see other issues addressed such as why The Star continued to do business with junket operator SunCity after a 2018 internal report indicated there was an unacceptable risk that the arrangement was facilitating money laundering.
A criminal breach of New South Wales’ Unlawful Gambling Act may have occurred in the situation when The Star allowed SunCity to run their own cashier cage inside the casino. Some reports earlier indicated regulators had seen CCTV footage of people transferring paper bags full of cash.
Suncity Group was the largest junket operator in Macau until former head, Alvin Chau was arrested last November. In late May Chau was formally charged by Chinese authorities with organizing illegal gambling, money laundering, and “founding and heading a secret association”.
The Star’s other casinos in Queensland are also under review. The state plans to make gambling laws tougher there prior to allowing Brisbane’s only casino to relocate from the Treasury building to the Queen’s Wharf next year. The $3.6 billion development will be located on one or two upper floors and offer a place for working-class gamblers to find entertainment.
Source: ‘Not running a flower shop’: Star still not suitable to run a casino, inquiry told, The Age, June 27, 2022