‘Renewal has got to go higher’: Pressure mounts on Star board after CEO steps down

Corporate governance experts are predicting further casualties from The Star Entertainment’s senior ranks and board after chief executive Matt Bekier resigned on Monday following damaging revelations about the group’s failure to stop money laundering and organised crime risks in its casinos.

Mr Bekier stood down on Monday, one week after a public inquiry by the NSW gambling regulator was told he furiously rejected a report by KPMG that found the company was failing to tackle money laundering risks in its casinos. Star later erroneously claimed legal privilege over the 2018 KPMG report to hide it from the financial crimes watchdog, the inquiry was told.

Matt Bekier has stepped down from Star Entertainment Group.Credit: James Alcock

The NSW Independent Liquor & Gaming Authority is examining whether Star is fit to hold its casino licence following allegations by The Sydney Morning Herald, The Age and 60 Minutes last year of money laundering, criminal infiltration and wide-scale fraud at the company’s flagship Pyrmont casino.

Swinburne Law School lecturer in corporate law and corporate governance, Helen Bird, said Mr Bekier was the most appropriate person to resign from the company but predicted more departures, pointing to the company’s chairman John O’Neill as one key figure now under pressure.

“I think there are question marks about the board. I think renewal has got to go higher, definitely the chair,” she said of Mr O’Neill, the former boss of rugby union in Australia who has served as chairman of Star since 2012. Mr O’Neill and Mr Bekier have not given evidence at the inquiry.

Elizabeth Sheedy, a former banker and risk governance expert at Macquarie University in Sydney, said any directors who were on the board in 2018 when the KPMG report was produced would now face pressure from regulators and investors.

“I think anyone who was on the board risk committee or board audit committee at the time the KPMG report was produced needs to show cause as to why they should keep their position,” she said. “I would imagine institutional investors are working behind the scenes and asking those questions.”

The Star was contacted for comment but did not respond by deadline. Aside from the KPMG report, the inquiry has not heard specifically which board members may have been aware of money laundering risks at what time.

Rival operator Crown suffered an almost complete purge of its board and management over the past two years after inquiries in NSW and Victoria both ruled it was unfit to hold a casino licence. “I think we’re seeing all the same behaviours,” Ms Bird said of the damning evidence that has emerged so far at the Star inquiry.

Ms Bird said there were also serious questions about the future of Star’s chief financial officer and general counsel in relation to evidence the casino operator disguised $900 million worth of Chinese debit card gambling transactions as hotel expenses and then lied to banks in an attempt to conceal it. Neither the CFO nor the general counsel have given evidence to the inquiry.

Both Mr Bekier and Mr O’Neill have played significant roles shaping Star. Mr Bekier has been with the company since it was spun-off by gambling group Tabcorp in 2011. He took over as CEO in 2014 and owns shares worth more than $4 million and options over shares with a face value of more than $9 million.

Mr O’Neill’s role stretches back even further to his appointment to the chair in 2012.

The public inquiry has heard damning revelations about conduct inside Star’s Sydney casino.

A billionaire property developer last week revealed how Star Sydney staff helped him use a Chinese bank card to transfer $11 million in gambling funds to the casino in a single day, which it disguised as hotel expenses.

The inquiry also heard that senior figures at the casino knew Chinese bank cards were not allowed to fund gambling, but accepted them anyway and did not disclose those facts to the NSW gambling regulator.

NSW Treasurer Matt Kean said the state government had been keeping a close eye on proceedings, and whether the state’s taxpayers had been shortchanged.

The Star said the resignation “follows issues raised in the public hearings in connection with the review” that found evidence of widespread avoidance of money laundering laws.

“While the review remains ongoing, Mr Bekier informed the board that as managing director and CEO he is accountable for the effectiveness and adequacy of the company’s processes, people and culture.”

The statement from the casino operator said Mr Bekier’s final departure date was yet to be determined.

What has the inquiry found so far?

• The Star disguised $900 million worth of Chinese debit card gambling transactions as hotel expenses and then lied to banks in an attempt to conceal the massive fraud
• It allowed Chinese high-rollers to use UnionPay debit card for gaming and developed two “workarounds” so it could accept the cards despite NSW law prohibiting it at the time from accepting debit or credit cards for casino chips
• Billionaire property developer Phillip Dong Fang Lee told the inquiry casino staff helped him use UnionPay card to transfer $11 million in gambling funds to the casino in a single day
• The casino let the notorious “junket” gambling tour operator Suncity run a private gaming salon at its Sydney casino despite a string of incidents that strongly indicated it was laundering dirty cash
• CCTV showed large amounts of cash was bundled up in suitcases, cooler bags and backpacks and brought into the exclusive “Salon 95″, where chips were being exchanged for cash from a service desk
• CEO Matt Bekier furiously rejected a KPMG audit that found Star was failing to tackle money laundering, before the group re-hired its authors in an attempt to water down their damning report

with Patrick Hatch

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.