By Colin Kruger
The corporate watchdog has accused 10 former Star Entertainment board members and executives of being blind to the red flags that pointed to money laundering and illicit activities at its casino.
The allegations were put forward by ASIC’s lawyers in their opening statement to the court on Monday at the start of a landmark six-week trial between the corporate regulator and former Star executives, including former chief executive Matt Bekier and former chairman John O’Neill, and directors.
ASIC launched civil proceedings in the Federal Court in December 2022, accusing the former Star board members and executives of breaching their duty to act with care and diligence.
“The defendants collectively conducted themselves in (such) an incurious and complacent manner that sharp practices became entrenched in the group’s culture,” Dr Ruth Higgins, SC, who is acting for ASIC, told the court.
Star is in talks to potentially sell its new Brisbane casino to its Chinese partners. Credit: Joe Ruckli
Higgins told the court of staff handling bags of $50 notes tied together with elastic bands being delivered in a blue Esky bag, and operators blocking the view of CCTV cameras with a blanket.
She also alleged the defendants cultivated and maintained business relationships with overseas junket operators “despite having substantial evidence that those junkets were engaged in illicit activities which may involve money laundering and links to organised crime.”
While Star executives failed to provide the board with all the troubling information about Sun City and other junkets, ASIC told the court that each of Star’s directors also failed to take reasonable steps to oversee its executive team.
“The board cannot avoid responsibility for Star’s failure to manage those risks,” Higgins said.
According to Higgins, there were enough red flags at board level to indicate that directors needed to investigate further. This included requests to approve an increase in cheque cashing facilities for a junket operator from $50 million to $80 million with no supporting information, and at short notice.
“You needed to know more about probity, to say ‘approved’ because there’s a $30 million increase, and an $80 million exposure for a company with a junket operator … alleged to be engaged in (illegal) activities overseas,” Higgins said.
The court heard that in November 2017, Star’s directors were asked to approve a cash chequing facility for Qin Sixin on behalf of the Minmin Shen junket.
“No probity information of any kind is included in the materials provided to the board. The information concerns only credit and property checks, ie the credit risk exposure to the company,” Higgins said.
This was on top of a KPMG report the board saw, which said Star’s anti-money laundering “protections are woefully deficient in respect of junkets”.
The former Star executives who face fines and corporate bans if found guilty by the court include former Business Council of Australia boss Katie Lahey, investment banker Ben Heap and former Macquarie Bank chief Richard Sheppard.
Last week, former Star finance boss Harry Theodore broke ranks with his former colleagues and settled with ASIC on charges that he knowingly misled NAB about its ATMs being used to funnel more than $900 million into Star’s Sydney casino.
Bekier is facing court on these and other charges.
The casino operator has been crushed by two inquiries that found it unfit to retain its casino licence.
Star shares got a boost on Monday after the company confirmed it is in talks with its Chinese partners to sell its Queen’s Wharf casino precinct in Brisbane, provided it gets the best price.
A deal could help Star avoid financial collapse.
The casino operator said it had rejected several confidential, indicative and non-binding proposals from its partners Chow Tai Fook Enterprises Limited and Far East Consortium International Limited, which are seeking to acquire Star Entertainment’s 50 per cent stake in Queen’s Wharf.
The group has been battered by hundreds of millions of dollars in fines. Rising regulatory expenses and a consumer downturn mean Star is now operating at a financial loss.
It is reliant on its lenders, and potential help from the NSW and Queensland governments for its continued survival. If current management cannot reach a long-term agreement with these parties or agree to a significant asset sale, Star might be forced into administration.
The trial is due to conclude next month.
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