Process comes last in The Star’s explosive battle with the NSW casino cop

The secret Star report and its full rebuttal offer an extraordinary glimpse of the behind-closed-doors interactions between the regulator and the regulated.

In a confidential report The Star hit back over suggestions it was going slow over the pace of change. Picture: Glenn Campbell

To get to the heart of why the relationship between the pressured Star Entertainment and NSW’s powerful casino regulator broke down so quickly, you need to go to the source.

The problem is that document – the first assessment of the reform efforts by The Star a year into its turnaround program – has been kept confidential since it was prepared last October.

Until now.

There’s a good reason the powerful players including the NSW independent Casino Commission don’t want it released. The document, authored by the regulator’s independent manager, Nick Weeks, and seen by The Australian, offers just a partial, subjective and wholly blinkered view of how Star was going in its reform efforts at the time.

Star’s special manager Nick Weeks. Picture: AAP Image

The Weeks report and its full rebuttal, seen by The Australian, offer an extraordinary glimpse of the behind-closed-doors interactions between the regulator and the regulated.

The simmering dispute between Star and its regulator late last year is likely to come as a shock to many in the NSW government.

Indeed, Premier Chris Minns needs to understand whether one of his most powerful regulatory agencies is all it is cracked up to be.

To be clear, NSW needs a strong, independent casino regulator. But that strength needs to come with integrity as well as checks on that power. Those that are regulated also need an avenue to be heard fairly when things go wrong.

There’s a lot more than reputations at risk when the process breaks down.

Through the actions of the NSW regulator since October, Star is now years behind in its rebuilding efforts. Its licence remains in doubt, which means thousands of employees face an uncertain future, and it is struggling financially.

As The Australian revealed, the weakened Star has received multiple buyout approaches. Many of these proposals would see the casino broken up and moved into offshore hands. That is bad for NSW.

Through his report Weeks, the former NRL integrity manager who had previously been passed over for the CEO role at Star’s Sydney casino, was scathing of the reform efforts of Cooke, new chairman David Foster and an entirely new board.

Weeks, who was being paid generously for his role as special manager at Star’s operations in Sydney and two Brisbane properties, recommended he stay on to provide “continued oversight, scrutiny, guidance and reporting to regulators” in the two states.

For such an important document, there was no outside input into Weeks’ report and it lacked evidence for the more serious claims.

So, it was easy to see why the Weeks report got such strong pushback from Star.

This document, the casino feared, was the sole source of information that regulators in NSW and Queensland would use to decide whether Star could become suitable to hold a casino licence. For the multibillion-dollar ASX-listed company there was much on the line.

Star issued a full-throated defence of its position and cautioned the Weeks report was full of “factual errors”.

The Weeks report had arrived at conclusions “without the full information, and/or which lack a factual basis, and/or which are based on irrelative considerations”.

It also ignored dozens of clear attempts at reform. The Weeks report said the lack of a remediation plan was a “material risk”, but as Star pointed out, it failed to note the same plan was sitting waiting for approval by the NSW regulator.

‘Nuclear option’

These are all serious claims and worthy of scrutiny. Indeed, if the claims are true, then it brings into question the motivation for the NICC to order another taxpayer-backed inquiry into Star.

However, Star’s efforts backfired badly then chief executive Robbie Cooke as well as then chairman David Foster.

The NICC chairman Philip Crawford took the nuclear option. In a NICC letter to Foster dated February 1 Crawford declares he is cutting off all communication.

“You have made your position clear, and the NICC will give careful consideration to the matters you have raised in your correspondence. In those circumstances, we are of the view that further meetings with you are not required at this time.” Two weeks later Crawford announced his damaging reboot of an inquiry and set the terms of reference. Both Cooke and Foster were gone within quick succession.

It had since emerged in the Bell inquiry that Crawford’s NICC was privately telling Star’s board it had lost confidence in Cooke in December and was pressuring Star’s board to find a replacement.

Former Star Entertainment chief Robbie Cooke. Picture: David Clark

Much of Weeks’ criticisms draw on the failings of the company that existed in the pre-October 2022 era when the casino operator was rightly raked over the coals for turning a blind eye to the risks and criminal elements that came with courting junket operators.

Star had been under-resourced in risk management and lacked governance needed to run a sophisticated international casino operator, the Weeks report noted.

This was all true, Star said in its response, but that was then. What about the dozens and dozens of governance and structural changes since October 2022?

There were also the rapid recruitment of hundreds of new risk staff; new employee protections; and substantially increased funding. There was a massive uplift in governance. Senior executives were being appointed; some were held up by legal obligations at their previous employers. It laid out pages of more changes. All these points were ignored.

What has been worrying all through the sorry saga of Star and the explosive Weeks report and its aftermath shows, is whether the process has been up to scratch.

The multiple state-backed inquiries into casinos – first Crown, then two into Star – have put everyone under the microscope in painful detail.

But they have firmly avoided asking any questions about the regulator – including why it was asleep at the wheel for much of last decade when Star was going off the rails.

The answer to this is easier. The terms of reference across each of these inquiries were set by the regulator, and perhaps conveniently it failed to ask itself the hard questions.

Originally published as Process comes last in The Star’s explosive battle with the NSW casino cop