Star director’s ‘heart sank’ amid battle with regulator

Star Entertainment non-executive director Peter Hodgson says his ‘heart sank’ when he realised the troubled casino group was antagonising the regulator that wanted it to accelerate reforms.

The inquiry heard Star board members did not want Mr Cooke to send an “exit statement” to staff that appeared to blame the NICC commissioner. Picture: Brendon Thorne/Bloomberg

Star Entertainment non-executive director Peter Hodgson says his “heart sank” when he realised the troubled casino group was antagonising the regulator that wanted it to accelerate safe gambling practices and other reforms.

Mr Hodgson told the Bell II inquiry that its response to the NSW Independent Casino Commission’s (NICC) reports earlier this year calling for accelerated changes had worsened relations, with one letter to the regulator including “bolded and underlined sentences” in what could be considered a unconciliatory tone.

Mr Hodgson said former chief executive Robbie Cooke’s delays in appointing key management personnel as well as his deteriorating relations with NICC meant he ultimately had to go.

He added board members did not want Mr Cooke to send an “exit statement” to staff that appeared to blame the NICC commissioner for his problems.

He said he was not aware of a clause in a “separation deed” that gave Mr Cooke a contractual right to issue the statement.

Under questioning from counsel assisting the inquiry Caspar Conde, Mr Hodgson agreed the statement encouraged a feeling among staff that the NICC was against the company, did not like gambling and the regulator-appointed manager Nicholas Weeks was too demanding.

Mr Hodgson says he agreed with new chair Anne Ward, who told the inquiry on Monday that the departure of her predecessor David Foster was linked to deteriorating relations with the NICC and private messages between him and Mr Cooke that were critical of the regulator.

He said the messages differed from public statements made by Star and reflected the wrong leadership. The inquiry heard Mr Foster authorised Mr Cooke’s controversial exit statement.

Former Star CEO Robbie Cooke’s exit came after deteriorating relations with the NICC.

Among the more serious allegations heard over the past 2 ½ weeek of the inquiry, headed by Adam Bell SC, was that Mr Cooke, along with Mr Foster, spied on the diary entries of Mr Weeks as they prepared for “war” with the NICC, withheld reports and correspondence from his senior colleagues and went back on mutually agreed decisions with his leadership team.

The inquiry also heard that on his watch a $3.32m fraud was committed against Star involving malfunctioning cash machines that led to the chief financial officer being pressured to cook the books to make the losses more attractive on its financial reports. Mr Cooke fronted the inquiry last week to deny the claims.

Mr Bell’s first inquiry in 2022 resulted in the installation of Mr Weeks to run Star’s casinos in both Sydney and Queensland, after he found breaches of money laundering rules and other misconduct.

Mr Hodgson said he stood by the board decision not to sack Mr Cooke in December when NICC told Star it had lost confidence in him but “we could have asked him to leave earlier than we ultimately did”.

He said Mr Cooke at the time was in the middle of settling a costly litigation battle with Multiplex over construction delays for the Queen’s Wharf project in Brisbane. Mr Cooke ultimately left the company in March.

The inquiry also heard a whistleblower complaint against Mr Cooke was still ongoing, with non-executive director Toni Thornton telling the inquiry it was a factor in the board’s decision to let Mr Cooke go in March. Details of the complaint have not been released publicly.

Ms Thornton agreed Mr Foster went beyond his authority in allowing the exit statement to be released by Mr Cooke as it risked worsening relations with the regulator.

Mr Hodgson said the company would need further supervision and monitoring once Mr Weeks’ term ended in September and in its current state would not be able to retain its Sydney licence.

He said it took too long to detect the fraud against the company involving malfunctioning cash machines, and that while “things happen” in any large organisation, it was what you did when they occurred that was important.

Mr Hodgson revealed that an investigation into the falsification of welfare checks on gamblers was ongoing and now involved Star’s Queensland casinos.

Former Star executive chair David Foster appearing at the inquiry last week.

Ten employees have been dismissed in relation to the falsifications.

“We are receiving daily summaries,” Mr Hodgson said, adding closer supervision may have prevented such incidents.

Ms Thornton told the inquiry the fraud reflected culture issues at the Sydney casino, but was confident such criminal behaviour would be detected earlier now given the company’s remediation efforts.

She said given tighter controls on gambling, Star’s previous gaming revenue base does not exist anymore meaning its hotels, restaurants and retail will become more important.