Shares in The Star Entertainment Group lift after late-night response to media allegations

The casino group’s share price regained lost ground after losing 25 per cent in two days as it fought back against media allegations.

The Star has labelled many of the media allegations against it “misleading”. Picture: Supplied.

Shares in The Star Entertainment Group rebounded strongly on Wednesday after the casino operator rebuffed media allegations it sat on secret reports outlining flaws in its anti money laundering systems, despite Queensland announcing it would follow NSW in investigating the claims.

Star shares lifted 6.54 per cent to $3.42 on Wednesday after plunging 25 per cent over Monday and Tuesday due to the media reports, which raised investor fears that regulatory action could endanger the group’s casino licences.

The boost followed a late-night ASX release from Star on Tuesday, which labelled allegations it sat on reports from KPMG in 2018 that outlined weakness in its anti money laundering controls while encouraging high-risk gamblers to play at their Queensland and Sydney casinos “incorrect”.

Star contended that it implemented the recommendations of the KPMG reports, which formed part of a regular review of its anti money laundering and counter terrorism financing (AML/CTF) regime.

“The Star initiated a program to address all recommendations from the review. That program of work was conducted from mid-2018 to early 2020,” the company said.

“The relevant reports relate to the regular independent review of The Star’s AML/CTF Program conducted in accordance with the AML/CTF Act and Rules,” The Star said.

“The reports, findings and outcomes from the review were considered by The Star (including the board) and acted on.”

The rebuttal came as Queensland’s Attorney-General Shannon Fentiman announced the allegations would be investigated in separate but collaborating probes by state’s gaming regulator and the Queensland police alongside financial crime regulator Austrac, which is already investigating The Star.

“Speaker, I can advise the house the Office of Liquor and Gaming Regulation is currently undertaking appropriate investigations, along with the Queensland Police and Austrac – who is the regulator responsible for assessing casino operators’ compliance with Commonwealth Anti-Money Laundering legislative obligations,” Ms Fentiman told Queensland’s parliament on Wednesday.

“These investigations will consider the appropriateness and effectiveness of Star’s due diligence processes and how the Star approaches exclusions to ensure people are excluded from all properties where appropriate.”

The NSW Independent Liquor and Gaming Authority has also announced the allegations will be investigated as part of a regular review of The Star’s Sydney casino licence headed by Adam Bell SC, the former lead counsel assisting the NSW Bergin Inquiry.

The Bergin Inquiry temporarily revoked rival Crown Resorts’ NSW casino licence earlier this year over money laundering failures that were unearthed through public hearings.

The NSW government has not ruled out public hearings for Mr Bell’s probe into The Star, which is to be finalised at the end of next March.

The Star has pledged to fully co-operate with Mr Bell’s review and said it would provide Mr Bell with details of how it made changes to its anti money laundering systems following the KPMG reports, which have also been shared with Austrac.

Jefferies analyst Simon Thackray said confirmation that the recommendations of the KPMG report were acted on and shared with Austrac should provide investors with comfort that there is unlikely to be forced management changes at the company.

“The Star’s ASX release yesterday evening addresses the incorrect media assertion and accordingly should mitigate this perceived investment risk,” he wrote in a client note on Wednesday.

He added that there was a chance a number of regulatory agencies were already aware of a number of the allegations raised in the media reports.

“Based on The Star’s public disclosures (including last night) that suggest a sense of co-operation and transparency in working with regulators and enforcement agencies, we actually wonder whether there was anything actually new in the allegations that was not already known to these agencies,” he said.

Originally published as Shares in The Star Entertainment Group lift after late-night response to media allegations