Star money transfers raised red flags at China central bank

Chinese customers at Star Entertainment withdrew up to $20m using the China Union Pay network, raising a series of red flags for the country’s financial authorities.

Money transfers Star Sydney raised concerns in China. Picture: John Feder

Chinese gamblers at Star Entertainment withdrew up to $20m using the China Union Pay network, raising red flags for Chinese financial authorities.

Star Entertainment’s former chief legal counsel Paula Martin told the Federal Court on Thursday junket customers over a period of time withdrew hundreds of millions of dollars via the CUP network using National Australia Bank terminals at the company’s casinos.

But, Ms Martin denied Star misled NAB over what the funds were being used for, and that she had attempted to distance herself from the decision to continue using the CUP network.

Ms Martin is one of nine former executives and directors being prosecuted by ASIC for breaching their duties to Star in relation to anti-money laundering controls at its casinos.

ASIC counsel James Arnott asked Ms Martin whether she was aware in 2019 of growing concerns from CUP and the People’s Bank of China that large amounts of cash were being used for gambling using the network. China at the time was in the middle of an anti-corruption drive which included a crackdown on the transfer of funds to overseas casinos.

“The People’s Bank of China was not satisfied with Union Pay’s explanations received from the Star via NAB for previous irregular transaction investigation requests,” Mr Arnott said. “The PBOC had observed individual cardholders spending more than $20m at the Star, which they believe includes gambling, and were struggling to see how this level of expenditure could be made on non-gambling entertainment.”

Former Star Entertainment legal counsel Paula Martin leaving Federal Court in Sydney after giving evidence in the ASIC money laundering case. Picture: Jane Dempster

Ms Martin said her understanding was the majority of funds CUP customers accessed through a two-step process at Star were then used for gaming purposes.

In the first step, a customer would have the amount processed through a terminal at their hotel. Then those funds would be transferred to the customer’s account to use on the casino floor.

Ms Martin denied approving the sending of a misleading email to NAB about the funds which showed receipts for private jets, travel and French wine in an attempt to build a case that funds were being used for purposes other than gambling.

She conceded she had a discussion with Star chief financial officer Harry Theodore about what non-gaming expenses could legitimately be expensed, including the booking of a corporate jet.

“The discussion was whether the types of jet service invoices we looked at and tour invoices were eligible to be expensed under a rebate program that a customer was playing on at the Star,” Ms Martin told the court.

“So under rebate programs, certain expenses were eligible for the customer to use in either a complementary or partial payment fashion and not all expenses were eligible.” She denied saying the email response to NAB was “fine to go”.

She also denied a suggestion from Mr Arnott that it was necessary to raise the matter with the Star board so approaches could be made to the NAB and the NSW Independent Liquor and Gaming Authority to explain what had taken place.

Originally published as Star money transfers raised red flags at China central bank