Star’s big-name board of directors ‘presided over a dysfunctional culture’, says Bell report

The culture the board thought it set bore ‘little or no relationship’ to the real world as its directors had no idea what was happening on the floor of its Sydney casino.

Star Entertainment’s board of directors, including some of the best-known names in corporate Australia, “did not have a clue what was going on in their own company” and had “little to no understanding of what people do … when no-one is watching”, a damning report says.

While the non-executive directors of Star, which on Tuesday was found to be unsuitable to hold a casino licence in NSW, “were all well qualified, well intentioned and highly experienced … the paradox is that people of this calibre presided over a dysfunctional culture,” a report into the company authored by Adam Bell, SC, has found.

The scathing report found that widespread misconduct occurred at Star in the past decade, and took particular aim at the culture inside the casino group and the disconnect between the board, led by former chairman John O’Neill and the executive ranks, headed by ex-chief executive Matt Bekier.

“The culture which the board of Star Entertainment thought it had set bore little or no relationship to the real culture which was seen in the evidence presented in this review, the way things operated at Star Entertainment when no one was watching,” the Bell report says.

The 946-page report was authored by Mr Bell for the NSW Liquor and Gaming Authority’s inquiry into Star and released by NICC chief commissioner Philip Crawford in Sydney on Tuesday morning.

NSW Independent Casino Commission chief commissioner Philip Crawford on Tuesday. Picture: Nikki Short

Mr Crawford hit out at Star’s board and said “institutional arrogance” still existed within the company.

He said Star’s board mostly “had no clue” what was going on inside the operator of Sydney’s casino at Pyrmont and, as such “weren’t really doing their job”.

He said Star was “a company in deep distress”.

Mr O’Neill, a successful sports executive who ran rugby union and soccer’s governing bodies, stepped down from the Star board in May after a decade at its helm, while Sally Pitkin, who is also the chair of Super Retail Group, left in June.

Another Star director, ex-Business Council of Australia chief executive Katie Lahey, has said she will resign as soon as new directors become available.

Gerard Bradley, who is chairman of Queensland Treasury Corporation, and ex-Macquarie Group executive Richard Sheppard, have also said they will leave the Star board in the near future.

The Bell report says “the Board renewal process currently under way is to be welcomed” but notes that “with the benefit of hindsight, some of the directors expressed regret that they had not asked more questions” of management.

It followed four months of hearings earlier this year, which detailed allegations of Star hiding a “cash (payment) cage” run by junket operator Suncity in a secret VIP gambling room called Salon 95.

There were also allegations and details of Star misleading banks, breaching anti money laundering measures, evading taxes and processing $900m of banned gambling transactions through China UnionPay.

Star Entertainment chairman John O'Neill stepped down from the board in May.

The Bell report details that Star’s board “was hampered by senior management which prevented it from receiving information it needed to carry out its functions” and was “in many cases … kept in the dark”.

“However, the board must also bear some responsibility, because it was required to have systems and processes in place to ensure that it received the information it needed,” the report says.

In evidence to the inquiry earlier this year, Mr O’Neill admitted that “maybe as a board, we should have just walked out of the boardroom and gone down to Salon 95 and had a look”.

The Bell report also says Star board’s “lack of insight” was demonstrated in events relating to statements it released to the ASX in October 2021, including rejecting media articles that a report prepared by KPMG that had found “significant shortcomings” in Star’s anti money laundering and counter-terrorism financing program had been kept secret.

“In fact, the media allegations to which those releases responded were substantially true,” the Bell report says.

“The confidence with which the board responded to the media allegations … contrasts markedly – and negatively – with the board’s lack of awareness of the underlying merit of the allegations and delayed response to requiring investigation of many of them.”

Originally published as Star’s big-name board of directors ‘presided over a dysfunctional culture’, says Bell report