By Colin Kruger
Star casino executives had extensive evidence that notorious junket operator Suncity was potentially breaching the casino operator’s licence conditions but signed a fresh agreement with the Chinese group regardless, a Federal Court heard on Tuesday.
Star’s lead investigator Andrew McGregor was the author of the report Operation Money Bags in 2018, which detailed troubling information that came to light during an investigation in April and May that year about Suncity’s Salon 95 – the Chinese group’s private office, which dealt directly with high-rollers but was meant to have a very limited role in handling cash at the casino.
Star faces a fine in the hundreds of millions of dollars for contraventions of Australia’s money-laundering laws.Credit: Joe Ruckli
Dr Ruth Higgins, SC, who is acting for the Australian Securities and Investments Commission, told the court of the report’s allegations of illegal activity within the walls of Star’s Sydney casino.
“It appears, from Mr McGregor’s account of relevant CCTV footage, that large amounts of cash were deposited at Salon 95 in a red-coloured suitcase, dropped off at Salon 95 in a black and blue sports bag with a black backpack, deposited at Salon 95 in white and yellow plastic bags, delivered to the service desk in a blue esky bag, and provided to patrons at Salon 95’s service desk in brown paper bags,” Higgins told the court.
She said the purpose of McGregor’s report was apparently to help Star’s lawyers prepare advice for the casino operator’s management about the legal and regulatory obligations implications from his investigation, and “to prepare for any anticipated legal proceedings”.
CCTV footage showing Suncity junket staff dealing with large amounts of cash in a private gaming salon at The Star.
When these issues did come to light – following reports in The Age and The Sydney Morning Herald – Star lost its licence to run casinos in NSW and Queensland. It faces a fine in the hundreds of millions of dollars for contraventions of Australia’s money-laundering laws.
Higgins told the court that Star executive Greg Hawkins twice warned Suncity that the casino operator would have to end their business partnership if these breaches continued.
Instead, Star signed a fresh agreement with Suncity later that year.
Hawkins and Paula Martin are facing court for alleged breach of their duties as executives. The corporate watchdog has also charged nine board members, including chief executive Matt Bekier, for breaching their duty to act with care and diligence.
While the Money Bags report did not make it to board level, another report from KPMG – which was just as illuminating of the compliance problems at the casino operator – did.
Bekier furiously rejected the consultancy’s report that found his company was failing to tackle money-laundering at its casinos.
ASIC’s lawyer Higgins noted the “vibrant red blocks” flagging the alarming deficiencies around Star’s processes and controls to protect against money-laundering and terrorism financing risks posed by working with junket operators.
The report stated that Star Entertainment Group obtains limited information on junket operators, the court was told. Source-of-wealth due diligence on junket participants was also limited.
“A reasonable director, upon being presented with the executive summary and summary of findings of the KPMG report, would have appreciated that it highlighted … pervasive deficiencies in the due diligence process undertaken by Star in relation to junkets,” she said.
It was the only year KPMG provided a report to the Star. The casino operator wrote its own report the following year.
Star had also erroneously claimed legal privilege over the 2018 KPMG report to hide it from the financial crimes watchdog, AUSTRAC, according to a 2022 hearing into its fitness to retain its casino licence.
The hearing continues.
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