Elastic bands, Eskies and merino blankets: Star’s sins laid bare

At the swanky Star Sydney integrated casino resort, you might think that the merino cashmere blend blankets were only good for providing a little extra warmth in the deluxe bedroom suites, the elastic bands were for guests having a bad hair day, and the eskies were for the picnic hampers for a patrons’ day out on the harbour.

Who knew all these goodies were useful for so many other things?

Former Star Entertainment chief executive Matt Bekier (left) and former chairman John O’Neill.

The blankets had their use in shrouding CCTV cameras in an exclusive gambling salon housing clients of dubious junket operator Suncity, while the Eskies were used to hold (hot?) cash and those elastic bands were (you guessed it) used to neatly secure rolls of banknotes.

Watching the corporate regulator’s opening shots in its legal case against a trio of former Star Entertainment management and 10 of its previous board directors for allegedly breaching their duties was full of vicarious thrills on Monday.

This is a case, according to the lawyers representing the Australian Securities and Investments Commission (ASIC), in which the junket-related conduct was “particularly brazen”, and it all allegedly happened right under Star management’s noses.

ASIC’s case again the casino operator contends that certain executives at the company were colour-blind to the red flags that were vigorously flapping around at the time.

The regulator’s salvo on Monday was given additional oxygen last week when Star’s former head of finance, Harry Theodore, broke ranks with his former colleagues and settled his case with ASIC on charges that he knowingly misled NAB about its ATMs being used to fund gambling (rather than paying for rooms) at Star’s Sydney casino.

Putting aside what the former Star executives did or didn’t do, knew or didn’t know, it is the prosecution of the non-executives that breaks some new ground in laws around governance.

Their alleged incuriosity, their reliance on what they were told by management, and the extent to which directors have a responsibility to grab a shovel and do some independent digging into the operations and risks of the company they are paid to govern, will all come under scrutiny as the trial continues.

The notion that gambling is a crap-shoot is understood – but what’s truly being tested now are the risks associated with managing casinos. And as if the courtroom drama weren’t enough, the casino operator’s current board and management are engaged in a desperate struggle of their own in a bid to keep the lights on.

Cost overruns at the Star Casino and Queens Wharf complex in Brisbane have added to the group’s financial woes.Credit: Glenn Campbell

Those with even a passing interest in the future of the Brisbane, Gold Coast and Sydney casinos will be glued to the speculation that Star is furiously, but thus far unsuccessfully, attempting to sell various assets in the business.

On Monday, Star confirmed media reports it had been negotiating to sell its 50 per cent interest in the Brisbane Queens Wharf casino precinct to its joint-venture partners Chow Tai Fook Enterprises and Far East Consortium.

According to its announcement, a deal couldn’t be reached that provided sufficient value for Star. Meanwhile, some media reports have suggested the parties couldn’t find a mutually agreeable management fee.

The fact that Star is desperate enough to sell its interest in the newly built crown jewel asset in Queensland has been viewed positively by shareholders because the punters now know there is nothing sacred left inside Star’s stable of assets. Nothing is off the table, and there’s a good reason for that.

Desperate doesn’t begin to describe Star Entertainment’s financial predicament. It is chewing through cash faster than its casinos are generating it. Its bankers are running out of patience and demanding it sell assets or raise more equity or debt within weeks.

There is still a good chance that Star could still sink into the abyss despite the best efforts of its current management, so maybe keep your eye out for used merino/cashmere blankets and packets of elastic bands on Facebook marketplace – they might be going cheap.

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