Bell targets Star Entertainment’s board over alleged ‘unethical’ conduct and ‘systemic cultural problem’

Star Entertainment’s board, led by executive chairman John O’Neill, needs to take responsibility for the company’s failings, inquiry chief Adam Bell SC says.

Star Entertainment Group chairman John O'Neill, pictured with former CEO Matt Bekier, has been accused of overseeing a ‘systemic cultural problem’ at the casino group. Photographer: Liam Kidston.

Star Entertainment’s board, presided over by executive chairman John O’Neill, was told senior executives may have misled NAB and China Union Pay about $1bn worth of suspicious transactions but failed to ask any questions to confirm the “serious” accusation.

Adam Bell SC, who is heading a royal commission-style inquiry into Star’s fitness to hold a NSW casino licence, took aim at directors on Tuesday, saying they must accept responsibility for the company’s “unethical” conduct and overseeing a “systemic cultural problem”.

His rebuke comes ahead of Mr O’Neill, and other directors - Richard Sheppard, Ben Heap, Gerard Bradley, Sally Pitkin and Katie Lahey - will be hauled before the inquiry from next week.

Mr O’Neill assumed chief executive duties in late March after Matt Bekier resigned. Mr O’Neill has chaired the company for the past 10 years, during which time Star disguised almost $1bn worth of gambling transactions on Chinese debit cards as hotel charges and did not perform any anti-money laundering checks on the funds.

More troubling, the company continued to deal with cashed-up Chinese gamblers when Macau banks would not, and even set up a subsidiary in Hong Kong to effectively provide credit - in breach of Australian casino laws - under the guise of offering interest free loans.

The inquiry heard on Tuesday that Mr Bekier also approved billionaire property developer Phillip Dong Fang Lee’s $22m withdrawal on his China Union Pay card at the Star’s Pyrmont casino, flouting a global CUP ban on its cards being used for gambling.

Mr Bekier was also accused of turning a “blind eye to a risk” after the inquiry heard he let a Chinese gambler play at Star in February 2017, despite the Australian Federal Police investigating the patron for money laundering offences in late 2016.

The high number of CUP transactions raised eyebrows at the People’s Bank of China, which Star has been accused of misleading. After attracting the attention of China’s central bank, China Union Pay probed Star via NAB, demanding the casino provide in writing that CUP cards were not being used to fund gambling.

Three senior executives - chief financial officer Harry Theodore, chief legal and risk officer Paula Martin and general counsel Oliver White - approved responses to NAB, which Mr Bekier conceded were “utterly misleading”, given they maintained the transactions related to accommodation services.

Junior executives, former Treasurer Sarah Scopel - who has since resigned from her subsequent role at Woolworths over the Bell inquiry’s damning revelations - and assistant treasurer Paulinka Dudek, also knew the responses were misleading at the time they were sent, but felt they were unable to challenge senior management.

Mr Bell said this was “emblematic of a cultural problem” at Star, and the board should assume responsibility.

Mr Bekier said that the board did not have “visibility” of the China Union Pay transactions and that it was management, not director, which set the culture of the company.

“The board is only there for 10 days a year. I’m not sure we can actually influence a culture,” he said.

But Mr Bell said: “the board has to ensure that their organisation has systems and processes (to) get them the right information needed to perform their oversight and monitoring functions”.

“And it follows, doesn‘t it, whilst you’ve accepted responsibility personally, by tendering the resignation it’s a cultural problem that I’ve drawn to your attention as a matter for which the board as a whole must accept responsibility,” Mr Bell said.

Mr Bekier said the board needed to “make up their own decision” and if were a non executive director at Star Entertainment, “I would not accept responsibility for this behaviour”.

But Mr Bell said that if Mr Bekier were a non-executive director and he was aware of such behaviour “you would appreciate immediately, would you not, that there was a significant systemic and cultural problem at the organisation”.

Former Star Entertainment CEO Matt Bekier giving evidence at the Star inquiry on May 3.

Following NAB questions to Star in 2019, HWL Ebsworth lawyers prepared a review paper on CUP for the board that stated NAB and China Union Pay “might have been misled but whether they were depends on what each actually knew or perceived about the use of CUP accounts”.

Mr Bekier said he nor the board did not check with CUP or NAB to see if they knew the CUP cards were being used to fund gambling.

Counsel assisting the inquiry Naomi Sharp SC said: “there is no proper basis for concluding that Union Pay or NAB were not misled, and less inquiries had actually been made with them to ascertain what it was they knew”.

Mr Bekier agreed. “There can be no certainty unless they have been asked”.

Star allowed the controversial Chinese debit card transactions, despite not informing the NSW Liquor & Gaming Authority - and the inquiry hearing on Tuesday that it was unlikely the regulator would have approved the use of the cards - for seven years from 2013.

The board asked management to “bring out the dead” after being “surprised” at the CUP revelations after Star terminated the service in 2020. Mr Bekier said directors wanted to ensure such behaviour would never happen again, but their response did not include approaching CUP or NAB.

“My read of the board‘s request was all about you know, making sure that something like this could not happen again as opposed to undertaking a full review,” he said.

“I was not asked to undertake a review of what had happened in the past. And because we had discontinued (the CUP) service. It was not foremost on my mind.”

Mr Bekier also admitted to “not being fully transparent” with the board by not providing it with a copy of a Hong Kong Jockey Club report, which revealed Star’s biggest Chinese junket operator - SunCity - had links to Chinese triad gangs.

Star Entertainment chairman John O'Neill and former CEO Matt Bekier. Picture: Liam Kidston.

Mr Bekier also admitted it was “stupid” of him to say “why not” in response to a journalist’s question in 2019 about why Star continued to deal with SunCity, despite the allegations of criminal behaviour.

“I was in a world where I thought that we‘re doing the appropriate due diligence on SunCity. I was in a world where I believed that SunCity was operating in a legal way with us and we had good control over their operations, and it’s on that basis that I said, ‘well, it’s legal for us to operate with these junkets why would we not do that?’.

“With what I know now, that looks stupid.”

Mr Bekier blamed a slew of executives including Ms Martin, Mr Theodore, Mr White and chief casino officer Greg Hawkins for “letting him down” and not making him fully aware of risks.

But the inquiry heard that when Mr Bekier was informed of serious risks, such as letting a Chinese gambler play at the casino despite being the subject of an AFP money laundering investigation, he took no action.

“Isn‘t this a situation where you turned a blind eye to a risk that was made known to you?” Ms Sharp asked.

Mr Bekier said: “I think this is a decision I should not have made because I was never in operational decisions of that nature”.

“I would say it‘s the wrong decision.”

Mr Bekier also denied “intentionally” briefing against the inquiry to the media to counter what he perceived to be “biased” coverage.

Before his resignation from Star on March 27, an article appeared in Nine’s newspapers, saying he was “blindsided” by a damning KPMG report into Star’s anti-money laundering program.

“I was obviously unhappy with what I perceive to be a very biased reporting. And I shared that view internally within the company,” he said.

“If that caused some people to take certain steps that may have resulted in the article …but I did not intentionally ask anybody to do anything for me.”

The inquiry continues.