Counsel assisting Naomi Sharp SC recommends Star Entertainment be not suitable for a NSW casino licence

After weeks of explosive evidence, counsel assisting an inquiry into Star Entertainment has recommended it be found unsuitable to hold a NSW casino licence.

Counsel assisting Naomi Sharp, SC, made the recommendation based on a series of explosive revelations heard throughout the inquiry. Picture: NCA NewsWire / Bianca De Marchi

An exodus of Star Entertainment management and directors was not enough to repair the damage from misconduct and unethical behaviour, with counsel assisting the royal commission-style inquiry recommending it be stripped of its flagship casino licence.

Naomi Sharp SC said the company was not fit to hold a NSW casino licence after 36 days of hearings revealed executives were “evasive”, “prioritised money making over compliance” and presided over a culture where there was “indifference” to money ­laundering.

Star is desperate to maintain its licence. Since the inquiry began most of its executive leadership – including chief executive Matt Bekier, chief financial officer Harry Theodore, chief legal and risk officer Paula Martin and NSW chief casino officer Greg Hawkins – have resigned, with directors indicating they will also go.

Even Star chairman John O’Neill has quit, leaving the company he chaired for more than a decade on Tuesday.

But Ms Sharp said the conduct of the leaders needed to be assessed in a broader context, including Star’s governance, risk management and culture.

“It is not enough to bring a corporation into suitability simply to terminate the employment of or part company with a number of senior officers,” she said.

“There is more in questioning of suitability than particular individuals within the corporation.”

The inquiry heard that Star deliberately disguised almost $1bn worth of illegal gambling transactions on Chinese debit cards as hotel charges over a seven-year period, misleading its bank NAB and ultimately the Bank of China. Bigger rival Crown Resorts was hit with a record $80m fine from the Victorian gambling regulator this week over a similar practice.

Star also continued to deal with patrons despite being alerted to links with Triad criminal gangs. It even moved a Chinese junket into a secret gaming room after it flouted money-laundering controls, exchanging bundles of cash from backpacks for gambling chips.

Star also potentially underpaid millions of dollars in taxes to the NSW government, sent fake source-of-funds letters to the Bank of China and continued to deal with certain patrons when Chinese banks would not.

Star directors have accepted responsibility for Star’s cultural failings and misconduct but said management did not alert them to risks or buried them in reports. But Ms Sharp said that was not an excuse and there was a “degree of passiveness” from directors in regard to the riskiest part of the business: the international VIP high-roller division.

“While it was correct that senior management failed to escalate a number of risks to the board – and while it was the case that at points senior management misled the board – it was also the case that the board was well aware (that the) VIP market was where the risks of criminal infiltration and money laundering were at their highest,” Ms Sharp said.

“This was a situation where you had forces that work from two different perspectives. Firstly, there was a failure to appropriately ­escalate … on the other hand, there was a failure to bring that questioning mindset to what it was that management report and a degree of passiveness on the part of the directors against the context that they knew this was the riskiest part of business.”

Ms Sharp said the company’s risk management process failed across all parts of the business – “all the way up to the board” – while Star employees revealed they did not understand the company’s new corporate value to “do the right thing”.

“We asked numerous witnesses about what they understood ‘do the right thing’ to mean and different witnesses had different understandings, some less comprehensive than others. It should be noted that in the PwC culture report in January 2022 it was reported to the board that employees did not understand this (new value),” Ms Sharp said.

“One of the key problems here was a failure in risk management, but … responsibility for this lies within various parts of the organisation. So within divisional business units, within the group risk function, within your management, within the board risk and compliance committee and all the way up to the board.

“Moving forward there may be good sense in having a stand­alone risk category for money laundering and counter-terrorism financing given the particular vulnerabilities to casinos.”

Crucially, Ms Sharp said inquiry head Adam Bell SC should use a similar method to Ray Finkelstein, who oversaw the Victorian royal commission into Crown Resorts, in determining Star’s fitness to hold a NSW casino licence.

Mr Finkelstein used a list of “appropriate norms of conduct” in determining whether Crown was suitable to hold a casino licence, including that a casino operator must obey the law; act honestly; deter illegal and immoral behaviour that might take place in a casino; not exploit people who come to the casino to gamble; take measures to minimise the harm caused by gambling; and co-operate fully and candidly with the regulator and government.

“So if a casino operator infringes any one of the norms … it’s on the road to unsuitability,” Ms Sharp told Mr Bell.

“If a casino operator infringes several of the norms the end of the road is near.

“If a casino operator has infringed most of those norms, the journey is at an end. And we submit you should adopt this approach.”

Ms Sharp spent most of Tuesday highlighting the lack of candour of witnesses – even accusing Star’s former group counsel Andrew Power of “deliberate obfuscation”.

“The reasons we’re pointing out where the written statements lack candour or do less than provide a complete account is because this is how The Star … dealt with the regulator up until these public hearings,” she said.

Ms Sharp will complete her closing address in the next two days.