John O’Neill says ILGA’s workload is ‘ludicrous’, calls for new casino regulator

Departing Star executive chairman John O’Neill has called for greater regulation of casinos, saying the NSW Independent Liquor & Gaming Authority is spread too thin.

Outgoing Star chairman John O’Neill says he ‘regrets’ that the gaming group’s identification of money laundering risks was ‘not up to scratch’. Picture: Bianca De Marchi/NCA NewsWire

Departing Star Entertainment executive chairman John O’Neill has called for greater regulation of casinos, saying the NSW Independent Liquor & Gaming Authority is spread too thin.

In his third and final day of giving evidence at a royal commission-style inquiry into Star’s suitability to hold a NSW casino licence, Mr O’Neill supported a new regulatory body specifically to monitor casinos, saying it is what investors want. “It’s ludicrous to think ILGA could oversee and monitor every pub and club in NSW and two casinos,” he said.

“For a large publicly listed company to be better regulated is a bonus for investors. Investors tell me how important it is for us to give them the assurance that we’re well regulated.”

The inquiry has heard that Star had a “them and us relationship with the regulators”, according to director Katie Lahey. The company did not share a raft of compliance breaches with the regulator, such as Chinese junket SunCity illegally exchanging cash from backpacks for gambling chips in an exclusive gaming room.

The inquiry has also revealed Star senior executives “utterly misled” NAB and ultimately the Bank of China over another processing almost $1bn worth of gambling transactions on China Union Pay debit cards. Gambling in China is illegal and CUP cannot be used for that purpose. Star employees also sent the Bank of China fake source of funds letters to the Bank of China, and continued to deal with patrons when Chinese banks would not.

ILGA was not aware of most of the misconduct at the time it occurred, with the inquiry hearing Star took a “sharp and technical approach to answering the regulator’s questions”.

Mr O’Neill said there had been a “communication breakdown” between ILGA and Star, and the casino group was “too remote” from the regulator.

He told the inquiry that when ILGA chairman Philip Crawford was appointed in 2016, he asked him if he would be interested in regular board-to-board meetings between the authority and Star. But he said Mr Crawford preferred to have a coffee catch-up.

“I know Philip Crawford well. He‘s a good man. When I first went to see him when he was appointed as chairman of ILGA … I mentioned to him that we would like to have regular contact,” he said.

“With the previous ILGA board, we had at least a board to board meeting once a year. And Philip‘s general response was “well, I’d love to have a cup of coffee with you regularly but I can just deal with Greg Hawkins and Andrew Power because they’re the people running Star Sydney.”

Star Entertainment executive chairman John O’Neill speaking at the inquiry.

Mr Crawford declined to comment, and said he had not heard Mr O’Neill’s evidence.

Mr O’Neill supported Patricia Bergin SC’s finding from her review into Crown Resorts to establish the Independent Casino Commission, saying a similar situation was brewing to the lead up to the creation of APRA in the 1990s. “When financial markets became deregulated and 16 new banking licences were issued (it was) ‘joy to the world’, the banks were let off the leash,” Mr O’Neill said.

“The upshot of that was … out of that came APRA because the Reserve Bank’s mandate (which includes) monetary policy, fiscal policy — you name all the things are under the Banking Act — they couldn’t have the prudential supervision role as well.”

But the creation of APRA did not prevent the myriad scandals that triggered the financial services royal commission, which exposed a raft of bad behaviour from the big four banks.

Mr O’Neill said the creation of the ICC did not “diminish the very heavy requirement for self regulation”. And he said instead of relying on Star’s management — most of whom have resigned following the inquiry — alerting them to risks such as SunCity’s behaviour in the exclusive gaming room known as Salon 95, should have interrogated executives more.

“Salon 95 gives me nightmares. But maybe as a board we should have just left the boardroom and gone to Salon 95 and had a look.”

Asked what he thought went wrong at The Star, he replied “how long do we have?”. Counsel assisting the inquiry Naomi Sharp SC asked Mr O’Neill if a number of senior Star managers risked engaging in unethical conduct because “the rivers of gold was just too great”. “With the benefit of hindsight it was more in the category that ‘everyone was doing it’,” Mr O’Neill said, again drawing parallels to the banks.

“In my day there was quite a lemming-like behaviour by banks. One bank did it, all banks did it.”

Fellow director Sally Pitkin said the “indifference has come about because of the failure to understand the harm that comes from money laundering”.

But Mr O’Neill said it “could be phrased another way”. “That indifference has come about because of a failure to understand their obligations under the … legislation,” he said. Adam Bell SC is expected to complete his report on August 31.