Outgoing Star executive chair John O’Neill says he resigned to allow ‘as much cleansing as possible’

Outgoing Star Entertainment executive chairman John O’Neill has branded a royal commission-style inquiry into the company a ‘cathartic moment’.

Outgoing Star executive chairman John O’Neill, left, with former CEO Matt Bekier, prior to the royal commission-style inquiry. Picture: Liam Kidston

Outgoing Star Entertainment executive chairman John O’Neill has branded a royal commission-style inquiry into the company a “cathartic moment” and says he resigned on Friday to allow “as much cleansing as possible”.

But fellow director Richard Sheppard – a former Macquarie Bank executive who has been on Star’s board for nine years – is hanging on to his position until the company’s annual meeting, normally held in October.

Mr O’Neill up-ended Star’s “renewal process” late on Friday when he announced he would step down after helming the company for a decade. It was expected he would remain as executive chairman until Star appointed a new permanent chief executive.

“I had intended to resign at the earliest opportunity when we found a new CEO and a new director,” Mr O’Neill said, adding “extraordinary circumstances (requires) extraordinary action”.

Mr O’Neill – who has had a distinguished career as a sports administrator, which includes heading rugby union and soccer in Australia, and playing a key role in securing the Brisbane 2032 Olympics – told the NSW inquiry headed by Adam Bell SC that the hearings had exposed examples of “errors of judgment” and “not enough consideration of the ethics” at the gaming company.

But he rejected Star’s board was complacent, saying the company had promoted people to senior positions “beyond their competency”.

“You’re only as good as the people that work for you,” Mr O’Neill said.

His exit will come after the resignation of the majority of Star’s senior executive team including chief executive Matt Bekier, chief financial officer Harry Theodore, chief legal and risk officer Paula Martin and NSW chief casino officer Greg Hawkins.

A raft of junior executives have also departed after giving evidence to the Bell inquiry as Star Entertainment fights to retain its NSW casino licence.

“This is a cathartic moment for the company and for the licensee,” Mr O’Neill said.

“The evidence that’s been given, and to the board and my own consideration of the evidence, is such that requires as much cleansing as possible.”

The inquiry heard on Monday afternoon that it was not until the Victorian Royal Commission into Crown Resorts that Mr O’Neill learned that Star Entertainment allowed the use of China Union Pay debit cards at its properties.

This was despite the company introducing the payment method in 2013 and allowing it to be used for seven years, processing almost $1bn worth of gambling transactions on CUP cards that it disguised as hotel charges to skirt a Beijing ban.

Mr O’Neill said he took no steps to determine whether Star had misled NAB – and ultimately the Bank of China – about the practice after the board received a damning report late last year.

“There was enough else in the report to occupy our minds,” he said. “The entire review … was a very, very serious matter for the board to consider in its totality.

“I didn’t turn my mind to it at that particular point.”

 

Mr O’Neill will step down next Tuesday. Another director, Ben Heap, will assume the role of interim chairman, while Queensland chief casino officer Geoff Hogg will take on chief executive duties until a permanent replacement is appointed.

Mr O’Neill said it was an “arrangement which will stand the company in good stead”.

His position is in contrast to Mr Sheppard, who said he will stay until his term as a director expires at Star’s upcoming annual meeting later this year. Mr Sheppard said the “best thing” he could do was stay on to assist in implementing the company’s reformation.

“With the board’s diminished numbers and large body of work going on to address the issues that have arisen of this inquiry and in some cases prior to the inquiry, I will be working as hard as I can to assist the board to address those concerns,” Mr Sheppard said.

“My term on the board will finish at the AGM and I think it will probably take pretty much all that time to fully address the issues which include putting a new board in place, management changes, changes in structural arrangements, with decision making, putting in place structures to ensure that issues are elevated – which in some cases might require the board to directly make similar decisions which are particularly in terms of … dealing with people of good repute, that type of thing.”

Directors have also flagged further staff departures, with doubt on group general counsel Andrew Power’s position after he made “material omissions” in response to questions from NSW Independent Liquor & Gaming in 2019 about Star’s dealings with the Chinese SunCity junket, which has links to triad criminal gangs.

Mr Power told ILGA that “we remain comfortable that the Star’s processes are robust”. This was despite the company issuing two warning letters to SunCity in the prior 12 months about illegally exchanging cash for gambling chips – a charge levelled at Crown – in an exclusive gaming room known as Salon 95 at Star’s Pyrmont casino.

Counsel assisting the Bell review, Naomi Sharp SC, said “there’s no mention whatsoever to any of the cash transactions of concern in Salon 95” and asked Mr Sheppard if he had “continuing confidence in Andrew Power as a very senior lawyer at Star Entertainment”.

“Based on everything we’ve seen and evidence to this inquiry, no,” Mr Sheppard replied.

Ms Sharp asked Mr Power last month: “is it right that the regulator can have no confidence in your judgment as to whether or not it is appropriate to deal with particular patrons or junket operators?”

“I don’t agree,” he replied.

Inquiry head Adam Bell SC asked Mr Sheppard given he was a “very experienced company director” how did this “failure of management to provide vital information to the board” happen.

“We have made some bad decisions on appointments and in retrospect it would have been better to bring some fresh eyes into the process,” Mr Sheppard said, conceding that management hiding information from directors exposed a cultural problem.

“I think from a board perspective, in retrospect, we possibly didn’t ask enough questions, but I can absolutely assure you that the board asked lots of questions in all its meetings.

“Most of the organisations – in fact all of the organisations I’ve been involved with except this one – there was a system worked on that was reinforced by trust between the board and management and in this case, that trust was misplaced.”

Mr Sheppard’s evidence followed a brief appearance from Mr Bowen, a former director in NAB’s institutional arm.

Mr Bowen appeared after former chief financial officer Harry Theodore told the inquiry he had a conversation with the NAB executive in September 2016, which revealed that the big four bank knew that Star was allowing China Union Pay debit cards to fund gambling.

Mr Bowen told the inquiry on Monday that Mr Theodore’s evidence was not correct.

“I couldn‘t exactly recall what I would say but I’ll be very clear that I would never have stated such a thing which it’s outside the (China Union Pay scheme) rules,” Mr Bowen said.