Star anti-money laundering officers told of junket operator Alvin Chau’s links to casino development partners

Alvin Chau had ‘direct influence’ on two groups that have partnered with Star Entertainment on billions of dollars worth of casino projects, an inquiry has heard.

A rendering of Star’s Queens Wharf development in Brisbane.

Chinese junket operator Alvin Chau had “direct influence” on Chow Tai Fook and Far East Consortium – groups that have partnered with Star Entertainment on billions of dollars of casino resort projects – an inquiry has heard.

Ahead of a risk assessment of Mr Chau’s Suncity junket in April 2018, his links to Chow Tai Fook and Far East Consortium were revealed to Star’s anti-money compliance executives Skye Arnott and Micheil Brodie.

Star has partnered with Chow Tai Fook and Far East Consortium on more than $5bn worth of developments, including Brisbane’s Queen’s Wharf.

Star’s former president of international marketing, Marcus Lim, told Mr Brodie and Ms Arnott in an email on April 6, 2018 that Mr Chau, as Suncity’s chief executive, “has a direct influence with our partners CTF and FE” and “Star Entertainment was in business dealings with them.”

Counsel assisting the inquiry Naomi Sharp SC asked Ms Arnott if she took note of Mr Lim’s email. “I possibly would have read it,” she replied. The email came a week after Star told the ASX that it had “expanded its strategic partnership” with Chow Tai Fook and Far East Consortium to “enhance the long-term value of The Star’s property and core business”. This included a $490m equity investment in Star.

At the same time, Suncity was building a $4bn casino with Chow Tai Fook along a 3km stretch of coastline at Hoi An in central Vietnam.

Meanwhile in Sydney, Suncity staff were caught on CCTV footage exchanging cash – taken from black backpacks – for gambling chips in an exclusive gaming salon at Star’s Pyrmont casino, in breach of state casino regulations. Ms Arnott said the behaviour in the footage was concerning, given a “large amount of cash coming (was) into the room that is not associated with a customer or none that we can see”.

Casinos must be able to identify a patron’s source of funds to ensure they comply with anti-money laundering rules.

Queensland Premier Annastacia Palaszczuk and The Star chairman John O'Neill at Brisbane’s Queen’s Wharf in 2019. Picture: Adam Head

Rather than ban cash transactions at Suncity’s “service desk” at the gaming room, known as salon 95, Ms Arnott proposed cash be deposited in Star’s casino cage – where patrons exchange cash for chip and collect winnings – daily. But she later conceded that was not an effective control, with Suncity continuing to flout casino rules into 2019.

In mid-2019, Angus Buchanan joined star as its due diligence manager and provided the company’s senior management with a copy of a report he had completed for the Hong Kong Jockey Club that revealed Mr Chau’s links to Chinese triad gangs and said Australian law enforcement agencies suspected SunCity of “large scale money laundering activities in Australia” amounting to $2m a day between 2013 and 2015.

But Ms Arnott said she “felt there were some issues in the report”, given that the source of information about Mr Chau’s triad links was Hong Kong’s Next magazine.

“My understanding in (Next is) an entertainment and news magazine rather than an authoritative journalistic source, so I didn’t necessarily put as much weight on that as you otherwise might expect.”

Ms Arnott also said a reference about Mr Chau being a follower of former 14K leader Wan Kuok-Koi, also known as Broken Tooth Koi, came from the BBC. But that article, she said, made no reference to Mr Chau.

“There are numerous points through this report where I found that there were things that were opinion being placed very close to things that were fact …

“And I found that to be concerning at the time.”

But Ms Arnott said she did not discuss her concerns with Mr Buchahan, who had investigated Chinese gangs for 30 years, and whom Star had employed for his expertise, according to Ms Sharp.

“Perhaps I should have done that,” Ms Arnott said.

When asked about the comment in the report about Australian law enforcement agencies’ suspicions of Suncity, Mr Arnott said she believed it was a “considerable concern”.

“But I believe that the investigations team were liaising with law enforcement to try to work out what that was and if we could get further information in relation to it,” she said.

In early 2020, Star commissioned its own due diligence report on Suncity and Mr Chau.

“It was completely remiss that you failed to do it more quickly, wasn’t it?” Ms Sharp said.

Ms Arnott replied: “I don’t think it was completely remiss as we were trying to mitigate the risks of Suncity and other junkets operators at that time.”

Inquiry head, Adam Bell SC, asked Ms Arnott how she believed she could “sensibly mitigate” the risks Suncity posed.

The inquiry continues.