Star chair O’Neill had report on junket’s alleged criminal links
The Federal Court has heard former Star chairman John O’Neill was sent documents showing a junket operator at the company’s Sydney casinos had alleged links to organised crime.
Former Star Entertainment chairman John O’Neill was sent a document showing a Macau-based casino junket operator had alleged links to organised crime a year before the board approved boosting its credit facility by $30m, the Federal Court has been told.
Ruth Higgins, counsel for the Australian Securities & Investments Commission, told the court on Tuesday a consultant’s report sent to Mr O’Neill about Suncity founder Alvin Chau in 2017 highlighted his alleged links to triad gangs and organised crime figures.
Dr Higgins said the document was forwarded to then-chief executive Matt Bekier and chief counsel Paula Martin, with the chair asking “whether it was of any interest, usefulness or not”.
Dr Higgins’ testimony is opening a six-week hearing which will detail allegations 10 former Star executives and directors breached money-laundering controls and corporate fiduciary duties in the period between 2016 and 2022.
Dr Higgins told the court despite the information being provided to the executives, the board signed off in early 2018 to increase Suncity’s credit cashing facilities (CCF) from $50m to $80m.
The court was earlier told Star’s involvement in junkets had accelerated after the arrest of Crown employees in China in 2017 on suspicion of gambling-related crimes.
At the time, vast sums of Chinese money was coming into Australia, accompanied in turn by a recognised risk of affiliations to Chinese organised crime, including triad gangs. Dr Higgins said Star also had in its possession another report prepared in 2013 by a security consultant showing Chau was a so-called “mudchip dealer” in the 1990s at a Macau casino under the protection of the 14K Triad Society, led by the notorious Wan Kuok-koi, known as “Broken Tooth”.
Historically, junket operators in Macau sold mud chips to gamblers in the VIP rooms for their actual face value after buying them at discount from casinos.
“To operate as a mudchip dealer, Chau would have had to associate with triad members and have their permission to operate,” Dr Higgins said.
“In Macau in the 1990s, it was not illegal to be a mudchip dealer and many respectable people, as well as many not so respectable, entered the business to make a living.”
In January 2023, Chau was jailed for 18 years in Macau after being convicted of operating illegal gaming activities, running a criminal organisation and numerous other charges.
Dr Higgins said Star executives had responded with “glacial inertia” to reports Suncity was flouting strict cash handling regulations at a high-roller room operated by the junket operator at Star Sydney.
She said this included a warning from one of Star’s senior lawyers that breaches of the regulations at the room, known as Salon 95, risked exposing the company to serious legal repercussions as well as loss of its casino licence.
While patrons were permitted to make cash payments to contribute to the front money for a junket, the money had to be deposited at Star’s casino cage.
Suncity could only provide chips to patrons at the Salon 95 desk which had been received from the casino cage in exchange for cash or as a result of a CCF drawdown, Dr Higgins said.
“Now, almost immediately from the time that Suncity began operating Salon 95, Star employees began to have suspicions that precisely activities of all of the prohibited kinds were occurring.”
She said even after a warning letter was sent to Suncity from Star executive Greg Hawkins, staff “continued to report suspicious cash transactions at the desk”.
In one incident, a non-participant in the Suncity junket was able to collect $45,000 from the service desk. On other occasions, CCTV footage showed large amounts of cash being dropped off at the desk in a red suitcase, brown paper bags and a blue Esky.
“By this time, there were red suitcases and red flags,” Dr Higgins said, adding the warnings were relayed to executives, including chief counsel Paula Martin, from a Star investigator in a report titled ‘Operation Moneybags’.
Dr Higgins said Star executives were told about a cupboard at Salon 95 where “bags stuffed with money” would be concealed to thwart surveillance efforts.
Despite the suspicious cash activity, Dr Higgins said Mr Hawkins recommended the agreement with Suncity be extended in June 2018. “Instead of taking any steps to terminate the relationship, Mr Hawkins approves a new commercial relationship in relation to Suncity,” she said.
Warnings that Suncity’s activities contravened money-laundering regulations and that it was operating a second cage at Star Sydney should have prompted then-chief executive Mr Bekier and other executives to make further inquiries, the court was told. A casino cage is where money, casino chips, credit clips and other paperwork is circulated.
“To say that there were concerns around certain activities undertaken at the junket service desk was a radical understatement,” Dr Higgins said.
“And we submit that the reasonable director in Mr Bekier’s position would have made inquiries with other members of Star’s executive team about whether there were other prevailing reports of suspicious conduct by Suncity representatives and employees.
“This is not a case of underage teenagers on the casino floor drinking on a Saturday. This is the largest junket to whom Star have given up a bespoke private room.”
The hearing continues.
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