Star Entertainment’s ‘secret’ board meetings on VIP junkets

Star Entertainment’s board may have discussed criminal links and other suspicious behaviour from its biggest junket earner in secret phone hook-ups.

Star's chief legal and risk officer Paula Martin giving evidence before a royal commission-style inquiry.

Star Entertainment’s board may have discussed criminal links and other suspicious behaviour from its biggest junket earner as well as its international rebate business being “out of control” in secret phone hook-ups.

And despite Star announcing a ban on the VIP tour groups in 2020, chief legal officer Paula Martin told an internal Star meeting in April last year, convened under the title “Project Zurich”, that “junkets will be different and heavily scrutinised, but not sure they are dead”.

Ms Martin also told a royal commission-style inquiry that cashed-up Chinese gamblers suspected of money laundering would potentially still be able play at Star Entertainment’s Sydney casino, depending on the type of controls the company could introduce to mitigate the risk.

In her third day of giving evidence to the Bell inquiry’s review into Star’s suitability to hold a NSW casino licence, Ms Martin was accused of not being “candid”, “honest” and being “incredibly incompetent”.

Board meeting minutes, read out at the inquiry, make no mention of directors being told the company possessed a copy of an explosive Hong Kong Jockey Club report that revealed links between Alvin Chau’s Suncity junket and triad criminal gangs.

Nor do the minutes reveal a raft of allegations about its international rebate team, including a manager pocketing referral fees and “$50,000 for services”.

But Ms Martin said some of those matters may have been discussed in “informal” board phone calls, which were not minuted.

Ms Martin was the first member of Star’s executive team to be hauled before the review headed by Adam Bell SC, with former chief executive Matt Bekier, chief financial officer Harry Theodore and executive chairman John O’Neill set to follow in coming weeks.

Counsel assisting the inquiry Naomi Sharp SC said there were “all sorts of allegations of misconduct” in relation to the international rebate business but no evidence of them being discussed at board level, according to official minutes. The international VIP business involved paying groups known as junkets to lure high-rollers to Star’s casinos.

Ms Martin said she did “provide some reports to the board” about the international rebate business, prompting Ms Martin to suggest that it was only discussed in a paper presented to the board in response to media allegations against bigger rival Crown Resorts in mid 2019.

Inquiry head Mr Bell asked Ms Martin if she told the board specifically about “serious misconduct” of the international rebate team, including former president of international marketing Marcus Lim.

“I don’t recall whether I did Mr Bell inform the board about the allegations of serious misconduct concerning Marcus,” Ms Martin said.

Mr Bell asked if he would find a mention of Star possessing the Hong Kong Jockey Club report in board minutes. Companies must keep accurate board minutes, recording them within a month of meetings, under the Corporations Act.

Ms Martin said: “We had board calls that weren’t held as formal meetings and therefore were not minuted.”

Star chief legal officer Paula Martin also told a royal commission-style inquiry that cashed-up Chinese gamblers suspected of money laundering would potentially still be able play at Star Entertainment’s Sydney casino.

Ms Sharp said Ms Martin could not provide any evidence that she told the board that Star had a copy of the Hong Kong Jockey Club report – or that two of Ms Martin’s subordinates, Kevin Houlihan and Angus ­Buchanan, had visited the Hong Kong Jockey Club in July of 2019, and were later told by the Australian Federal Police that Suncity currently was of “interest to them”.

Ms Martin said that was “not correct”, but she also did “not have a specific recollection”.

Ms Martin’s responses attracted tense exchanges, including later on Wednesday when she said she also did not have a “specific recollection” of assisting with responses about junkets to the NSW gaming regulator. “It was only two years ago,” Ms Sharp said. Ms Martin paused, smiled slightly, before repeating: “I don’t have a specific recollection.”

That exchange followed Ms Sharp telling Ms Martin on Wednesday morning that “Mr Bell can have no confidence whatsoever that you are giving honest answers to any of the questions I’ve asked you”.

In responses Star provided the NSW gaming regulator, the company did not disclose the risks Suncity and Mr Chau presented to the casino, nor did it reveal VIP tour operator Tom Zhao’s links to the Chinatown junket.

“It’s incredibly incompetent in not realising that this letter failed to disclose the relationship between Mr Zhao and … Chinatown. Do you agree?” “No, I don’t,” Ms Martin replied.

The inquiry heard that Star allowed Mr Chau and his Suncity junket to continue to play at its Sydney casino in 2018 and 2019, despite repeatedly flouting NSW laws and being suspected of money laundering.

Asked if Star would permit the same behaviour – which included VIP gamblers exchanging bundles of cash from backpacks, suitcases and environmental shopping bags for gaming chips – again today, Ms Martin said they would not face an immediate ban.

“I would still say they would need to be assessed for what was appropriate in terms of the response and it may very well be that that reached a conclusion of eliminating that risk all together through one way or another, or alternatively putting in place satisfactory mitigants,” Ms Martin said. “I find this hard to do as a ­hypothetical.” Ms Martin’s evidence followed Star group general counsel Andrew Power telling the inquiry earlier this week that an association with ­triads alone was not enough to ban gamblers.

At internal meeting in April last year, Ms Martin said while the Bergin inquiry’s “starting point” was “all junkets are evil, that has not been the position in Australia for decades”.

“In Queensland, the regulator may be very comfortable with the business model and level of privacy undertaken. I think it is correct to say junkets will be different and heavily scrutinised, but not sure they are dead,” Ms Martin said according to a summary of the meeting. Mr Bell asked what should he conclude from this document, given Star had previously announced a ban on junkets.

Ms Martin said it was a meeting “talking about different eventualities”.

“We’ve moved from a position of junkets being an existing concept in the casino environment to one that perhaps is too high risk to exist at all … bearing in mind there was government consideration being given to the Bergin inquiry, and considering the fact that The Star may end up operating in different states with different regulatory regimes,” she said.

Earlier on Wednesday, Ms Martin said she was aware of Star dealing with Suncity from 2011, with it becoming one of its biggest junket partners by 2017-18.

She also conceded a response that she signed off to NAB that misled the bank that almost $1bn worth of China Union Pay (CUP) debit card transactions were used to buy gaming chips, flouting an international ban. But she did not believe that was unethical.

“Your own conduct with respect to the usage of the CUP card at Star Entertainment was completely unethical, do you agree?” Ms Sharp said. Ms Martin replied: “I don’t agree with that absolute statement. I do agree that there are areas where I could have done better in doing the right thing.”

The inquiry continues.