Star Entertainment director Ben Heap blasts management over high-roller program

Star director Ben Heap has criticised the way wrongdoing was hidden, but believes a lucrative high-roller program marred by claims of having a ‘toxic culture’ can be salvaged.

Star Entertainment director Ben Heap says directors should not have to work against management to be fully informed of risks.

Star Entertainment director Ben Heap believes the company’s troubled high-roller rebate business can be salvaged, saying it “can make sense” despite a “toxic culture”, a royal commission-style inquiry has heard.

The company suspended the program – which casinos often use to attract cashed-up gamblers by offering resort perks and other benefits – this week for international and domestic patrons as directors were hauled before the inquiry headed by Adam Bell SC.

Mr Bell asked Mr Heap what prompted the decision. Mr Heap said it reflected the Star board’s “strong desire” that all its “processes are working as well as they need to”. The inquiry has heard the international side of the rebate business was “out of control” with managers accused of accepting kickbacks and other wrongdoing.

The inquiry heard on Wednesday that senior management failed to escalate or did not fully inform the board of significant risks such as Chinese junket SunCity illegally exchanging bundles of cash for gaming chips at an exclusive gaming room, known as Salon 95, effectively operating a “casino within a casino”.

In a report to the board in May 2018, Former chief executive Matt Bekier told the board “concerns emerged around certain activities at the junket service desk” and there was “ongoing compliance monitoring”, without directly calling out the wrongdoing in language counsel assisting the inquiry Casper Conde said was “vague” and “mysterious”.

Mr Heap said: “It was a bit like looking for a needle in a haystack”.

“It was an obligation of the board to find that and go looking for that – I’m not resigning from that fact. But the board should not have to work against management to find these things,” he said.

Mr Heap said the opening of Crown Resorts’ $2.4bn casino in Barangaroo – which has been delayed after the Bergin inquiry last year found it unsuitable to hold a NSW casino licence – also might have led to senior management not fully informing the board of SunCity’s illegal behaviour at board meeting in mid 2019.

“My speculation is that SunCity was an important client partner in the context of the junket business. The IRB (international rebate) business represented a reasonably significant amount of The Star’s, revenue and earnings at that point in time,” he said.

“We were 12 months or so away from having a major competitor into the Sydney market, who was specifically focused on that same IRB business.

“I speculate for all of those reasons that management was seeking to find a way to continue that relationship with SunCity and I speculate that if they were to make (SunCity’s behaviour) clear … the decision would be quite obvious for the board, which would be to exit any arrangement or any association with SunCity.”

Mr Heap said he only learned of the behaviour in Salon 95 following media articles last October. But the inquiry heard that the board did not launch an “urgent and comprehensive investigation” at the time.

“There was certainly in my mind, I believe in the minds of other directors as well, there was a desire not to be seen to be cutting across the work of this review. That did not mean there weren’t actions that needed to be taken.”

He also, with other directors, approved an ASX statement dismissing the media reports – which included allegations Star “kept secret” a damning KPMG report into its anti-money laundering practices – as “incorrect” and “misleading”.

This was despite Mr Heap acknowledging on Tuesday that parts of the media reports were “substantially accurate”.

“Are you concerned reading this now that by focusing on the matters you consider to be misleading as opposed to the matters you consider to be substantively accurate, the ASX announcement of 11 October was itself misleading?” Mr Conde asked.

Mr Heap said: “I don’t believe it was”.

The inquiry also heard Star’s chief people and performance officer Kim Lee warned in an email in May 2018 to former chief legal and risk officer Paula Martin of a “toxic culture” forming in the international rebate business, citing its “ignorance of company policy”.

But Ms Martin did not inform directors of Ms Lee’s concerns.

Mr Heap reiterated Star had axed its junket relationships, redeploying or making associated staff redundant. But he believed the rebate business could be salvaged.

“The rebate business per se can make sense. It is something that we would consider opening again, but only subject to the board‘s full satisfaction and … the regulator’s full satisfaction.”