Star chief lawyer Paula Martin in hot seat over ‘misleading’ NAB and Austrac snub

Star’s chief risk and legal officer admitted she didn’t read all of the email chain before signing off on a “misleading” response back to NAB about suspicious Chinese debit card transactions.

Star's chief legal and risk officer Paula Martin gives evidence at the independent review into Star.

Star’s chief risk and legal officer Paula Martin signed off on a “misleading” response to NAB about the true purpose of almost $1bn in suspicious Chinese debit card transactions, and approved cheque-cashing facility limits despite not knowing who the gamblers were, an inquiry has heard.

The revelations came on the same day the inquiry heard Star incorrectly claimed legal privilege to repeatedly snub requests from the financial crimes watchdog for a copy of a damning report on its anti-money laundering practices.

Ms Martin was the first member of Star’s executive leadership team to be hauled before the inquiry into Star’s suitability to hold a NSW casino licence, as the review enters its fifth week.

Chief financial officer Harry Theodore, former chief executive Matt Bekier – who resigned last month – and executive chairman John O’Neil are set to follow in coming days.

The review has so far heard explosive revelations from middle management, including that Star disguised almost $1bn worth of gaming transactions on Chinese debit cards as hotel expenses, moved a junket with links to organised crime to a “secret” gaming salon and thought that association with Triad gangs was not enough to ban gamblers from its casinos.

The inquiry’s fallout has already spread beyond the casino group, with Star’s former treasurer Sarah Scopel stepping down from a similar role at Woolworths last week after she told the inquiry she “utterly misled” NAB on more than $900m in suspicious China Union Pay (CUP) card transactions. More executives are expected to depart Star in coming weeks.

On Tuesday, Ms Martin conceded she did not read in its entirety an email chain from Ms Scopel in November 2019 that sought her feedback on questions from NAB about suspicious CUP card transactions, before writing: “looks OK to me”.

The response stated: “We confirm the terminal is located in Star Grand Hotel outside of gaming related areas and gaming transactions are not conducted at the hotel to provide further comfort around the nature of the transactions being non gaming related.”

Inquiry head Adam Bell SC said: “Ms Martin, this draft response is utterly misleading, do you agree?”

“I think on the face of it, Mr Bell, it is a misleading response to the question being asked,” Ms Martin said.

“It’s important to note that I have to admit that I don’t believe I read that email fully until afterwards and I acted in haste on this … which I regret doing.”

Ms Martin also said she did not know who billionaire property developer Phillip Dong Fang Lee was, despite him being one of the biggest users of Star’s CUP ‘‘workaround’’ and her approving an $11m increase in his cheque cashing facility in April 2015.

Counsel assisting the inquiry Naomi Sharp SC asked: “How could you authorise a cheque-cashing facility limit change without having any understanding at all who the customer was?”

Ms Martin said there were “materials provided” to her to substantiate the increase but she couldn’t say what those materials were because she rarely granted cheque-cashing facility limit increases.

Earlier on Tuesday, Ms Martin conceded she made an error in claiming legal privilege on an independent KPMG report that exposed “fundamental deficiencies” in Star’s anti-money laundering practices and which Mr Bekier dismissed at a “hostile” meeting in May 2018.

The inquiry heard that Star rebuffed three requests from Austrac for a copy of the report, citing legal privilege. It was only in late January 2020, after Austrac said it was an offence not to share the KPMG report, that Star finally complied – while maintaining that it wasn’t waiving legal privilege.

This is despite the fact that the dominant purpose of the report was not for legal advice

Ms Sharp asked Ms Martin: “You understand you can’t just slap a legal professional privilege claim on any old report that gets commissioned by the Star, don’t you? Was it your intention to attempt to cloak this document in privilege so that it did not need to provide it to the regulator?”

Ms Martin said that was not her intention.

But last July, Star commissioned another independent review into its AML program, this time from BDO, with Ebsworth Lawyers acting on the company’s behalf and the report “being conducted subject to legal professional privilege”.

“Were you acting with the intention that you would have a proper basis to claim privilege over this independent … review if you had Ebsworth commission it on behalf of the Star?” Ms Sharp asked. “Don’t think that was my driving intention here,” Ms Martin replied.