Crawford and Bell paint a foul picture of life at The Star

The tricky part for casino operator is that the regulator says firing individuals is not enough since no one person is responsible for the ‘appalling culture’.

The Star in Pyrmont on Tuesday. Picture: Nikki Short

The collective feeling in the Star Entertainment bunker must be rather stunned.

Stunned at the excoriating comments on Tuesday from NSW gaming regulator Philip Crawford that accompanied finding that the Sydney casino was unfit to hold a license.

Star has 14 days to convince Crawford that it should keep the casino license following a damning report authored by Adam Bell SC.

So foul is the picture Crawford and Bell have painted that it is hard to see what might satiate the regulator – short of perhaps Catherine Livingstone and Andrew Scipione leading a board-commissioned milestone-driven independent audit into cultural change.

Yet a 4.5 per cent jump in the share price after the trading halt was lifted suggests investors are betting the regulator has not the political ticker to remove the license given the risk of job losses and lost tax to state coffers.

Crawford did not mince words, however, calling out a breathtaking institutional arrogance in management’s appalling willingness to take financial risks and pursuing financial goals. Doing nothing was not an option. Leadership was needed.

In the next 14 days then, what more can Star offer that is tangible?

Star knows all too well it needs leadership but it could be up to three months before the company’s new chief executive, Robbie Cooke, is on board. Cooke is busy trying to extricate himself from payments business Tyro – itself in play defending a takeover.

Could Cooke, whose impressive background includes transformation at the Tatts lotteries group, running Wotif and managing regulation at Tyro, at least wrangle an earlier arrival date for the very big job Crawford says he has ahead of him?

Crawford described Star as a business driven by money, obfuscation and ignoring risks around money laundering. “Then they took deliberate actions to mislead and deceive their own bank, their own board of directors, and the regulator,” he said. “Money laundering is not about hiding a pot of money from the tax office, it is assisting organised crime and very bad people.”

He warned that while most people who allowed this to occur are gone, not all of them have departed. He effectively put a Sword of Damocles over these individuals.

Crawford made a point of naming and shaming interim chief executive Geoff Hogg who gave evidence that an individual banned by NSW police for gambling in 2007 has since been allowed to gamble in Queensland.

“When pressed it was almost as though the evidence was, unless there is proof beyond reasonable doubt of criminal activity, that they were happy to accommodate that person as a gambler in Queensland,” said Crawford.

Hogg was managing director of the company’s operations in Queensland for over ten years. The findings of a separate Queensland inquiry are still to come.

Crawford conceded that new hire Scott Wharton, who led Commonwealth Bank’s response to the company’s penetrating inquiry into governance and culture was “a very good person running around doing the best he can”. Wharton is known as a stickler for regulation and transparency and has been put in charge of The Star in Sydney and transformation across the group.

But for several weeks now Crawford has received regular feedback from Wexted, a company appointed as an independent monitor at The Star. And he said the regulator was not getting the vibe it needed. “I’m afraid the cultural, institutional arrogance has not changed much. There is still an unwillingness to show the right level of transparency,” he said. Whether Wexted is in the market for a permanent position as monitor is unclear.

Star can argue that, long before the Bell report landed, there had been a clean out. John O’Neill, its chairman, is gone. So is chief executive Matt Bekier and others. Ben Heap (against whom there were no adverse findings) was installed as interim chairman. Contrast that with the old Crown Resort board that still in place after a similar report last year.

But the product of that inquiry, the damning Bergin, came well ahead of Bell. It was a wake-up call that failures in compliance and culture would not be tolerated.

Recent criticism that state regulators might themselves have been asleep at the wheel as the country’s casinos went rogue will not make them any easier to placate.

Crawford has put all options on the table: a suspension or cancellation of the license, a fine, or a mix. Presumably he could also choose to suspend the license to gamble at tables but leave pokies in play. Jobs might be under threat but taxes would continue to flow.

Crawford also noted it took 18 months for the regulator to be comfortable that there was proper risk analysis to award Crown a gaming licence in Sydney.

He said The Star had admitted at the start of the inquiry that it had been unsuitable to hold a licence, but that Bell did not agree with any of Star’s eight submissions that it was now suitable.

The tricky part for Star is that the regulator says that firing individuals is not enough since no one person is responsible for the “appalling culture” and a failure in risk management that the company has yet to get to demonstrate it comprehends. “Importantly with this company, they need a fresh set of eyes. They have 14 days to do it,” said Crawford.