Nick Weeks had talks with former Star chair about ‘opportunities’

Nick Weeks, the external manager who is about to take on Star’s gaming operations, earlier this year discussed ‘opportunities’ with the company, it has emerged.

The external manager appointed by the NSW regulator to oversee Star Entertainment’s Sydney ­casino discussed “opportunities” at the company with John O’Neill, its former chairman, this year.

That discussion took place in Sydney before the company appointed Scott Wharton, a former Commonwealth Bank executive, as the venue’s chief executive.

Nick Weeks, an ex-NRL chief operating officer, will from Friday take control of the gaming operations at Star Sydney, having last year assisted with Crown Resorts’ response to several inquiries into the larger casino group.

He will have to work with Mr Wharton and with new Star chief executive Robbie Cooke until he is satisfied that the casino licence can be handed back to the ASX-listed company, a process that could take more than a year.

John O'Neill resigned as Star executive chairman in May.

Mr O’Neill quit as Star executive chairman in May, days before he was scheduled to give evidence at a NSW inquiry into the company headed by Adam Bell SC.

That review found Star had set up an “inherently deceptive and unethical process” to ­disguise $900m as hotel expenses in a bid to allow wealthy gamblers to bet at the ­venues, failed to check the source of the money, and knew it was in breach of the rules.

As a result of the findings, the NSW Independent Casino Commission imposed a $100m fine on Star and appointed Mr Weeks to allow the gaming floor to operate.

A lawyer, Mr Weeks has been at Wexted Advisors since July – when the firm was appointed an expert adviser to the NICC as it worked through issues at Star.

Mr Weeks never applied for a position at Star, and one was not offered, although he did discuss a number of issues including his experiences working at Crown and overhauling the company after its own failings were disclosed in an earlier NSW review, sources with direct knowledge of the meeting told The Australian.

As Crown’s executive general manager for regulatory response since March 2021, and later as an NICC adviser, Mr Weeks would have had significant experience at a crucial time, and just as it was needed by Mr O’Neill and Star.

The Star chief executive Scott Wharton. Picture: John Appleyard

An NICC spokeswoman told The Australian the commission was “aware of discussions between Nicholas Weeks and The Star, but is not aware of any applications for a specific role”.

“The NICC is not surprised The Star might have been interested in Nicholas Weeks given his expertise and background in the industry,” she said in response to questions on Tuesday.

Despite a $100m penalty and appointment of Mr Weeks, investors have responded positively to the NICC’s actions. Star shares rose 3 per cent, or 8c, to $2.72 on Tuesday. They rose 1.5 per cent on Monday after the NICC delivered its decision about the licence.

The NICC fine was the maximum allowed under legislation, and is the full and final penalty for the Bell inquiry breaches.

“The manager has initially been appointed for 90 days, but we anticipate it will take significantly longer for (Star) to prove its suitability and hence expect this time frame to be extended,” wrote CLSA analysts Justin Barratt and Oliver Ridge in a note to clients late on Monday.

“A key role of the manager will be to work with Star to conduct a ‘root cause analysis’ of the cultural issues at the company.

“Importantly for Star, the company will continue to be entitled to the earnings derived from the casino, after paying for the manager and his costs, while the licence is suspended.”

The CLSA brokers, along with those at Jarden and Jefferies, have also noted that the outlook remains positive, although there is expected to be a significant earnings hit once the NSW fine and those to be levied in Queensland and by financial crime watchdog Austrac are accounted for.

Former NRL chief operating officer Nick Weeks takes over Star’s Sydney gaming operations.

“We expect (Star) to receive a fine as a result of the external review of its Queensland operations,” Jarden’s Ben Brownette told investors. “It appears the extent of potential breaches in Queensland may not be as severe as those in NSW; nonetheless, this would represent the maximum fine. A potential fine from Austrac is unknown but we assume $100m,” he added in a note.

At Jefferies, equities analysts Simon Thackray and Kai Erman said: “Regulatory, legislative and operational change will be ongoing as NSW looks to implement all 19 of the Bell inquiry recommendations including cash caps on patron gaming (per day) and cashless card-based gaming.

“An eye on the NSW Crime Commission Report into the broader slots industry that is expected at the end of this month will look to comment and make recommendations on the operations of all 95,000 installed (electronic gaming machines) in NSW, of which only 1500 are currently installed at (Star).”

Some investors who had spoken to The Australian said Star could cope if it had 12 months or more to pay the $100m fine. A Star spokesman said on Monday: “The company has various sources of liquidity available to it to pay the fine over a time period still to be agreed with the NICC.”

NICC chief commissioner Philip Crawford had on Monday singled out Star’s new executive chairman Ben Heap, who succeeded Mr O’Neill, for demonstrating “genuine contrition and a desire to work … transparently”.