A law firm is considering bring a case against SkyCity’s former execs over Adelaide money laundering

A litigation funder is considering bringing a legal action against former SkyCity directors and executives over breaches of money laundering laws at the Adelaide Casino.

SkyCity is facing another potential legal headache.

Litigation Capital Management is considering bringing legal action against former SkyCity directors and officers relating to the company’s failure to implement adequate money laundering controls at the Adelaide Casino, leading to the group copping a $67m fine earlier this year.

LCM is considering launching a statutory derivative action against the directors and officers, and is advertising for SkyCity shareholders to join its claim.

A statutory derivative action is similar to a class action, however differs in that any money awarded if the matter is successful flows back to the company.

SkyCity was hit with a $67m fine by the Federal Court in May this year, after admitting to “serious breaches” of anti-money laundering and counter terrorism financing laws.

The financial crimes regulator Austrac brought a case against SkyCity in late 2022, alleging that more than $4bn was gambled through the casino by 59 suspicious customers.

Austrac’s allegations included that one customer, who gambled $4.8m over three and a half years, was not banned from the casino until 10 months after he was jailed for more than eight years for money laundering and heroin trafficking.

SkyCity Adelaide on the banks of the River Torrens.

Another casino client, identified as customer 33 in the Austrac action, gambled more than $33m over the course of a year it was alleged, and had told the casino they were at different times employed as a part-time waiter, farmworker or cleaner, the 800-plus page claim said.

“Many (suspicious gamblers) engaged in large cash transactions and transacted with cash that appeared suspicious including in plastic bags, garbage bags, cash bundled together with rubber bands or irregular straps, cash that was dirty and cash that appeared to have been buried,” the court filing said.

The breaches covered a period from 2016 to 2022.

The money laundering issues also triggered a state government review of SkyCity’s suitability to hold the Adelaide Casino licence, which is ongoing, and is due to be handed to the government by the end of the calendar year.

LCM said it will allege in its proceeding that SkyCity’s leaders failed in their duties.

“The proceeding will allege that directors and officers of SkyCity Adelaide breached their statutory and fiduciary duties and/or were negligent by reason of their failure to implement adequate anti-money laundering/counterterrorism financing programs, their involvement in high-risk customer decisions and systemic compliance failures at SkyCity’s Adelaide casino,” LCM says in an email.

“This proceeding would be supported by LCM (or a related entity), a third-party litigation funder.

“If the claim is successful and financial compensation is recovered from the proposed defendants, legal costs payable and a funding commission for the litigation funder will be deducted from the recoveries, with the remainder paid to SkyCity for the benefit of its shareholders.

“The costs deducted from the recoveries will not exceed the amount of compensation to which the SkyCity may become entitled.”

SkyCity’s former Australian chief operating officer and head of the Adelaide operations David Christian resigned in April, before the Austrac matter was formally settled.

In June, the company’s chair Julian Cook apologised for the company’s failure to implement appropriate safeguards.

“While we take this responsibility seriously, we accept that we have failed to live up to the standard required of us and for this, on behalf of the SkyCity and SkyCity Adelaide boards and management teams, I apologise,” he said.

It has been a difficult year for SkyCity, which plunged to a $NZ143.3m loss, drive in part by an $86.2m write down of the Adelaide Casino, due to the implications of the introduction of mandatory carded play in early 2026.

SkyCity was also on the wrong side of a legal determination in South Australia relating to the taxation of loyalty points, which will cost it at least $13.1m and potentially another $25.3m in penalty interest.

SkyCity’s Australian boss David Christian resigned earlier this year.

In New Zealand, the company agreed in July to shut the gambling areas of the Auckland Casino for five days after failing to adequately monitor incidents of continuous play by a customer, and was also hit with a $NZ4.16m fine for historic breaches of New Zealand’s anti-money laundering laws.

SkyCity also this year suspended its dividend payouts until 2026 to ensure “headroom” to ­accommodate the Austrac fine and other debt arrangements.

SkyCity has been contacted for comment.

The company’s shares were trading 1.9 per cent lower on Tuesday at $1.27, not far from their 12-month low of $1.19.