Star board asks no questions about Suncity, key report may have been shredded

Star Entertainment’s anti-money-laundering team did not tell the company’s board about a Chinese junket operator exchanging backpacks of cash for gambling chips.

A gaming table inside Suncity-run Salon 95 at The Star. Image: The Star independent review

Star Entertainment’s anti-money-laundering team did not tell the company’s board about a Chinese junket operator exchanging backpacks of cash for gambling chips in an exclusive gaming salon at its casino, an inquiry has heard.

Meanwhile, a Star executive admitted she may have shredded a copy of a Hong Kong Jockey Club report, which circulated among Star management from June 2019 and revealed Suncity junket operator Alvin Chau’s links to Chinese triads and organised crime.

Despite a growing mountain of evidence – including Suncity junket staff being caught on CCTV operating a “casino within a ­casino”, flouting state laws – Star compliance manager Skye Arnott said she did not mention the “suspicious activity” occurring in Salon 95 in a board paper.

Nor did the board probe management about potential illegal activity at its Sydney casino during the presentation, which was made to the audit and risk committee following media allegations in July 2019 that rival Crown Resorts facilitated money laundering and other organised crime.

The revelations come after the inquiry heard Star’s former chief executive, Matt Bekier, dismissed an independent KPMG report that exposed “fundamental deficiencies” in the company’s anti-money-laundering program at a separate audit committee meeting in May 2018.

Star has repeatedly sought to distance itself from Crown, with chairman John O’Neill – now acting as the company’s chief executive after Mr Bekier’s resignation last week – denying last October allegations that it was no better than its scandal-plagued rival.

Ms Arnott contributed to a board paper that stated “Crown was wilfully blind to criminal activity of key business partners, particularly junket operators” and outlined Star’s response.

That response detailed Star’s ending of trade policies “embedded” in its anti-money-laundering, counter-terrorism financing program, but the paper did not mention that Suncity staff were caught on camera in 2018 engaging in suspicious behaviour at the Sydney casino.

Nor did Star management say in May 2019 that Star’s compliance team had been notified that Suncity had committed another seven breaches, despite the company introducing so-called “controls” to mitigate the risk.

Crucially, the board paper failed to disclose that senior management had read copies of a Hong Kong Jockey Club report that revealed Mr Chau and Suncity’s links to Chinese triads and organised crime.

Naomi Sharp SC, counsel assisting an inquiry into Star’s suitability to hold a casino licence in NSW – asked Ms Arnott: “That was completely remiss of you, was it not?” Ms Arnott, who told the inquiry the compliance officer’s role was to “alert the board to whether there is if there are non compliances with AML CTF program”, said she believed she had taken “appropriate steps by raising it with senior management and continuing to look into it”.

“It may be that I should have reported it to the board at this time. But that was the reason for my decision at that time.”

Ms Arnott said that activity the compliance team had previously reported to the board was “specific breaches of the act rather than transactions of concern”.

While Ms Arnott was critical of the Hong Kong Jockey Club report, which was written by Star’s due diligence manager Angus ­Buchanan during his time at the club, she said repeatedly that she could not recall when she received a copy of the report and may have shredded it, raising the eyebrows of inquiry head Adam Bell SC.

“In the shredder?” Mr Bell asked. “Well I was given a paper-based copy,” Ms Arnott replied. “I had no way of securing that. It’s very likely that I gave it to the person who gave it to me, or I didn’t keep a copy of that report because it was given to me on paper … I had no way to store it or secure it.”

The inquiry also heard that Star’s general counsel, Oliver White, asked staff if they became aware of cash transactions in Salon 95 to send him an email marked “privileged and confidential’, despite them not necessarily seeking legal advice. “Is it possible you were inviting the colleagues to mark their communications with you privileged and confidential to shield the production of their communications from the regulator?” Ms Sharp asked.

Mr White – who earlier agreed it was “unethical for a lawyer to claim legal professional privilege when the lawyer knows that he or she is not entitled to claim that privilege” – said that was not his intention. “No, I think I was saying to them that if there were circumstances where this was happening that there would need to be legal advice,” Mr White said. He admitted it was “quite clumsy”.

The inquiry continues.