Sydney Star Casino’s $900m in ‘dodgy’ cash deals, inquiry hears

Star Entertainment Group officials deliberately concealed ­almost $1bn worth of highly suspicious gambling transactions from law enforcement agencies and other institutions.

The Star Casino in Sydney. Picture: NCA Newswire / Gaye Gerard

Star Entertainment Group officials deliberately concealed ­almost $1bn worth of highly suspicious gambling transactions from law enforcement agencies and other institutions, using a controversial debit card to flout anti-money laundering procedures at its Sydney casino, an ­inquiry has been told.

The extraordinary allegations were raised on day one of a royal commission-style inquiry that is examining The Star’s suitability to continue holding its casino ­licence and whether its operations remain free from “criminal influence or exploitation”, among other factors.

By the conclusion of the first day’s hearing, the inquiry had been told $900m had been brought into Australia disguised as hotel expenses using a debit card that was open to exploitation and a method that remained completely opaque to intelligence agencies and law enforcement.

The revelations raise serious questions about the conduct of Star management executives who had knowledge of the suspicious transactions, as well as other entities informed of them, including NAB.

Concerns were also raised about the nation’s anti-money laundering agency, Austrac, and why it failed to identify the scam and act on these loop­holes during its own assessments of the debit card in 2018 and earlier.

The inquiry’s first witness, Paulinka Dudek, an assistant treasurer at the casino group, conceded the casino had misled NAB about the nature of cash withdrawals that were facilitated using a debit card known as China Union Pay, and which were eventually queried by the bank.

Owned by China Union, a financial services company based in China, the CUP card was issued to international high rollers for use on hotel services, including accommodation, but it was forbidden to use it for gambling.

NAB supplied the merchant terminals to The Star so CUP transactions could be processed, the inquiry heard; these terminals were located in The Star’s various hotels but not on the casino floors.

Patrons are understood to have swiped a card at the terminal, enabled by staff, who entered a merchant code for “hotel services” and printed a voucher that was redeemed on the casino floor, even though it was against policy and went unreported.

In 2019, China Union raised concerns about the use of its cards with the NAB, highlighting suspiciously high transactions at Star venues billed for hotel services. These concerns were forwarded by NAB to the casino for further analysis and response.

Answering questions in the witness box, Ms Dudek confirmed she had responded to NAB stating that a CUP card had been used to pay for “hotel accommodation services”, but failed to mention the card had been used to fund gambling activity, and that records indicated the funds ended up in “front money” accounts for gambling.

An invoice with a hotel room number had also been attached to the email, the inquiry heard.

“I suggest to you that your response was utterly misleading, do you agree or disagree?” asked counsel assisting the inquiry Naomi Sharp SC.

“I agree,” Ms Dudek said.

Ms Dudek said she had responded to NAB with input from the casino’s legal team, overseen by general counsel Oliver White, because she had been recently hired and was “still understanding how these transactions worked”. The responses were approved by the company’s chief financial officer Harry Theodore.

Ms Dudek said she later felt uncomfortable that “we weren’t being complete” with the bank.

“Did you feel that this conduct was unethical?” Ms Sharp asked.

“I don’t think I considered it at the time,” Ms Dudek replied. “I didn’t feel I could challenge a process that had been in place for a very long time at The Star.”

The CUP eftpos terminals were disabled in 2020, with approximately $900m in funds transacted through its cards.

A second witness, Sarah Scopel, a former group treasurer at the casino, said she became aware in 2019 that CUP cards were being used to fund gambling, despite prohibitions on this use.

“And when did you become aware of that?” asked Ms Sharpe.

“Towards the end of 2019,” Ms Scopel replied.

Additional reporting: Liam Mendes