Star’s 130-point ‘pathway to suitability’

Star Entertainment’s shares are higher after it promised ‘urgent’ changes as part of a two-year, 130-point remediation plan to keep its Sydney casino licence.

Star Entertainment is making several changes to hold on to its Sydney casino licence. Picture: Nikki Short

Investors have cautiously welcomed Star Entertainment’s rehabilitation plan, as it pledged “urgent changes” in the fight to keep its casino licence in Sydney.

Australia’s second-biggest casino operator released a 130-point plan of action on Tuesday, promising a raft of projects from whistleblower programs to technology upgrades and improved internal reporting standards.

It will boost physical monitoring, including enhanced face-to-photo verification of guests, and enter a voluntary information-sharing protocol with rival Crown Resorts.

The promise of “immediate action” follows scathing findings earlier this month from the NSW Independent Casino Commission (NICC) that it was not suitable to hold a licence.

In its response to the report by Adam Bell SC in his review of The Star Sydney, Star Entertainment said it accepted the finding of unsuitability and was committed to making the changes needed to keep the licence.

“We have overhauled our approach including undertaking a frank and rigorous assessment of the root causes of our unsuitability,” Star Entertainment chairman Ben Heap told the market. “The company has developed a transformation plan that includes “significant organisational changes, role and reporting-line changes, and real actions, to demonstrate that the commitment to cultural change is real.”

But the casino group has a long road ahead, with full implementation of the plan not scheduled for completion until the end of 2024.

Shares in The Star lifted 1.1 per cent, or 3c, to $2.66, matching their closing price on September 9, the last trading day before the Bell report was released.

They are still down 29 per cent from January’s peak of $3.75.

Robbie Cooke is set to enter Star as its chief executive, which will leave him to drive its rehab plan. Picture: Ric Frearson

Earlier this month, NICC chair Philip Crawford made it clear he was not getting the “vibe” from Star that it understood its “problems” and was showing the necessary leadership to fix them.

Star and Melbourne-based rival Crown Resorts are both in the midst of massive overhauls after it was discovered rules and regulations were being openly flouted and some $1.5bn of illegal cash had flowed through their businesses, much of it laundered for Chinese organised crime gangs through junket operators who organised trips for high-rolling gamblers, including airfares and lines of credit.

Star had not addressed these issues thoroughly enough to remain in business, according to John Langdale, honorary research fellow at the Department of Security Studies and Criminology at Macquarie University, who believes it is not enough to just rule out working with junket operators.

“It is all very well for Star to promise to be a “good citizen” when it is up against the wall, but what happens in the future when the economics of the casino start to look fairly poor,” Mr Langdale said. “All they are doing is dropping the junket operator. How are they going to collect debts in China? This was a major advantage of using junkets, since they use Chinese criminal groups (Triads) for debt collection.”

Both Star and Crown have been accused of arrogance during commissions of inquiry into their unsuitability to hold casino licences, supposedly regarding their casino licences as a right rather than a privilege that is subject to rules and regulations.

The new chief executive of The Star Sydney, Scott Wharton, believes his “fresh eyes” — he has been in the role eight weeks — will help push the remediation plans ahead “urgently” and that the company is “fully committed to doing what it takes” to keep its licence in Sydney.

Star’s new plan to keep its licence in Sydney includes “immediate actions” to make changes, and is structured along nine “workstreams”: governance, people, culture, risk and compliance management, financial crime, safer gambling, investigations, technology and data, and communications.

The casino operator said that by the end of 2024, it hoped to achieve all the milestones in the plan, which should mean it had then addressed and implemented the Bell recommendations and findings.

To date, eight of the 130 “milestones” had been completed, with another 29 due for completion by the end of December, it said.

Star Entertainment interim chief executive Geoff Hogg quit this week. Picture: Liam Kidston

Star has appointed Allen & Overy as the independent monitor to provide independent assurance and reporting to the board and regulators on the progress of its remediation plan.

“We intend to do whatever is necessary, in consultation with NICC, to restore The Star Sydney to suitability,” said Mr Heap in the statement.

“We submit that the appropriate action NICC should take is to allow The Star Entertainment Group to continue to operate the licence, under strict supervision and being held accountable to the milestones on the Remediation Plan.

“Achieving those milestones should give NICC confidence that TSEG has restored suitability.”

On Monday Star Entertainment’s acting chief executive and the long-serving boss of its Queensland casinos, Geoff Hogg, quit the company, ahead of its response to the Bell report.

Mr Bell found that Star – with a string of casinos and a market value of more than $2.6bn – had set up an “inherently deceptive and unethical process”, ­dis­guising more than $900m as hotel expenses to allow wealthy Chinese gamblers to bet at the ­venues.

He found it had failed to check the source of the money, continued to deal with patrons with known links to triad criminal gangs and knew for years it was in breach of the rules.

Star Entertainment has appointed Robbie Cooke as the new chief executive, subject to regulatory approval, as well as a new group chief risk officer, company secretary, and acting general manager compliance, and three new non-executive ­directors to the board.

Originally published as Star’s 130-point ‘pathway to suitability’