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AUSTRAC expands probe into Crown suitor Star casino
By Colin Kruger
Crown Resorts rival, and would-be suitor, The Star Entertainment Group said anti-money laundering agency AUSTRAC has expanded its investigation into the casino operator’s alleged money laundering failures.
In a statement to the ASX on Friday, the company said that following AUSTRAC’s initial investigation at its Sydney casino, it “has subsequently been advised by AUSTRAC that it has expanded the scope of its investigation to other entities within The Star group.”
The Star’s potential merger with Crown Resorts now faces the distraction of an Austrac investigation and public inquiry. Credit: Louise Kennerley
The Star operates casinos in Sydney, Brisbane and the Gold Coast and has recently spent hundreds of millions of dollars revamping these properties.
The expanding investigation by AUSTRAC will add to the regulatory distractions for The Star as it considers a response to Blackstone’s $8.9 billion bid for Crown.
The NSW gambling regulator, the Independent Liquor & Gaming Authority (ILGA), is also preparing to hold public hearings in March as part of a review of Star’s Sydney casino licence following allegations of governance breaches.
On Friday, The Star said AUSTRAC had advised it would be requesting information and documents from the company as part of its investigation.
“AUSTRAC has advised that it has not made a decision regarding the appropriate regulatory response that it may apply to The Star, including whether or not enforcement action will be taken,” the company said.
The Star said it takes its anti-money laundering obligations very seriously and will fully co-operate with AUSTRAC in relation to its requests for information and documents and the investigation.
The Star’s shares closed 2 per cent lower on Friday at $3.54.
On Thursday, the James Packer-backed Crown received an $8.9 billion offer from private equity group Blackstone, which has the support of Crown’s board.
The Star withdrew its $12 billion merger offer last year as Crown’s licences for its Melbourne and Perth casinos came under threat from royal commissions that examined criminal activity by its customers and other malpractice, but it has said it is still interested in combining the two casino outfits.
The Star’s inquiry by ILGA was triggered by allegations of similar governance breaches.
“The Star withdrew its conditional, non-binding indicative proposal to merge with Crown on 23 July 2021,” a Star Entertainment spokesman said on Thursday.
“As we have said consistently since that time, The Star remains open to exploring potential value-enhancing opportunities with Crown.”
Mr Packer’s private company, CPH, also appears to be hoping for rival bidders such as The Star to emerge in response to Blackstone’s latest offer.
“The assets of Crown Resorts are world class and this is reflected in the significant interest in the company,” the company said in a statement on Thursday.
Morningstar analyst Angus Hewitt flagged that the Crown board’s unanimous support for the Blackstone offer does not mean it is a done deal.
“The increased offer is non-binding and remains conditional on completion of due diligence, support from shareholders, unanimous approval from the board, final approval from Blackstone’s investment committees and approval from state gaming regulators.”