The secretive Hong Kong-based company backing Brisbane’s new casino precinct once tried to become a majority shareholder in the struggling Star Entertainment Group but pulled out after it learned that this would trigger probity checks in NSW.
Chow Tai Fook Enterprises (CTFE), which owns a 25 per cent stake in the Queen’s Wharf Brisbane project at the heart of The Star’s financial woes, has taken out a court order to prevent this masthead from publishing a report into allegations that it had a business connection to jailed junket operator Alvin Chau.
The Star’s new casino at Queen’s Wharf in Brisbane is at the heart of its financial troubles
The NSW Independent Casino Commission chair Philip Crawford told the NSW upper house on Friday that CTFE formally approached the regulator about becoming a majority shareholder in the ASX-listed casino giant in 2020. It abandoned this plan after the NSW government introduced a cap for mandatory probity checks on all investors with shares above 10 per cent, as recommended by the 2021 Bergin Report into Crown Resorts.
“We opened a file, sent them a letter and some months later the chairman of The Star said, ‘That’s not going to happen, you can close your file’, so no probity was undertaken in this state,” Crawford told the NSW upper house on Friday.
A CTFE spokesperson confirmed the discussions but denied they had withdrawn their interest based on the probity checks. CTFE now owns less than 3 per cent of The Star.
“Ultimately, the business case did not stack up,” the CTFE spokesperson said.
A source close to the negotiations who spoke on condition of anonymity said CTFE originally sought to own up to 20 per cent of The Star with Far East Consortium, its current joint venture partner on the Queen’s Wharf precinct.
The Star confirmed late on Friday it had finally sold Treasury Brisbane’s casino building after multiple failed attempts ahead of the opening of Queen’s Wharf.
It will sell the leasehold interest in the building to Griffith University for $61 million this month.
This is expected to alleviate a significant chunk of the financial pressure The Star faces, even though the sale price is well below the original agreement with Charter Hall to take over the casino, hotel and car park for $248 million.
NSW Independent Casino Commission chief commissioner Philip Crawford.Credit: Michael Quelch
Earlier in the week, The Star said it was not ready to lodge its financial accounts for the 12 months to June 30, despite the ASX suspending it from trading for failing to report last Friday. It has been locked in discussions with banks, the NSW and Queensland governments, and its major investors for weeks to try and find a way to stay solvent after the costs associated with Queen’s Wharf Brisbane exploded.
“The company confirms that the advice being provided has extended, from time to time, to considering the application of provisions of the Corporations Act 2001 [Commonwealth] [including the safe harbour provisions].”
Safe harbour provisions are enacted to protect a company’s board from being personally liable for debts in the event it cannot stay solvent. It’s often used when groups are considering a last-ditch restructure.
NSW Gaming Minister David Harris also confirmed at budget estimates that the government started making contingency plans for the potential collapse of The Star as far back as last year, when it was told that the casino was considering an application for safe harbour provisions.
“That’s a very complex matter which has been looked at in very great detail,” he told estimates. He ruled out further financial assistance.
“Our worry is that the Queen’s Wharf development has serious financial issues, and we don’t want NSW taxpayer money being deferred to that.”
The Queensland government waved through CTFE as a suitable casino operator in May, declaring the evidence did not substantiate that the company had deliberately concealed its relationship with jailed “junket king” Alvin Chau.
Queensland Deputy Premier Cameron Dick on Friday played down his government’s role supporting CTFE in suppressing the leaked probity report from being published, by agreeing to act as a witness in the case and initially tipping off the firm that this masthead had seen it.
“There’s an injunction [from the Supreme Court] that says the report is not to be released publicly,” Dick said.
“That is not an application made by the Queensland government, that is not a civil case that is brought by the Queensland government. The Queensland government was not a party to those proceedings.”
The injunction does not prevent anyone other than this masthead from publishing the report.
The Queensland opposition said this week it would release the report if it won government next month. Shadow attorney general Tim Nicholls said the Queensland government should not extend The Star any further tax breaks, and should not have given it a licence to operate the casino at Queen’s Wharf given what it knew about the company’s parlous financial situation.
“What was the government doing granting a licence to Star and a consortium including Chow Tai Fook ... days after they had been approached by Star and told that they were in financial difficulties?” Nicholls said.
“It stinks to high heaven.”
Chow Tai Fook also owns Alinta Energy in Australia. The Foreign Investment Review Board said it did not comment on what probity checks were carried out on specific companies.
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