Star boss Matt Bekier failed to tell board of China cancellation, court told

Former Star Entertainment chief executive Matt Bekier failed to inform his board that the casino operator had cancelled the use of China Union Pay cards in 2020, a court has been told.

Former Star Entertainment CEO Matt Bekier.

Former Star Entertainment chief executive Matt Bekier failed to ­inform the board that the casino operator had cancelled the use of China Union Pay cards in 2020 after growing concern they were used for prohibited gambling purposes, the Federal Court has been told.

Ruth Higgins, chief counsel for the Australian Securities & Investments Commission, told the court the CUP cards were being used to transfer large sums via NAB for gambling by Chinese guests in Star casinos against Beijing’s efforts to crack down on ­illicit gaming.

“ASIC’s case is that when Mr Bekier was informed of the cessation of the CUP process, his duty to the company required him to inform the board of what had gone on and why management had felt it necessary to cancel the acceptance of the cards,” Dr Higgins said. “From very humble beginnings, the CUP service became a very important funds transfer mechanism for some domestic and international gaming guests.

“The risk profile had increased due to greater focus on capital controls in China, expanded use beyond that in the operating procedures, and high transaction ­volumes.”

Dr Higgins on Thursday finished her opening submissions in a hearing that will detail allegations that 10 former Star executives and directors breached money-laundering controls and corporate fiduciary duties between 2016 and 2022.

The court was told that Mr Bekier should have acted to inform the board after the company received a warning letter from China Union Pay about the illicit use of its cards for gambling purposes on March 3, 2020.

Ruth Higgins SC.

The court was told Star earlier had incorrectly informed CUP and its own banker, NAB, that the funds transferred from China were used for non-gaming purposes.

“That letter made it clear that CUP had understood from the responses passed on by NAB from Star that CUP cards had only been used for accommodation services and did not include gambling,” Dr Higgins said.

“Mr Bekier knew in March, 2020, and we submit he had known for a long time before that, that understanding was not correct and that the purpose of the CUP process was to enable patrons to obtain funds for gambling via their CUP cards.

“It was thus apparent to Mr Bekier, or ought to have been, that there was at least a risk that CUP and NAB had been misled by Star. “And that if that had occurred, it would give rise to all the potential problems that we’ve already identified.”

Dr Higgins said a reasonable CEO and managing director in Mr Bekier’s position would have appreciated the representations were “badly inaccurate” and informed the board. Former Star chief counsel Paula Martin also ought to have taken steps to ensure that Mr Bekier and the other members of Star’s board were told precise details of use of the cards.

Ms Martin and former chief ­financial officer Harry Theodore had failed to prevent an email from Star to NAB that claimed none of the funds patrons obtained from their CUP cards were used for gaming-related pur­poses.

“The email stated those funds were instead used to fund non-gaming expenses such as accommodation, private jet travel, expensive goods such as wine and jewellery and tourism services,” Dr Higgins said.

ASIC claims Mr Bekier and Ms Martin’s actions risked Star losing its casino licence and causing other harm in contravention of its fiduciary duties under the Corporations Act.

ASIC last week struck a settlement deal with Mr Theodore ahead of the start of the case against his fellow executives.

Mr Theodore has agreed to be disqualified from running a corporation for nine months in return for ASIC settling its case against him. Earlier this week the court was told former Star executives were “incurious and complacent” about alleged criminal activity and money laundering involving junket operators at the company’s casinos, including bags of $50 notes delivered ­secretly to a private gaming salon at its Sydney casino

It also heard former Star chairman John O’Neill was sent a document showing a Macau-based casino junket operator had alleged links to organised crime a year before the board approved boosting its credit facility by $30m.

Dr Higgins said a consultant’s report sent to Mr O’Neill about Suncity founder Alvin Chau in 2017 highlighted Chau’s alleged links to triad gangs and organised crime figures. In January 2023, Chau was jailed for 18 years in Macau after being convicted of operating illegal gaming activities, running a criminal organisation and other charges.

Dr Higgins said Star executives had responded with “glacial inertia” to reports Suncity was flouting strict cash handling regulations at a high-roller room operated by the junket operator at Star Sydney. She said this included a warning from one of Star’s senior lawyers that breaches of the regulations at the room, known as Salon 95, risked exposing the company to serious legal repercussions as well as loss of its casino licence.

The hearing has been adjourned to Wednesday, February 19.

Originally published as Star boss Matt Bekier failed to tell board of China cancellation, court told