Latest Developments In NSW Ilga Star Review
The Star Pty Ltd has been participating in public hearings since 17 March. Two months later, hearings continue in the independent review of the company by the NSW Independent Liquor & Gaming Authority (ILGA). With Adam Bell SC in charge, the inquiry continues to produce shocking headlines and prompting company changes. The latest changes include more executive resignations and the suspension of the Star’s VIP program.
Where Were We?
When we last checked in with the Star Entertainment inquiry, the hearings had only been happening for a couple of weeks. Already, though, testimony alleged that Star concealed nearly $1B in suspicious financial transactions linked to high-stakes gamblers from China. Star executives misrepresented well over 500 financial transactions.
The risks of terrorism links and money laundering program leaks astounded members of the inquiry and the public alike. And it was more than simple allegations; there was video proof of some of the transactions.
Ultimately, Star CEO and Managing Director Matt Bekier resigned, effective immediately. John O’Neill AO stepped into the Executive Chairman position temporarily.
Meanwhile, a group of Star Entertainment investors filed a securities class action lawsuit in Victoria.
More Testimony, More Concerns
Bekier may have resigned from the company, but he still had to take the stand and testify in the ILGA probe. He did so in early May.
It didn’t take much questioning to reveal that there was widespread “bad culture” at the company. Communications were deceptive, and executive staff created an environment in which no other employees could challenge management. He admitted that the problem was systemic.
Bekier took some of the blame off the board of directors, saying they are rarely present for regularly-made decisions. Most members were simply not aware of the culture or the decisions that created it.
Most telling of all, Bekier admitted to letting the culture become what it was.
Specifically, he admitted to things like approving an $11M line of credit to a high roller. He also knowingly agreed to illegal practices and didn’t ask questions no matter how suspect the transactions.
Case of the Unsavory VIPs
One of the most interesting situations that came from the testimony pertained to a top member of the Star Casino VIP team. The unnamed man was a senior manager who mainly worked with Chinese high-stakes players.
Testimony revealed that he transferred $13.3M from a junket operator to his own bank account in 2020 and then…disappeared.
Another member of the same VIP team, Marcus Lim, allegedly received bribes (or bonuses) to handle corrupt transactions. He served as the President of International VIP Sales. During an investigation into his dealings, Star allowed him to remain on “gardening leave” for six months at full pay.
When questioned about these situations during testimony, Bekier did not agree with the assertion that the VIP team was “simply out of control.” He asserted that the VIP team had proper supervision, though he admitted it was vulnerable to exploitation.
Rebate Program Suspended
As testimony continued, the Star Entertainment Group decided to put a hold on all VIP reward programs at its casinos. On 9 May, it suspended all domestic and international rebate play programs until further notice.
In the past, such programs attracted regular customers by promising rewards for repeat business. It was also a key tool in attracting high-stakes gamblers and keeping them at Star properties. This will likely be a permanent decision to cease work with junkets.
The company also reaffirmed its commitment to suspend all work with junkets. It ended all junket programs in October 2020 but noted that it continues to work with regulators in light of the inquiry.
More Resignations and Management Changes
Those weeks of testimony in late April and early May prompted more changes in the upper management level of Star. Resignations included:
- Chief Financial Officer Harry Theodore
- Chief Casino Officer NSW Greg Hawkins
- Chief Legal & Risk Officer Paula Martin
- Board member Sally Pitkin
- Board member Gerard Bradley
- Executive Chairman John O’Neill
The Star initiated a search for appointments to replace those who departed or will depart.
Jennie Yuen will continue on as Star Secretary, a result of her appointment in July 2021. Christina Katsibouba will serve as Interim CFO. The Star appointed Michael Issenberg as a non-executive director, though that decision requires regulatory approval.
Note that O’Neill’s resignation is important, as he only recently took over for Bekier when he resigned. O’Neill agreed to officially step down on 31 May 2022.
Star wanted Geoff Hogg to serve as Interim CCO for NSW and Queensland, and he is doing so. However, in light of O’Neill’s resignation, Hogg will assume the role of CEO. Ben Heap will take over as Interim Chairman.
Testimony Resumes
This week will be the final week of testimony from planned witnesses. Interestingly, one of those witnesses will be Chairman O’Neill. Director Richard Sheppard will answer questions. And former National Australia Bank Director Andrew Bowen is on the docket as well.
Beginning 31 May, counsel will present closing submissions. Parties may submit responses between 14 June and through 21 June. Counsel will submit their replies on 24 June. That will conclude this part of the process.
The current delivery date set for Bell’s final report is 31 August. It may not be immediately available to the public.
