Corporate watchdog ASIC has launched civil proceedings against 11 current and former Star Entertainment executives over alleged breaches relating to oversight of anti-money laundering protocols at the company’s casinos.
ASIC’s case includes claims against members of the Star board between 2017 and 2019, including former chairman John O’Neill, former chief executive Matt Bekier and directors during that time period – Katie Lahey, Richard Sheppard, Gerard Bradley, Sally Pitkin, Ben Heap and Zlatko Todorcevski.
ASIC Chair Joe Longo said a statement on Tuesday announcing the proceedings that the role of directors was critical to a company’s general standing and performance, including how it deals with significant issues.
“As I’ve said on many occasions, directors and officers are a critical part of the conduct of business in Australia. Their duty is to understand the operations of the company over which they preside, and the particular risks faced by the business. They are required to bring an inquiring mind to business operations. It is not ‘set and forget.’”
ASIC is seeking penalties against the directors and is also asked the court to make findings against a host of Star executives including former general counsel Paula Martin as well as former chief casino officer Greg Hawkins and chief financial officer Harry Theodore.
ASIC’s action comes just months after inquiries in NSW and Queensland found Star was unfit to hold a licence over numerous suspected breaches of anti-money laundering laws at casinos in Sydney, Brisbane and the Gold Coast.
ASIC Deputy Chair Sarah Court said in the same statement that, “ASIC alleges that Star’s board and executives failed to give sufficient focus to the risk of money laundering and criminal associations, which are inherent in the operation of a large casino with an international customer base.”
ASIC alleges the Board members approved the expansion of Star’s relationship with certain individuals with reported criminal links, rather than addressing money laundering risk by inquiring into whether Star should be dealing with them. ASIC also alleges that Board members, when provided with information about money laundering risks affecting Star, did not take steps to make further enquiries of management about those critical risks and that this was a breach of their director duty obligations.
ASIC further alleges that Mr Bekier, Ms Martin and Mr Hawkins breached their duties by:
- Not adequately addressing the money laundering risks that arose from dealing with Asian gambling junket Suncity and its funder, as well as continuing to deal with them despite becoming aware of reports of criminal links; and
- Not appropriately escalating money laundering issues to the Board.
ASIC alleged Ms Martin and Mr Theodore knowingly permitted misleading statements being provided to National Australia Bank (NAB) regarding the use of debit cards issued by China Union Pay International Ltd (CUP) at NAB ATMs located on Star’s premises.
Those statements disguised the fact that Star was permitting CUP cards to be used for gambling, which was prohibited by CUP. ASIC is aware over $900 million was obtained by Star customers using CUP cards in NAB ATMs from 2013 to 2019. ASIC also alleges that they, and Mr Bekier, failed to report these matters to Star’s Board.
ASIC said Suncity and its funder organised groups of high-roller overseas customers, known as junkets, to visit Star casinos. Suncity was Star’s largest junket, with Star’s turnover from Suncity being approximately $2.1 billion, $4 billion and $5.9 billion for the 2017, 2018 and 2019 financial years respectively.
The ASIC statement said breaches of director’s duties, s180 of the Corporations Act, attract a maximum penalty of $1,050,000 for each breach in the period 2017-2019.
During its investigation, ASIC engaged with AUSTRAC and the gaming regulators in NSW and Queensland.
Star shares edged up 0.3% to $2.59 because this is all seen as ‘old news’
What is not old news is the size of the fines AUSTRAC obtains from Federal Court actions.
The size of those fines will make the $200 million from the NSW and Queensland government look small.
