Star should keep licence as key people to blame for failures have left: lawyer

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Star should keep licence as key people to blame for failures have left: lawyer

By Jack Gramenz
Updated

Senior managers who have since resigned are responsible for Star’s past failures and should not stop a renewed company from continuing to operate, a lawyer trying to save the group’s Sydney casino licence says.

The NSW Independent Liquor and Gaming Authority is conducting an inquiry into whether the embattled company should keep its licence.

Sydney’s Star casino in Pyrmont.

Sydney’s Star casino in Pyrmont.Credit:Flavio Brancaleone

Kate Richardson, SC, closed Star’s case on Thursday after the inquiry spent months examining claims that the casino enabled suspected money laundering, organised crime, fraud and foreign interference.

She told the inquiry that Star was probably not fit to hold a casino licence in the past, but it is now.

“The key persons who were responsible for or failed to stop misconduct are no longer at Star,” she said.

She said most of the board would retire following the inquiry, and Star had already begun fixing its failures.

“We say that the actions that have been taken to date by The Star and the forward plan for renewal and change demonstrate the necessary commitment to the characteristics of suitability,” she said.

Star accepted that an arrangement with overseas money remitter Kuan Koi lacked transparency and obscured the source of funds transferred from overseas patrons to the casino through Koi’s accounts, posing risks that Star could fall foul of anti-money laundering and counterterrorism financing laws.

It also accepted it was concerning that the arrangement changed and continued without the board’s knowledge or proper checks in place.

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The process began in 2018 as an “interim arrangement” sparked by a Chinese government crackdown on money leaving the mainland for gambling, Richardson told the inquiry.

The arrangement was originally intended to run until Star subsidiary EEIS could begin providing and collecting loans from overseas patrons.

Money would be collected overseas and go through Koi’s bank accounts before reaching Star.

“They amount to significant failures on the part of the managers who were responsible,” Richardson submitted.

She said senior managers also failed to inform the authority about Star’s acceptance of funds via China Union Pay cards, and should have understood they might not agree it was legal.

Richardson said the review could find Star failed to be frank and transparent with the regulator, as well as finding relevant managers were prepared to court risk in pursuit of profits.

However, she said the departure of staff who failed in multiple areas and the path to renewal Star has since embarked upon should allow the inquiry to find it suitable to retain its licence.

A 2019 memorandum from Star general counsel Oliver White warned the board that the company had not been able to verify whether the methods used complied with the law.

Star’s compliance with the law became even murkier when the arrangement morphed over time.

“The board wasn’t briefed at all about the modified Kuan Koi arrangement,” Richardson said.

Under the modified arrangement, Koi could also facilitate the deposit of “front money” for overseas patrons travelling to Australia to gamble.

This changed the risk because Star would no longer be conducting due diligence on the patrons and their source of funds, Richardson said.

Koi was effectively acting as a remitter despite being unlicensed, Richardson submitted, and Star made an error of judgment.

“[Star] accepts that the more prudent course would have been not to pursue the Kuan Koi arrangement at all,” she said.

Star also relied on overseas remitters to comply with the AML-CTF laws in their own jurisdiction, which did not always happen.

“A reasonable expectation of conduct by others may be relevant but The Star may not outsource its responsibilities,” Richardson said.

She submitted the modified arrangement with Koi, which continued until 2020, was initiated and maintained by the VIP credit and collections team.

Legal and risk assessments weren’t conducted and the arrangement was not formally approved nor disclosed to the board, she said.

Inquiry chairman Adam Bell, SC, who will ultimately decide Star’s suitability, did not appear convinced the departure of some managers and board members was enough.

“The key question is whether the regulator and ultimately the state can trust The Star,” Bell said.

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“Trust takes time to build up, and in this context relevantly requires a history of the casino operator acting honestly and transparently and with integrity.”

He said Star had not rectified incorrect evidence given at a separate inquiry into rival casino operator Crown regarding gang-linked junket operator Suncity and its private VIP gaming room at The Star, where an illegal cage operated.

Star was asked in October whether any matters that could affect its suitability had not been previously disclosed.

“There was not a word provided in response concerning the extraordinary activities in Salon 95, and it was left to this review to uncover this wrongdoing,” Mr Bell said.

“Why shouldn’t I conclude that the concealment of this important matter from me was a continuation of the deliberate pattern of concealment ... [which] continued right up until the time of this review?”

Richardson said Star accepted it should have disclosed its dealings with Suncity before the inquiry began.

Star also accepted the review could find there was a pattern of concealment.

“But it was a pattern engaged in by management who are no longer employed,” Richardson said.

AAP

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