Star Entertainment faces second Bell Inquiry at Sydney Casino

Mr Bell’s initial inquiry clearly stated that it was “unable to assess the suitability of star finance chief Christina Katsibouba, chief customer officer George Hughes and company secretary Jennie Yuen to remain in management”. Jessica Mellor, the former chief operating officer, has been promoted to head of Gold Coast Casino.

The ICC’s chief commissioner, Philip Crawford, said his main concern was the leadership team’s “ability and capacity” to carry out its recovery programs.

“I’m just not sure to what extent they’ve addressed cultural reform, which Adam Bell said was serious and endemic and needed a lot of work,” Crawford said in an interview with The Australian Financial Review. “We want to see the progress they have made in this particular area. It’s really important.”

The new review will consider whether Star has enough cash to operate properly, as well as its management, reporting lines and compliance with internal controls. The regulator said it was concerned that a large portion of the remedial action was the result of the actions of a state-appointed special manager and was not the company’s actions.

Star has not yet responded to the new investigation, which will take place in camera for 15 weeks and conclude in May. The first Bell review, as well as a similar investigation in Queensland, where Star operates casinos in Brisbane and the Gold Coast, led to the resignation of key figures including the company’s chief executive Matt Bekier.

Star’s share price has fallen to just $56 from more than $3 before the investigation. They were suspended from trading on Monday. Debt concerns and tougher trading conditions, as well as a writedown in the value of its casinos, forced Star to seek additional financing twice last year. The first, at $1.20 a share, raised $800 million in February. The second offering in September raised $750 million at just 60 cents per share.

The investigation comes two months after Mr Crawford warned Star that he was unhappy with the company’s ability to operate its flagship casino without oversight despite major investments in turnaround programs. “We are still not convinced of that [giving back the licence] is appropriate,” Mr. Crawford said on Monday.

He said the casino’s special manager, Nick Weeks, a former NRL manager, had been actively working to identify weaknesses in the business. “These internal control measures … surrounding the conduct of the casino are not intended to be applied in good faith,” he said. “You are the law. The license is a privilege, not a right.”

If Star is found to be eligible to hold a casino license, the suspension will be lifted. Other options include extending Mr. Weeks’ term as special manager or retiring him but maintaining the suspension – which would result in the casino’s closure. In the worst case scenario, Star’s operating license will be revoked.

The Bell investigation went into detail about the company’s cultural deficiencies. It described the culture as one “that condones unethical behavior, puts business goals above compliance goals, encourages risk, and discourages bad news.”

The Star must work quickly to convince regulators that it should not lose its provisional casino license. Louise Kennerley

In his report, Mr. Bell highlighted areas that needed investigation, including the retention and promotion of employees who were part of the culture that enabled misconduct. “The cultural dysfunction had significant negative consequences for [Star’s] Ability to withstand the risks of criminal infiltration and money laundering,” he wrote.

A second investigation will intensify pressure on the casino operator, which secured a reprieve from the New South Wales government late last year after months of uncertainty over tax rate increases that it said would drive it out of business .

Star’s new CEO Robbie Cooke had previously floated the prospect of selling the Sydney business after the company slashed the value of its three casinos by more than $2 billion. It hired Barrenjoey Capital Partners to do the valuation but later shelved those plans.

The financial crimes watchdog is also suing Star, alleging that the company allowed 117 high-risk VIP guests to funnel billions of dollars in dirty cash through its casinos over the years.

Suncity, the junket operator headquartered in Macau, turned over $15.5 billion between December 2016 and September 2020 alone, and players recorded a total loss of more than $150 million, according to the Australian Transaction Reports and Analysis Center claimed in documents filed in federal court.

The initial Bell Inquiry found evidence that Star knew Suncity was potentially linked to several criminal enterprises, including gangs involved in “illegal bookmaking, drug trafficking and large-scale money laundering activities.”

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