Alarming Evidence Heard at Second Star Sydney Inquiry

The second inquiry from the New South Wales Independent Casino Commission (NICC) regulator into the license suitability of The Star Sydney casino in Australia has kicked off by hearing shocking revelations regarding the property’s senior leadership.

Opened in 1995, The Star Sydney is the second largest gambling-friendly facility in Australia, with its two-story casino hosting roughly 1,500 slots as well as a large selection of gaming tables offering baccarat, poker, craps, blackjack, and roulette entertainment. 

The 351-room venue owned and operated by Brisbane-headquartered The Star Entertainment Group Limited also accommodates a 2,000-seat theater, a trio of restaurants and 130 serviced apartments alongside a spa, a health club and a multitude of bars.

Original Offense 

The Star Sydney was left reeling in 2022 after an initial state-sanctioned investigation found significant shortcomings in its cultural, communications, and anti-money laundering processes. 

This exercise determined the property located in the Pyrmont district of Sydney had also flouted the rules by misclassifying over $600 million in debit card gambling transactions from Chinese patrons before going on to lie to its banks in an effort to conceal this fraud.

However, the five-star venue was controversially allowed to keep its NICC-issued casino license under a conditional suspension so long as it agreed to pay a record fine of just over $65 million and clean up its act by completing a remediation plan under the supervision of independent manager Nicholas Weeks. 

The second inquiry is now being held to determine if this process has been satisfactorily completed or whether any further action is required.

Mean Messaging

This fresh 15-week examination began on Monday with investigators being shown correspondence between the former Chief Executive Officer for The Star Entertainment Group Limited, Robbie Cooke, and the operator’s current Chair, David Foster. 

In this communication, News Corp Australia reports, the pair discussed information surreptitiously gleaned from Weeks’ diary, including the particulars of a February meeting the independent manager had with NICC representatives and a number of lawyers.

Cooke was appointed to lead The Star Entertainment Group Limited in October of 2022 after a six-year spell serving as the Chief Executive Officer for Australian financial services firm Tyro Payments Limited. But the 59-year-old unexpectedly stepped down last month amid an assertion that his position had become untenable due to pressure from the New South Wales casino regulator.

Astonishing Admission

Upon learning of the identity of the law firms attending the Weeks meeting, the inquiry was reportedly told Cooke wrote ‘they are up to something’ before Foster replied, ‘they are prepping for war; we better do the same’. In response to a question from assisting counsel Caspar Conde, the independent manager purportedly described the pair’s decision to access his diary as ‘extraordinary’.

“To suggest they want to go to war with the regulator and me in circumstances where their license is suspended is extraordinary,” Weeks reportedly told the inquiry.

Peculiar Plan

As if this wasn’t bad enough, investigators reportedly also exhibited evidence in which Cooke and Foster were seen discussing the possibility of launching a shareholder class-action lawsuit against Weeks. This was purportedly followed by the revelation Foster had told Cooke any unfavorable report into The Star Sydney’s progress from the independent manager could well be used by the Sydney-listed casino operator as a ‘catalyst to get rid of Weeks’.

“It’s difficult to reconcile everything the company has told me and everything it tells the market and the regulator in relation to its motivations to reform,” Weeks reportedly stated. 

“I find it extraordinary that the Chair of a listed company and a Chief Executive Officer are exchanging messages contemplating a class-action from shareholders against me personally and the NICC in circumstances where their public position is that they’re working cooperatively.”

Fiscal Faltering

All of this comes just a few days after The Star Entertainment Group Limited released its first-quarter financial results, showing a decline of 4.6% year-on-year in net revenues to approximately $270.7 million. 

Normalized earnings before interest, tax, depreciation, and amortization for the three months to the end of March furthermore fell by 11.5% to just over $24.4 million, although operating expenses improved by 4.2% to some $178.4 million.

The Star Entertainment Group Limited, which is additionally responsible for Queensland’s The Star Gold Coast and Treasury Casino and Hotel properties, added gaming taxes and levies for the three-month period had dropped by 2.9% year-on-year to slightly beyond $67.8 million as it ‘increased resourcing in the risk, controls and transformation teams to strengthen the control environment’.

The company also disclosed ‘premium gaming room’ receipts from The Star Sydney had slumped by 19.3% year-on-year while the corresponding figures from its The Star Gold Coast and Treasury Casino and Hotel venues were down by 20% and 28%, respectively.

Nevertheless, the embattled operator finished by expressing optimism after the trio’s ‘main gaming floor’ revenues improved by an average of almost 5.5% to push its company-wide quarterly net profit after tax up by 86.4% to a deficit of about $4.4 million.

(Image: Timon Schneider / Alamy)