Star in Hot Water over Criminal, Casino, Corporate Law Breach Allegations

Further accusations of illegal behavior leave Star in a difficult position, as serious breaches of multiple laws surface on the second day of SC Naomi Sharp’s submissions.

Second Day of Hearings, Three More Laws Allegedly Breached

Star Entertainment is under further scrutiny on the second day of Naomi Sharp SC closing submissions at the Bell inquiry. Sharp is assisting counsel to lead counsel Adam Bell SC who is part of the inquiry in the ongoing regulatory review of Star. On her first day, Sharp appealed to Bell that Star is “not fit” for a license. Now more accusations and allegations come under the spotlight, as Sharp says Star has broken criminal, as well as gambling laws in NSW, and that it has also breached the Corporations Act, meaning three different law breach accusations in a single day.

Criminal and Gambling Law Breach

The alleged gambling and criminal law breaches pertain to Star setting up its China UnionPay (CUP) system and then “misleading” its bank – NAB. An identical implementation of CUP has already been found to be illegal by the Victorian royal commission into competitor Crown Resorts last year. Crown was just recently hit by a record $80 million fine for that transgression. Needless to say, this serves as a precedent for condemning Star’s CUP shenanigans as well.

As per Sharp’s words, “every time the CUP card was swiped” in the lobby and the money was made immediately available in the casino, “there was a breach”. Apparently, this was a breach of the Casino Control Act, since it requires a due diligence process before making loans. By making the money available in the casino before it was in Star’s account, thus providing credit by circumventing the official procedure, Star is accused of breaching the Casino Control Act.

Since 2012, Star allegedly processed nearly 2000 transactions by 1300 gamblers through its CUP scheme. After a more thorough examination of Star’s CUP records, it appears there have been twelve payments in a single day, coming from billionaire Phillip Dong Fang Lee, amounting to $11, which is in direct conflict with Lee’s testimony about never staying at Star’s hotel.

Furthermore, Sharp says, Star is breaking the law by “misleading” NAB about the money. Under the CUP program, Star has apparently facilitated north of $900 million of banned transactions, which were inappropriately reported to NAB as “hotel invoices”, although it was gambling money.

Corporate Law Breach

The third major breach accusation comes in the face of burying a negative KMPG report which found Star to be noncompliant with AML laws. Star tried to “resist production” on AUSTRAC for 16 months, by providing a “baseless claim for the legal professional privilege”. “We say this is quite inconsistent with the expectation that a casino licensee will be clear and transparent with its regulators,” Sharp said.

Not disclosing the report to the market might be construed as an infringement of continuous disclosure obligations, which is a major breach of the Corporations Act.

Past Misdemeanors, Serious Allegations

These accusations build upon an already growing case against Star’s behavior and practices. Many C-level employees have already departed, and negative news full of allegations has been steadily pouring with Star-related headlines. Not all of it has been “questionable” as well, with an ex-employee running away with stolen money being a cut-and-dry example of the company’s internal dubious culture. Star, however, is trying to build an image of clearing up its act, but, as Sharp puts it, it is only “at the beginning of its journey” in accomplishing that and these new findings are not making it a shorter one.