Ann: Response to Media Reports, page-13

STAR

By CHRISTINE LACY, SENIOR REPORTER, MARGIN CALL COLUMNISTEXCLUSIVE10:30PM SEPTEMBER 11, 2022 • H 19 COMMENTS

Bell inquiry finds Star Entertainment not fit for casino
licence but set to offer lifeline

Star Entertainment should lose its licence to operate in NSW unless it overhauls its board and undertakes compliance reform, the
NSW inquiry into the company’s suitability has concluded.

The probe, led by Adam Bell SC, has found the ASX-listed Star unfit to hold a licence in NSW, but paved the way for the gaming
giant to keep operating its Sydney venue if it agrees to changes, The Australian understands.
The inquiry’s report, authored by Mr Bell for the NSW Liquor & Gaming Authority, was handed to state officials in early
September. It would be publicly released as early as Tuesday, sources said. Several NSW government officials were last week given
briefings about the report contents.
A similar ILGA review undertaken by Patricia Bergin in 2021 concluded Star’s rival Crown Resort was no longer suitable to hold
the licence for its Sydney casino. But Crown, now owned by private equity firm Blackstone, was given an opportunity to address
those concerns – a process which had already begun with the departure of most of its board.
Crown was handed a highly conditional licence in NSW earlier this year, as revealed by The Australian on June 2.
The Bell inquiry heard an exodus of Star management and directors would not be enough to repair damage from misconduct.
In her closing in May, Naomi Sharp SC, counsel assisting, said Star should be found unfit to hold a casino licence after hearings
revealed the company’s executives “prioritised money-making over compliance” and presided over a culture of “indifference” to
money laundering.
At the time, Ms Sharp said the conduct of the leaders needed to be assessed in a broader context, including Star’s governance, risk
management and culture.
“It is not enough to bring a corporation into suitability simply to terminate the employment of or part company with a number of
senior officers,” she said.
“There is more in questioning of suitability than particular individuals within the corporation.
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“One of the key problems here was a failure in risk management, but … responsibility for this lies within various parts of the
organisation. So, within divisional business units, within the group risk function, within your management, within the board risk
and compliance committee and all the way up to the board.”
The inquiry heard that Star deliberately disguised almost $1bn worth of illegal transactions on Chinese debit cards as hotel charges
over a seven-year period, misleading NAB and the Bank of China.

Star also continued to deal with some patrons despite being alerted to their links with criminal gangs. It even moved a junket into a
secret room after it flouted money-laundering controls by exchanging bundles of cash from backpacks for gambling chips. There
have already been several departures from Star, which has lost chief executive Matt Bekier, chief financial officer Harry Theodore,
chief legal and risk officer Paula Martin and NSW chief casino officer Greg Hawkins.
Long-time Star board member Sally Pitkin has also resigned, as has chairman John O’Neill. Two other Star directors, Gerard
Bradley and Katie Lahey, have flagged their intention to resign, but they have yet to do so.
The Star in August appointed Anne Ward, who had been on the Crown board until it was acquired by Blackstone, and David
Foster, the former chief executive of Suncorp Bank, to the board.
ILGA, which was disbanded in September and reconstituted as the Independent Casino Commission, has already appointed
Wexted Advisors, a firm specialising in restructuring, as an independent monitor at Star’s Sydney venue.
ILGA said the appointment was necessary “due to the serious matters uncovered” by a review into the casino undertaken by Mr
Bell. The regulator brought in Wexted in early August to urgently “review” Star’s attempts to overhaul its operations.
Star has hired Allen & Overy to act as its own monitor as it overhauls its practices.
The inquiry has already forced the company to wipe $162.5m off the value of its flagship casino, a move that forced Star to report a
$198.6m statutory loss for the year to June 30 last month.
Despite this, equities analysts have been upbeat about the company’s performance – notwithstanding the risk of regulatory action
which could mean significant restrictions on, or the loss of, its crucial operating licence.
But Star faces a second inquiry, in Queensland, with acting chief executive Geoff Hogg already admitting the company failed for
years to ban suspicious high-rollers from its Queensland casinos.
Star shares last traded at $2.66, down 30 per cent this year.