Executives at Star Casino had substantial evidence suggesting that the notorious junket operator Suncity was potentially violating the conditions of the casino’s operating license but proceeded to sign a new agreement with the Chinese group anyway, a Federal Court was told on Tuesday.
Andrew McGregor, Star’s lead investigator, authored the 2018 “Operation Money Bags” report, which revealed concerning findings from an investigation in April and May of that year. The investigation focused on Suncity’s Salon 95, a private office that dealt with high-rollers and was supposed to have a very limited role in handling cash at the casino.
Dr. Ruth Higgins, SC, representing the Australian Securities and Investments Commission (ASIC), presented the report’s findings, which pointed to potential illegal activities occurring within the walls of Star’s Sydney casino. According to McGregor’s testimony, CCTV footage showed large amounts of cash being deposited in various containers, including a red suitcase, black and blue sports bags, white and yellow plastic bags, blue esky bags, and brown paper bags—all of which were delivered to or from Salon 95’s service desk.
The purpose of McGregor’s report was reportedly to assist Star’s legal team in advising the casino operator’s management about the legal and regulatory implications of the findings and prepare for possible legal action. When these issues came to light, primarily through investigative reports in The Age and The Sydney Morning Herald, Star lost its license to operate casinos in both New South Wales and Queensland. The casino now faces the prospect of a significant fine for breaching Australia’s money-laundering laws.
Higgins also noted that Star executive Greg Hawkins had warned Suncity twice that the partnership would be terminated if the breaches continued. Despite this, Star went ahead and signed a fresh agreement with Suncity later that same year.
Hawkins, along with Paula Martin, is facing court charges for allegedly failing to fulfill their duties as executives. Nine of Star’s board members, including CEO Matt Bekier, have also been charged by ASIC for breaching their duty of care and diligence.
While McGregor’s “Money Bags” report did not make it to the board level, a KPMG report—which highlighted similar compliance concerns at the casino operator—was presented. Bekier strongly rejected KPMG’s report, which concluded that Star was not effectively addressing money-laundering risks at its casinos.
ASIC’s lawyer, Higgins, highlighted alarming deficiencies in Star’s processes and controls designed to prevent money laundering and terrorist financing risks related to their partnerships with junket operators. The KPMG report noted that Star obtained limited information about junket operators and conducted minimal due diligence on the wealth sources of junket participants.
Higgins argued that a reasonable director would have recognized the significant deficiencies outlined in the executive summary of the KPMG report. This was the only year that KPMG issued a report to Star, and in the following year, the casino operator submitted its own internal report.
In a previous hearing regarding its fitness to retain its casino license, Star was found to have incorrectly claimed legal privilege over the 2018 KPMG report in an attempt to withhold it from AUSTRAC, the financial crimes watchdog.
The court proceedings are ongoing.