ASIC’s Trial Against Former Star Entertainment Leaders Commences

Former leaders of Australian casino and hospitality giant Star Entertainment Group appeared in court for a hearing related to past regulatory violations. The company, which is currently facing financial and regulatory headwinds, found itself in hot water when regulators uncovered concerning instances of non-compliance.

Star Entertainment Failed to Manage Risk at Its Properties

On Monday, ten ex-heads of the operators showed up at the federal court for a hearing connected to alleged negligence and money laundering facilitation. According to the Australian Securities and Investments Commission (ASIC), the former leaders failed to properly manage risk at their casinos across Australia.

ASIC barrister Ruth Higgins elaborated that this case is not about the risks involved when players wager money but rather the risks associated with management negligence leading to legal, regulatory and reputational risks.

The case mentioned previously identified instances of non-compliance at the operator’s properties in Sydney, Brisbane and Gold Coast. The Star Entertainment leadership was accused of violating a variety of protocols and dealing with shady foreign junket operators.

The Star Entertainment’s leadership was accused of dealings with shady Chinese junkets despite the obvious risk associated with that. The ASIC argued that there had been more than enough information at the time to prove that junkets, such as Suncity, were engaged in crime.

Despite that, Star Entertainment not only dealt with Suncity but also allowed it to host an illegal gambling cage at The Star Sydney. The so-called Salon 95 came to be associated with high-rollers, who came with bags of $50 notes tied with elastic bands. To make matters worse, many dealings were obscured by CCTV cameras using blankets.

According to Higgins, these were acts “uncluttered by subtlety and freighted with risk.”

ASIC Hopes to Ban the Defendants from Managing a Corporation

As a result of the violations, several former Star Entertainment leaders are facing legal proceedings. These include ex-CEO Matthias Bekier, former secretary and general counsel Paula Martin and former chief casino officer Greg Hawkins. The trio was allegedly aware of the risks but took no action to inform the board.

Speaking of the board, several members, including Benjamin Heap, Gerard Bradley, John O’Neill, Kathleen Lahey, Sally Pitkin, Wallace Sheppard, and Zlatko Todorcevski, were accused by the ASIC of failing to oversee their company’s relationship with Suncity and other junkets. Higgins insisted that they were sufficiently aware about the risks and red flags associated with such dealings.

Higgins’ opening submissions will continue for a total of three days as the ASIC seeks penalties for the former Star Entertainment directors and executives. The corporate regulator hopes to ban the defendants from managing a corporation for a period of time that has yet to be set.

Star Entertainment Is in a Precarious Position

The lawsuit against Star’s former leadership comes as the company continues to struggle financially. In January, the company reported limited debt-raising capacity, leading to a decline in shareholder trust. This limited capacity may jeopardize the drawing of the second tranche under the operator’s new facility.

In the meantime, Star Entertainment announced that it selling non-core assets as the group desperately seeks to secure its financial position.