Law firms Maurice Blackburn and Slater and Gordon announced they are preparing to launch class action lawsuits against The Star Entertainment Group following revelations that the casino operator’s board of directors ignored serious operational risk warnings.
Star Stock Plummets
Both law firms are preparing to launch class-action lawsuits on behalf of Star’s investors, who saw their investments plummet by more than 20% last week, following media revelations that the company’s board had done nothing to rectify shortcomings under the Anti-Money Laundering and Counter-Terrorism Financing (AML-CTF) Act.
Similar to the troubles experienced by Crown Resorts, reports in Nine Group’s The Age, The Sydney Morning Herald and 60 Minutes were the first to reveal the ASX-listed Star did nothing to address anti-money laundering (AML) deficiencies uncovered by two reports.
The confidential reports provided to the Board in 2018, including CEO Matt Bekier and Chairman John O’Neill, informed the directors that Star’s AML risk assessment system fails short of terrorism financing provisions under the AML-CTF Act.
Specifically mentioning Chinese high-rollers, the report noted the company’s understatement of the level of money-laundering risk, having no documented risk assessment or risk assessment methodology of the so-called junkets groups of gamblers, some of which with associations to criminal organizations or foreign-influence outfits. The report referred to the period from 2014 to 2021.
Following the reports that the company had been enabling suspected money laundering and organized crime, Star’s stock took a major blow and erased nearly AU$1 billion ($750 million) in shareholder value. Since then, the share price managed to slightly recover but is still around 17% below the pre-reports level.
Investors to Seek Compensation
Maurice Blackburn said the class action would allege Star of misleading and deceptive conduct, breaches of disclosure obligations under the ASX reporting rules and engaging in affairs against the interest of its investors and shareholders.
Slater and Gordon said that, based on their investigation, “there may be a proper basis to allege that Star has been in breach of its continuous disclosure obligations, and further that it has made misleading or deceptive statements to the ASX.”
The Star responded to the reports as having misleading assertions, threatening to take appropriate steps to address allegations with state and federal authorities and regulators. It would have to, after the Queensland regulator and the national financial transaction agency AUSTRAC responded to the reports by launching investigations into Star, while the state’s attorney general labeled the ignoring risk warnings behavior as “very serious.”
The New South Wales (NSW) Government also branded the allegations as very serious and requiring thorough investigation. In September, the Independent Liquor and Gaming Authority (ILGA) asked the same inquiry into Crown Resorts, led by Adam Bell SC, to scrutinize its rival.