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ABC News
National

Report finds Sydney's The Star 'not suitable' to run a casino in NSW

The Star Entertainment Group has been found unsuitable to operate its casino in Sydney after a damning inquiry into the company.

The inquiry, led by Adam Bell SC, was held earlier this year and heard allegations of money laundering, organised crime links and fraud at its casino in Pyrmont.

Philip Crawford, the NSW Independent Casino Commission chief, said the report made for "sad reading" and detailed Star's "scant regard" for harm minimisation.

"The institutional arrogance of this company has been breathtaking," he said.

"And their willingness to take risks in pursuit of financial goals has been appalling.

"Our major concern with regard to the Star remains its culture. There doesn't seem to be any short-term fix."

Mr Crawford said Star had allowed money laundering and organised crime to infiltrate the casino, and took "deliberate steps" to cover their tracks.

He said some of that conduct continued even after the public inquiry began.

"They tended to ignore the risk inherent in all of their conduct, and then they tried to hide their conduct," he said.

"Financial goals seemed to have been the main driver of their conduct."

The report found that "a number of extremely serious governance, risk management and cultural failures of The Star Entities occurred" during and before the period being reviewed. 

"The failure to report in relation to CUP (China Union Pay) and the serious misconduct by (junket operator) Suncity in Salon 95 was a manifestation of a culture where business goals took priority over compliance goals," the review found. 

"The Star treated the (NSW Independent Liquor and Gaming) Authority with disdain, as an impediment to be worked around. 

"The Star misled the Authority about the CUP Process and about Salon 95."

The review has not made any recommendation about what changes need to be made to render The Star suitable to operate a casino, as it was not in the terms of reference.

Mr Crawford said The Star now had 14 days to respond to the report. 

"The report also identifies a number of specific breaches of the casino control act as well as the internal control measures under which it operates, these constitute specific breaches of its casino licence," he said. 

Mr Crawford said The Star admitted at the start of the inquiry that it had been unsuitable to hold a licence, but made eight submissions as to why it was suitable now.

"Mr Bell did not agree with any of those eight submissions and found that Star remains unsuitable," he said.

He said the commission has today sent a show cause notice to the Star, asking the it to show why "disciplinary action should not be taken against it".

Disciplinary actions could include revocation or suspension of their casino licence, fines or a combination of these measures. 

"I can say from the contents of the report doing nothing is not an option," Mr Crawford said. 

Mr Crawford said there were no adverse findings against individual directors or board members, but that failures occurred because there was never a fresh set of eyes looking over their practices

"(Mr Bell) finds them well meaning people, well credentialed, but at the end of the day they didn't have a clue what was going on in their own company, as such they really weren't doing their job."

Mr Crawford said the report found a culture of finding ways to do things, instead of considering whether they were the right thing to do in the first place, and that financial goals were the main motivation behind such conduct.

Therefore, practices at Star Casino exposed them to significant risks of money laundering, criminals gambling in the casino and infiltration of organised crime.

"Then they took deliberate actions to mislead and deceive their own bank, their own board of directors and the regulator," Mr Crawford said.

Mr Crawford said it took nearly 18 months for Crown to address the issues identified by the Bergin Inquiry to satisfy the Authority that they could issue them a provisional licence, and he expects it will take Star just as long, if not longer, to fix their culture. 

"We still have inspectors/investigators down there very frequently," he said. 

"I'm afraid the cultural, institutional arrogance hasn't changed much, there is still an unwillingness to show the right level of transparency."

Hospitality and Racing Minister Kevin Anderson said the NSW government would take the recommendations of Mr Crawford, after Star had their chance to respond to the review.

But he warned the government would be "cracking down hard on Star".

"It is disgraceful and we are outraged as to the operations of this particular company," he said. 

"The flagrant disregard for the rules and regulations they should be operating under is breathtaking. 

"The people of NSW expect casinos should operate at the highest standards; it's very clear that Star has not been doing that. 

"To be able to still operate on a day-to-day basis while undertaking deceptive conduct is outrageous."

In a statement to the Australian Stock Exchange, Star's interim chairman Ben Heap said the company was considering the review's findings and matters raised in the show cause notice, and intended to respond in 14 days. 

NSW Opposition Leader Chris Minns said Labor was prepared to work with the government on the changes that were needed. 

"I think it is outrageous that the owners and operators of the casino had been insisting for many months there was nothing to see here — that the inquiry was not warranted, it was not required, that the administration of the casino was all above board," he said. 

"If there were non-compliance with the law or problems with the functioning and management of the casino, they were at the fringes of the operation, that doesn't seem to be the case, they are central to the operation of Star City casino.

"Changes will need to be made."

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