A couple of years ago, the ASX made an important tweak to its listing rules — requiring that any company making an ASX announcement had to disclose precisely who had authorised the statement.
This was a good reform as it meant boards could no longer hide behind faceless PR people if they subsequently claimed to be misled or blindsided by what had been disclosed to the market.
Since the change, we’ve seen all sorts of authorisations spanning from the company secretary, the CEO, the chair, the full board or even a board subcommittee. But we’ve never anything like the sign-off on this mealy-mouthed March 18 ASX statement by the besieged casino operator Star Entertainment, which was authorised by “a majority of the board of directors”.
All that statement did was refer to various media reports on Star’s licence review and then declare: “As the review is ongoing, the Star does not consider it appropriate at this stage to comment on matters which remain before the review and which will be considered in that process. The Star remains committed to fully cooperating with the review.”
Clearly there were some directors who wanted to say a lot more — and potentially some who thought it was better to say nothing.
Fast-forward to yesterday and we finally got the much anticipated resignation of long-serving CEO Matt Bekier, but this disorganised board wasn’t even able to advise his exit arrangements or who would be acting CEO.
In times of crisis when a CEO is fired, the acting gig often goes to the chair or the chief financial officer, but the long-serving occupants of both those positions at Star, John O’Neill and Harry Theodore, are arguably next in line for the boot.
But who will force this to happen? It was the NSW Independent Liquor and Gaming Authority (ILGA) chairman Philip Crawford who directly intervened to demand the resignation of various Crown Resorts directors, such as Andrew Demetriou and Harold Mitchell, but he had the extra leverage of refusing to give the company approval to open the Barangaroo casino until a refreshed board was in place.
The doors remains fully open at Star casino in Sydney so it remains to be seen precisely who will force the board to collectively fall on their swords while also purging a handful of senior managers who are coming a cropper at the Adam Bell SC inquiry.
Star is clearly going to need at least four new directors, in addition to former Accor Hotels CEO Michael Issenberg, who was announced as a new director last month but is awaiting clearance from NSW and Queensland authorities.
The situation at Star is so bad that it probably is time for the regulators to intervene by appointing some interim directors to take charge and oversee all the necessary exits. Under Section 45 of the Star Entertainment constitution (see page 31) new directors must first be approved by the relevant Queensland minister (Attorney-General Shannon Fentiman) and the NSW authority, which is ILGA.
Is it time for Crawford to give Fentiman a call and fast-track approval for some new directors?
The governance and credibility crisis at Star is also a good advertisement for annual elections of directors, as occurs in the UK and the US. As things stand at Star, two of the directors — Dr Sally Pitkin and Ben Heap — won’t face reelection until 2024 because both were reelected for three-year terms last October with more than 97% of the voted shares in favour. And this was after the first Nick McKenzie stories in Nine’s newspapers had been published last year.
The only three Star directors up for election at this year’s AGM will be newcomer Issenberg and Gerard Bradley and Richard Sheppard, who were last elected in 2019. O’Neill’s mandate lasts until the 2023 AGM.
If we don’t see some movement with the board shortly, all it takes to remove directors is for 100 shareholders — or shareholders representing more than 5% of ordinary shares on issue — to petition for a special meeting to consider their removal. But with no controlling shareholder like James Packer, it can sometimes be difficult to get enough shareholders on board for a coordinated governance intervention.
Star Entertainment’s constitution allows for a minimum of three directors and a maximum of 12, so if the existing seven refuse to go, a regulator-backed reform ticket could propose the appointment of up to five new directors.
As for the ongoing revelations about lax approaches to money laundering and colourful junket operators, these daily hearings before Bell are scheduled to run until April 8 and we are still yet to hear from any of Star’s directors.
When McKenzie first hit Star up last October the company told the ASX much of his reporting was “misleading”. It was a statement authorised by “the board of directors”. McKenzie hit back on Twitter yesterday, pointing to the Bekier resignation and noting that “journalism matters”.
Indeed it does, particularly when he is pursuing it.
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