A Star casino manager has told a public inquiry about "serious" and "repeated" misrepresentations the company made to the Bank of China concerning the source of millions of dollars.
The inquiry into Star's fitness to hold its Sydney casino licence has heard how the company sent several false documents to the bank's Macau headquarters about the source of funds it was depositing.
The casino led the bank to believe it was depositing its own money, when in fact it was depositing money from gamblers who were repaying debts or sending money to use for gaming.
Star's manager of finance and commercial, Michael Whytcross, said he was "very concerned" to learn about the falsifications and agreed it was a major management failure that the documents had only come to light recently.
The employee responsible for the documents no longer works for Star, he said.
"But it's extraordinary that Star is providing false letters to a bank is it not?" Naomi Sharp SC asked Mr Whytcross.
"Yes it's concerning," he said.
Ms Sharp went on: "It's extremely concerning from an anti-money laundering and counter-terrorism perspective isn't it?"
"Yes it is," Mr Whytcross answered.
The inquiry, being run by the Independent Liquor and Gaming Authority (ILGA), today also heard about a subsidiary company set up by Star, called EEI Services Hong Kong, to assist Chinese customers in accessing money for gaming in Australia.
Gambling is illegal in China and local banks often block transfers to foreign casinos.
Mr Whytcross said EEI Services allowed Chinese gamers to carry out transactions with a company that wasn't easily identifiable as a casino.
Guests could even take out a loan with EEI, which attracted no fees or interest, so they had money to put into front-money (gaming) accounts.
"So the reason for the loan arrangement was to disguise the fact patrons were obtaining credit from the casino?" Ms Sharp asked.
"No I don't believe so ... but in hindsight I accept this has been conveyed," Mr Whytcross replied.
Ms Sharp said the casino received approximately $227 million between May 2018 and November 2021 by using EEI Services as a side-door for money.
The casino was not conducting credit checks on patrons that were using the arrangement though, which Mr Whytcross agreed was risky.
The former Crown staffer said although he was the compliance officer of anti-money laundering and counter terrorism for EEI Services, he had a lack of information about the laws and did not believe it was up to him to monitor the transactions.
An investigation was launched at the end of 2021 about the false documents provided to the Bank of China but Mr Whytcross said he didn't know where it was up to as he didn't think it was "imperative" to be up to date with all developments.
He also revealed to the inquiry, led by Adam Bell SC, that Star had marketing staff operating in mainland China for several years, despite the fact that the promotion of gambling is illegal in the country.
The staff worked to convince customers to make trips to visit the Star in Australia but Mr Whytcross said this arrangement ceased after Crown employees were charged with gambling promotion offences in China in 2017.
Yesterday Star investors launched a class action against the company, alleging they had been misled about the casino operator's compliance with regulatory obligations.
On Monday CEO and managing director Matt Bekier resigned from the Star board effectively immediately, claiming he wanted to take "responsibility" for the misconduct uncovered at the inquiry.
He had been at the helm of Star for eight years.
The public inquiry continues.
