A former executive of the company behind Sydney's Star casino has told an inquiry its CEO Matt Bekier was "in a sulk" over a report raising concerns about money laundering controls and claimed that the report was "wrong".
The Independent Liquor and Gaming Authority inquiry is this week probing Star Entertainment's suitability to run the Pyrmont casino.
Today, the inquiry has been going through a 2018 review by KPMG which found the risk assessment the casino used to identify possible money laundering and terrorism financing was deficient.
Former chief risk officer Paul McWilliams gave evidence in on Tuesday morning, recalling a tense audit committee meeting in 2018 where he said Mr Bekier questioned the factual accuracy of KPMG's findings.
"My overwhelming recollection is of the mood, the sentiment in the room," Mr McWilliams said.
"It started with Mr Bekier arriving ... and making a show of throwing on to the table what I assume was the executive summary of this report and saying, 'I haven't seen this.'
"Then the discussion was along the lines of that it was unacceptable for the report to be prepared in this way [and] it was wrong in some material respects."
Mr McWilliams said during the meeting he felt there was a lot of pressure on him and his colleague Tarnya O'Neil, who was the head of internal audit.
"When it was put to us [that] this was wrong, without specifics and without having KPMG in the room, it was really hard to counter that," he said.
"It is natural when it comes from the CEO. When he says it's wrong, you wonder if you missed something.
"After the meeting I became increasingly satisfied there was nothing of a fundamental error in the report itself."
Mr McWilliams also said non-executive director Richard Sheppard asked if it was too late for the report to be edited.
"We just confirmed the report was final, that it was not open to be amended," he said.
Mr McWilliams said another meeting held with KPMG and Mr Bekier was similarly tense, because the CEO was unprofessional and in a "sulk".
"Mr Bekier wasn't at his best, we had organised the meeting with Geoff O'Sullivan to come in with his team to listen to the specific concerns, but it proved to be a difficult meeting," he recalled.
"Matt [Bekier] was in what I would describe as a sulk still, and it presented as quite an unprofessional demeanour having brought people in from outside to address his concerns.
"We explained the meeting was organised following the audit committee to try to get him to identify the specific concerns he had so KPMG could either respond at the meeting or take notes and go away and do further work and present back.
"But my recollection is that Matt didn't actually engage that well in articulating what his list of issues were."
The inquiry heard people carrying large amounts of cash were not automatically flagged as potential money launderers.
Counsel assisting the inquiry Caspar Conde asked Mr McWilliams whether he agreed people "bringing in hundreds of thousands of dollars" raised concerns about money laundering.
"Yes I agree," Mr McWilliams said.
Mr Conde went on: "At the time of this report, for example, if someone walked in with $200,000 in cash and someone walked in with $500 in cash, the person with $200,000 wouldn't be flagged as higher risk for that reason alone."
"That's my understanding yes," Mr McWilliams replied.
He agreed the report found "fundamental deficits" in the program, including that the risk assessment did not consider terrorism financing.
The review also found no money laundering or terrorism financing risk assessments were being conducted on junkets.
Mr McWilliams agreed junkets posed a high risk for money laundering, because they involved large amounts of money and the source of the funds was not always easy to identify.
Alexander Graham was one of the KPMG staff who attended the meeting with Mr Bekier and Mr McWilliams .
He told in the inquiry the Star Entertainment CEO was 'hostile' towards him and his colleague.
"When me and Geoff walked into the room we weren't greeted, there was no eye contact," Mr Graham said.
"Mr Bekier was sat down, turning the pages of the report, essentially berating us for the whole entire time of that meeting.
"The CEO (was) turning over pages, pointing to things, saying this is wrong, turning the page, that is wrong, doing that for a sustained period of time, and we tried to understand what the specific points the CEO believed was wrong and we just weren't getting the details."
Mr Graham said he and his colleague later received an apology from non-executive director Zlatko Todorcevski.
"I recall Zlatko apologising for the way that both me and Jeff had been treated and also acknowledged that it is time to move forward," he said.
The inquiry continues.
