Matt Bekier, the chief executive of casino group Star Entertainment Group, was not happy.
It was late May 2018 and he was, according to testimony to an inquiry now underway in New South Wales, the last person to enter the room for an important meeting of the company’s audit committee, which oversees the accuracy of its financial records.
There was “heightened tension in the room”, Star’s former chief risk officer, Paul McWilliams, told the inquiry, which is being held by the state’s Independent Liquor and Gaming Authority.
The cause of Bekier’s unhappiness, McWilliams said, was the document he, the company’s directors and key executives were there to discuss: a report prepared by KPMG which outlined alleged failings in the anti-money laundering programs Star was supposed to have in place to keep dirty money out of its casinos in Sydney, Brisbane and the Gold Coast.
Bekier made “a show of throwing on to the table what I assumed to be this report – or the extract – the executive summary of this report and saying, ‘I haven’t seen this’,” McWilliams told the inquiry.
“And then the discussion was along the lines of, as best I can recall, that it was unacceptable for the report to be prepared in this way, that it was wrong in some respects – material respects, but without getting into a lot of detail as to what was wrong.”
McWilliams said he agreed with the report and the inquiry heard that KPMG stood by it.
Bekier resigned from his $3m a year job on Monday after the inquiry heard evidence regarding his alleged hostility towards KPMG’s report. Star said that, while the review remains ongoing, Bekier told the company’s board he was “accountable for the effectiveness and adequacy of the company’s processes, policies, people and culture” and the right thing for him to do was take responsibility.
The inquiry had previously heard evidence of other alleged failings by the company, including a scheme where Star allowed gamblers to disguise $900m gambled across its tables as hotel expenses and allowed a junket operator to run a room where large amounts of cash were exchanged in paper bags.
However, his resignation is not enough to satisfy critics of Star and of casino regulation, who see the current hearings repeating the same types of allegations aired against its bigger rival, Crown, at three previous inquiries and say the problems that have been exposed are symptoms of a deeper malaise afflicting corporate Australia.
“What it comes down to is the clear lack at a political level of regulation of these businesses and ensuring the regulators have sufficient resources and sufficient capacity to enforce any level of regulation,” says Charles Livingstone, a gambling policy expert and associate professor in the school of public health and preventive medicine at Monash University.
“That’s dependent on a range of factors including their influence – Star perhaps less so than Crown and the Packers, but they’re all pretty well connected in government and able to get what they want.
“The message is loud and clear that the casinos are not to be troubled, not to be touched.”
It is not clear whether the allegations emerging about Star and the findings about Crown and Star will yet lead politicians to rethink their attitude towards casinos. The inquiries found that Crown facilitated money laundering through its Melbourne and Sydney casinos and that some junket operators who brought in high-rolling gamblers from overseas were linked to organised crime. They also criticised Crown’s former directors for failing to properly oversee the gambling empire’s operations.
But this week, NSW’s cities minister, Rob Stokes, said it might be “time for our community to rise up against them”.
In a statement to state parliament this week, he said: “Now is the best time to ask the question: are the illusory and ephemeral benefits of Sydney’s casinos worth the proven harm – the deceit, the crime, the destroyed lives?”
Casinos have two big business areas – what they call “grind”, the flow of every day folk through the public gaming floor, where Livingstone estimates half the money comes from people with a gambling problem – and high-rollers and junkets.
In the inquiries so far into casinos in Australia – the Bergin inquiry in NSW and royal commissions in Victoria and Western Australia – most of the focus has been on the high-rollers.
Only the Victorian inquiry, run by former federal court judge Ray Finkelstein, spent significant time examining the damage done to gambling addicts lured into the casino floor by the carefully calibrated lights and sounds of their serried ranks of poker machines.
The Star inquiry has, so far, also focused on high-rollers. It got off to a spectacular start last month, hearing evidence the casino disguised $900m gambled through it as accommodation spending by allowing users of China UnionPay to deposit money at the group’s hotels that was then transferred to their gambling account.
And it has also seen video of large amounts of cash exchanging hands at “Salon 95”, a private gaming room run by junket operator Suncity, whose principal, Alvin Chau, was arrested in Macau in November last year on charges of operating gambling activities in mainland China.
It was only after Chau’s arrest that Star cut off relations with Suncity, the inquiry heard this week.
Crown accused of breaching finance laws
High rollers have also landed Crown in regulatory trouble.
Australia’s financial intelligence agency, Austrac, launched legal action against Crown in February, accusing it of 547 breaches of anti-money laundering and counter-terrorism finance laws – breaches that, if proven in court, are likely to cost Crown hundreds of millions of dollars in fines.
“We’re not talking about the odd postage stamp being nicked from the mailroom. We’ve got guys turning up in jeans and T-shirts with cooler bags full of cash,” Livingstone says of the allegations.
Andrew Linden, a corporate governance expert at RMIT University, says a decision by the Australian Securities and Investments Commission last month not to pursue allegations that 10 unnamed former Crown executives and directors breached their duties points to a broader problem with corporate regulation. Defending the decision, ASIC said that the directors were reasonably entitled to “rely on what they were being told by senior management”.
He points out that Australia lacks equivalent laws to Germany, where directors can be held criminally responsible and jailed for misdeeds committed by the companies they run.
“All these grand pooh-bahs of the corporate governance world run around saying Australia has a rolled gold corporate governance regime, it is at the bleeding edge,” he says.
“But all the offences are against the corporate entity, not against the directors.”
Linden says the Bergin inquiry into Crown in NSW, as well as the inquiries into the company in Victoria and WA, showed a pattern of directors failing to record their deliberations.
He points to findings of the Perth royal commission that Crown’s former directors did not record the full activities of the board in the minutes of its meetings.
“It’s the same pattern of all care and no responsibility,” he says.
“At a fundamental level it reveals that the whole approach to corporate governance in this country is in a bad place.”
The inquiry continues.
