The Star Board’s lack of information about an unacceptable change in the company’s relationship with a foreign lender resulted from senior management mistakes, says a lawyer trying to salvage the company’s casino license in Sydney.
The NSW Independent Liquor & Gaming Authority is investigating whether the controversial company should keep its license.
After months of hearings examining claims that the casino facilitated suspected money laundering, organized crime, fraud, and foreign interference, Kate Richardson SC is closing Star’s case.
She has told the inquiry that the company was likely unfit to hold a casino license in the past but is now eligible following the departures of senior staff and reforms to its processes.
Ms. Richardson resumed her closing entries on Thursday, focusing on Star’s relationship with a foreign lender named Kuan Koi.
The investigation found that Mr. Koi facilitated funds transfers between international customers and the casino operator’s bank accounts.
The trial began in 2018 as an “interim settlement” sparked by a Chinese government crackdown on money leaving the mainland for gambling, Ms. Richardson told the inquiry.
The scheme was originally intended to run until Star subsidiary EEIS could begin making and collecting loans from foreign customers.
The money would be collected abroad and passed through Mr. Koi’s bank accounts before it reached Star.
Star accepted that the scheme was not transparent, as banks and law enforcement would see money coming from Mr. Koi to the casino, not the patron.
It would be open to the review to conclude that the settlement was unsatisfactory regarding the Anti-Money Laundering and Anti-Terrorist Financing (AML-CTF) laws, Ms. Richardson argued.
A 2019 memorandum from Star’s general counsel, Oliver White, warned the board of directors that the company had failed to verify that the methods used were by the law.
Star’s adherence to the law grew even murkier as the scheme changed.
“The board was not informed about the changed Kuan Koi scheme,” Ms. Richardson said.
Under the amended arrangement, Mr. Koi could also facilitate “front money” deposits for overseas customers traveling to Australia to gamble.
This changed the risk as Star would no longer do due diligence regarding the patron and their source of funds, Ms. Richardson said.
Mr. Koi was acting as a transferor despite being unlicensed, Ms. Richardson admitted, and Star made an error of judgment.
“(Star) accepts that it would have been wiser not to pursue the Kuan Koi scheme at all,” Ms. Richardson explained.
Star also relied on foreign lenders to comply with AML-CTF laws in their jurisdictions, which was not always the case.
“A reasonable expectation of behavior by others may be relevant, but the Star should not outsource its responsibilities,” Ms. Richardson said.
Ms. Richardson submitted the amended arrangement with Kuan Koi, which ran through 2020 and was initiated and maintained by the VIP credit and collection team.
No legal and risk assessments have been performed, and the settlement has not been formally approved or disclosed to the board of directors, Ms. Richardson said.
Star accepted that it was about continuing the scheme without the board’s knowledge or proper controls.
“They come down to significant shortcomings on the part of the managers who were responsible,” Ms. Richardson argued.
The hearing continues.
