Star Entertainment is unfit to hold a Sydney casino licence even under provisional circumstances, the independent NSW inquiry into the beleaguered group heard.
Assisting counsel Caspar Conde said in closing submissions there was no evidence to suggest the casino giant would be in a fit state to take back control of the licence, regardless of any conditions or if it were overseen by a special manager.
“The Star entities’ contention that they are suitable with licence conditions and the [special] manager contrasts with the unqualified acceptance by every director of Star Entertainment that Star Entertainment is presently unsuitable,” Mr Conde said.
“In terms of present suitability, our submission remains that you would conclude that the Star and Star Entertainment are not presently suitable regardless of any proposal in relation to licence conditions or the manager (continuing to supervise the company).”
He said there was no apparent time the inquiry could be satisfied that Star “will or is likely to become suitable”.
The inquiry, run by Adam Bell, SC, is assessing whether Star Entertainment has sufficiently changed its culture, secured financial resources, and complied with its internal control manuals.
It has held public hearings over the past month that focused on three key issues: the falsification of welfare checks on customers; bulk approval of source-of-wealth checks for high-risk customers; and a $3.2 million loss from a so-called malfunctioning cash-in, cash-out terminal.
Star’s former chairman, David Foster, and former chief executive, Robbie Cooke, have also come under intense scrutiny for text message exchanges regarding the casino group’s relationship with the regulator and special manager Nick Weeks.
Star conceded in its closing submission last week that it is not suitable to operate a casino in its own right. But it argues it should be found suitable to run its casino subject to conditions where Mr Weeks’ term is extended.
In his closing remarks, Mr Conde said the removal of Mr Foster – which occurred mid-way through public hearings – showed that he was a barrier to suitability.
“He was indeed seen by his colleagues as a barrier to suitability,” Mr Conde said.
Luke Livingston, SC, appearing for Mr Foster earlier this week, said the former chairman was not a barrier to Star’s suitability. He described the board as being “highly engaged and proactive”, disputing a fiefdom of two individuals.
“Such a grave binding – seeking to apportion blame on a named individual – should not be reached on such exiguous material,” Mr Livingston said.
Mr Bell will have until July 31 to decide what to do with Star Sydney’s casino licence. During that time, Star will need to find a new permanent chief executive, a permanent chief financial officer, a chief legal officer, a chief transformation officer, and a chief customer officer.
It also needs to find a replacement to helm its Gold Coast casino and a Sydney-based patron liaison officer.
Sources familiar with its recruitment process said Star Entertainment had held advanced talks with Crown Resorts’ former chief transformation officer, Jeannie Mok, who left her position in December.
Former Crown boss Steve McCann, who was at the helm when Crown was sold to Blackstone in 2022, is widely considered the preferred candidate to become CEO.
Whoever takes charge will arrive with the ownership of Star in flux.
Distressed debt funds, investors, and casino owners have been circling the group for weeks. On Monday, Star said it had received a non-binding proposal from a local partner of Hard Rock Casinos and Resorts, confirming reports by this masthead.
A Brisbane developer named Patrick Farrugia with ties to the former Hard Rock Cafe in Surfer’s Paradise was at the centre of the proposal, which Hard Rock International has distanced itself from.
Any takeover would be conditional upon probity approvals, the group’s AUSTRAC penalty (anticipated to be around $350 million), the outcome of the NSW inquiry, and debt refinancing of Queen’s Wharf in Brisbane. It would also need the support of major shareholder Bruce Mathieson and joint venture partners, Chow Tai Fook and Far East Consortium.
Source: Financial Review
