Star Sydney to operate under special manager during suspension
The New South Wales Independent Casino Commission (NICC) has announced the suspension of The Star Sydney’s operating licence, a record fine of $100 million, and the appointment of an external manager in response to the damning report given by the Bell Inquiry last month. The firm is now on track “to do whatever necessary” to regain its licence and overhaul its culture and processes to get rid of the systemic corruption that has taken root there.
Ever since an investigative report pointed accusing fingers at top casino operators in Australia, including Star Entertainment Group, there has been a slew of inquiries to confirm if the allegations of money laundering, links to organised crime, fraud, and other illegal activities were true. In the case of The Star Sydney, the Bell Inquiry found it guilty of these crimes and more. To that effect, the inquiry submitted that the casino was unsuitable to hold an operating licence.
This led to the company being fined a whooping sum of $100 million, the maximum penalty the NICC can issue under the law. This amount surpasses the $80 million penalty that Victoria’s gambling regulator dished out to Crown Resorts earlier this year. In addition to that, the company’s licence was suspended amidst a complete change of the senior management team.
Per a press release from the NICC, headed by Philip Crawford, the regulator has confirmed The Star’s licence will be suspended for at least 90 days with the strong possibility of an extension. Meanwhile, the casino will remain fully operational but a special manager will be appointed to oversee the running of the company’s day-to-day activities.
The appointment of a special manager will enable the company to continue trading for the period of its suspension, log profits, repay any debts incurred in the running of the company, and even pay shareholder dividends. According to Robbie Cooke, the new CEO of Star Entertainment, the actions of the regulator could not have been better as it gives the company and its investors clarity on what to expect in the coming months.
“The suspension comes into effect Friday 21 October 9.00am when the manager starts in the role,” Mr. Crawford said in the press release.
“The NICC has resolved that it is no longer in the public interest that The Star should remain in control of that licence, and that The Star is not currently suitable to be the holder of the licence.”
The decision to leave the casino operational despite the gravity of the firm’s offences was to preserve the jobs of more than 10,000 employees. In addition to that, the NICC chief notes that both the board and the executive have taken steps that have shown contrition and a willingness to correct their wrongs.
As part of its steps towards restoring its suitability, Star has highlighted its multi-year action plan in its response to the show cause notice it received from the Bell Inquiry. Part of the plan includes permanently ending junkets, effecting changes to leadership, increased risk-compliance, and improved security staff. The execution of the two-year plan will be monitored closely by the international law firm Allen & Overy.
In the same press release, the NICC named Wexted Advisor’s Nicholas Weeks as the special manager that will be working alongside Mr. Cooke to help Star “chart the course of suitability”. Mr. Weeks’ experience as executive general manager of transformation and regulatory response at Crown Resorts makes him a suitable candidate to effect the changes highlighted in the Bell Inquiry while running the company in a way “broadly consistent with the manner in which the former casino operator operated the casino”.
In essence, Mr. Weeks will hold The Star’s licence and have veto power over the company’s decisions for the time being. He will also be conducting a ‘root cause’ review into the operator’s practices and his report will ultimately determine if the licence should be renewed or not.
In his concluding remarks, Mr. Crawford noted: “Gambling in this country is not illegal, but it’s got to be done by certain rules and there’s a really big building piece that needs to be undertaken by The Star to win back the public confidence.”
