Class action lawsuit could loom for Star Entertainment

By Ethan Anderson Updated
New light on Queensland probe into Star

After nearly $1 billion in shareholder value was wiped off Star Entertainment stocks in the past week, the Australian casino operator is facing the threat of a class action lawsuit after news broke of its alleged failure to confront money-laundering and terrorisim-financial risks. 

The Sydney Morning Herald reports that law firm Maurice Blackburn has begun preparing a class action on behalf of Star’s investors following revelation that the ASX-listed company has been enabling suspected money laundering and organised crime in its Sydney, Brisbane and Gold Coast casinos for years.

“Shareholders rightfully expect casino operators to rigorously comply with anti-money laundering and counter-terrorism financing laws because casinos are unmistakably targets for criminal activity,” Maurice Blackburn principal Vavaa Mawuli said.

“The fact that these concerns were raised in 2018 and not disclosed to the market raises real concerns about Star’s governance and shareholders should be rightfully concerned.”

It was revealed in mid-October that two confidential reports were provided in 2018 to Star’s board, whic included chief executive Matt Bekier and chairman John O’Neill, warning the company’s anti-money laudnering risk-assessment system “does not consider terrorism financing as required by the AML-CTF Act.”

Star’s assessments of some gamblers “appear to understate the level of money-laundering risk”, the reports added, and Star had “no documented money-laundering risk assessment, or risk-assessment methodology” for Chinese high-roller tour groups known as junkets.

Star shares plunge after bombshell report

On October 11, the day after the revelations were published, Star’s share price plunged more than 20 per cent, wiping out nearly $1 billion from its market value.

Its shares have since recovered slightly but are still trading about 17 per cent lower than the start of the month.

Ms Mawuli said the class action would allege Star engaged in misleading and deceptive conduct, breaches its continuous disclosure obligations and conducted its affairs contrary to the interests of members as a whole in the period.

The Star, Australia’s second-biggest casino operator, has until now largely escaped the regulatory fallout that has plunged the James Packer-backed Crown Resorts into crisis after an investigation revealed Crown went into business with Asian crime-linked companies as part of an aggressive push to attract ultra-rich Chinese high-rollers to its Australian venues.

The scandal led to the suspension of Crown’s Sydney gambling licence in light of evidence the company had facilitated money laundering and had been infiltrated by organised crime and the resignation of several high-profile board directors and executives.

Star said it’s not aware of any class action at this time

When contacted, The Star said it had not been notified of any action at this time by Maurice Blackburn.

In a statement made to the ASX a week ago, Star said it had acted upon the recommendations of the KPMG reports by adopting an updated anti-money laundering and counter terrorism financing program “as a priority” in October 2018 and had undertaken a work program to enhance its compliance framework with board oversight.

“The Star initiated a program to address all recommendations from the review,” it said.

“That program of work was conducted from mid-2018 to early 2020.”

Star’s board said it considers a “number of assertions” in the media reports to be misleading, and would take appropriate steps to address all allegations with state and federal regulators and authorities.

Queensland’s gaming regulator, the police and anti-money laundering agency AUSTRAC have launched investigations into the latest allegations concerning The Star.

The state’s attorney-general has described the allegations about the casino ignoring risk warnings “very serious”.

In NSW, the government has said the allegations were serious and needed to be “thoroughly investigated”.

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