ILGA Announces Star Sydney Public Hearing
March 17 is the date the Independent Liquor & Gaming Authority (ILGA) of New South Wales has set for the public hearing into its Star Sydney investigation. It is an important date because the hearings could determine if the casino should hold a licence.
Philip Crawford is the ILGA Chairman. Crawford appointed Adam Bell SC to conduct the hearings. Bell is vastly experienced in this field having represented the counsel assisting the NSW inquiry into Crown Resorts.
“Mr Bell’s review will consider how effectively The Star is complying with its statutory obligations and whether it remains suitable to hold a casino licence. This includes examining to what extent the casino is free from the infiltration of criminal interests such as money laundering and how well it is administering its obligations to minimise gaming harms.
“The Star is responsible for ensuring adequate anti-money laundering and counter-terrorism financing systems are in place and for thoroughly vetting and managing relationships with close associates, junket partners, and high rollers.”
The ILGA commissioned the inquiry in October 2021. Mr Bell releases his findings in June.
Why Is ILGA Looking Into Star Sydney?
Crown Resorts was under the spotlight for many months, which diverted attention from Star Entertainment. However, the public perception that Star was good and Crown was bad was wrong.
The Age and Sydney Morning Herald published allegations into money laundering at The Star Sydney. The newspapers did this about Crown Resorts two years earlier. They got their hands on insider information that did not show Star in a positive light.
Star allegedly allowed Chinese high-rollers to withdraw hundreds of millions of dollars disguised as hotel expenses. In addition, one customer spent a staggering $175 million on Star’s pokies between 2007 and 2021. Mende Trajkoski did not have a job for 14 of those years, yet Star never challenged him about his income. Police arrested Trajkoski in 2021 for his part in the importation of three tons of cocaine into Australia.
The Star share price dropped like a stone, 31%, when the ILGA announced its investigation into the claims.
Additional digging uncovered fraudster Michael Gu spent $8 million of his client’s money at Star Sydney. Gu fled the country owing investors in his iProsperity company some $325 million.
Investigation Drags Up Plenty of Negativity
ILGA dug up plenty of bad dirt on Star, changing its squeaky clean image overnight. The inquiry discovered Star encouraged high rollers to lie about where they lived. They did this to reduce the casino’s tax bill. Star pays the New South Wales government 20% gaming tax on local high rollers. However, the rate is only 10% for those living out of town. Two of the casino’s workers confirmed their involvement in the scheme.
The casino promised high rollers a small cut of their gambling revenue in exchange for lying about where they live. it does not take a genius to realise this is illegal.
Underpaying Staff Wages Does Not Look Good
Although not looked at by the ILGA, Star admitted to underpaying 2,200 of its staff over six years. Those underpayments tipped the scales at $13 million, so an average of $5,909 per affected employee. The casino promised to make good on the error in the first half of 2022.
“Over the review period, the number of team members on annualised salaries underpinned by an award is approximately 2,200 and The Star plans to take a provision of approximately $13 million in its H1 FY2022 accounts for the expected cost of remediation. This provision includes estimated back payments, interest and superannuation contributions, where applicable.”
Stars’ share change hands at $3.30 per share, down from a 52-week high of $4.66. Expect a significant drop below the 52-week low of $3.14 if the hearings do not go the company’s way.
