Star Admits Misleading National Australia Bank

Star Entertainment admitted misleading the National Australia Bank (NAB) in relation to gambling transactions of high rollers. Star’s assistant group treasurer conceded misleading NAB about the use of a China Union Pay card at its venues. The transactions total approximately $900 million.

The NSW Independent Liquor & Gaming Authority (ILGA) inquiry into Star Sydney opened Day 1 of public hearings on Thursday. It is during Thursday’s hearing that the misleading allegations came to light.

The inquiry heard China Union, a Chinese financial services company, voiced its concerns in 2019 that Star used its card to pay for large, suspicious gambling transactions. Those transactions breached its strict rules. China Union contacted NAB, and NAB contacted the Aussie casino giant.

However, Star did not act. Instead, Paulinka Dudek, Star’s senior manager responsible for compliance and risk management on the casino’s bank account, sent a misleading reply to the bank. Dudek claimed Chinese customers used the China Union Pay for “hotel accommodation services.” Dudek attached an invoice showing a hotel room number. However, she neglected to confirm not deny the customer gambled with the card in question.

Inquiry Asks If Star Provided Misleading Info

Naomi Sharp SC is one of the counsel assisting the inquiry. She pulled no punches and shot from the hip from the get go.

“I suggest to you that your response was utterly misleading, do you agree or disagree?”

“I agree,” Dudek replied.

Dudek went on to claim she did not write the email to NAB but that another Star employee wrote it. This was because Dudek was fairly new to the company. In addition, Dudek made an outrageous claim.

“I was still understanding how these transactions worked.”

It is almost unbelievable that someone in a senior role in the casino’s treasury department did not know about anti-money laundering and counter-terrorism financing.

Ms Sharp called Dudek and Star’s conduct both unethical and misleading.

How Did The China Union Pay Cards Work?

The system used for accepting China Union Pay cards was simple. However, it was also blatantly obvious to anyone part of the scheme it was a grey area.

China Union Pay does not permit gambling with its cards because gambling is illegal in mainland China. Star got around these strict rules by accepting deposits at its casinos and transferring the money internally to the patrons’ gambling accounts. Star hid the transactions by labelling them as hotel services and similar, this misleading the banks.

Both China Union Pay and NAB pestered Star for more details into the use of gambling with the cards. Star eventually responded and limited transactions to $50,000 per day per patron. However, the obvious gambling continued, leading to NAB and China Union Pay sending Star a warning letter in March 2022. Star stopped accepting the cards following the warning.

Why Was The System Unethical?

The Australian Transaction Reports and Analysis Centre (AUSTRAC) hears about all gambling transactions over $10,000. The casinos report this as part of their gaming licence. However, it is not required to report large transactions for services. Depositing $100,000, for example, and misleading AUSTRAC into thinking it was for a lavish stay at the hotel would not flag up on any reports.

The lack of transparency leaves Star and, therefore, the Australian economy open to money laundering. Cash rich criminals move money into Star’s casino undetected, play pokies, baccarat, etc. and withdraw what looks like legitimate money. Those same criminals, many brought to the casino by junkets, are often linked to organised crime syndicates.

It is not only Star that finds itself in hot water in this regard because Crown Resorts had a similar system in place. Crown Victoria admitted misleading authorities about more than $160 million of gambling payments. The inquiry into Crown deemed the company unfit to run its casinos. However, Crown kept its licences after decimating its Board of Directors and showing significant signs of change. Expect something similar in Star’s case.