A class action lawsuit has been filed on behalf of Star Entertainment Group investors in a damning public inquiry into the group’s Sydney casino operations.
Investors seek compensation for misleading or misleading statements Star has made about its compliance with regulatory obligations.
Their trial comes during a royal commission-style public inquiry into Star’s fitness to hold its Sydney casino license after media reports of “suspected money laundering (and) organized crime”.
The class action lawsuit alleges that Star led investors to believe the group was a model casino operator when, in reality, it failed to mitigate corruption, money laundering and bribery.
In response to 2021 media reports of Star’s misconduct, the company’s stock price fell more than 25%, wiping over $1 billion of the company’s value.
Slater and Gordon – who is bringing the class action in the Supreme Court of Victoria – said the investors had a strong case to recoup their losses.
“When investors buy shares of a publicly traded company, they are entitled to assume that all material information regarding its financial condition has been disclosed to the market,” said senior class action partner Ben Zocco.
“Star has insisted that it takes compliance seriously and conducts its business ethically, honestly and with integrity. Our investigations, to date, in addition to the extraordinary evidence uncovered so far in the [inquiry]suggests they did anything but.”
Lead plaintiff David Lynch said he was disappointed to see the value of his stake drop so significantly and felt Star had been misleading about his company values.
“As an investor, I expect listed licensed traders to act in accordance with the law and that there are appropriate checks and balances to ensure they do so,” Mr. Lynch.
“I am appalled at the apparent extent of Star’s misconduct which is now being revealed in the public hearings.”
Star Entertainment Group chief executive and chief executive Matt Bekier yesterday resigned from the company’s board, effective immediately, saying he wanted to take ‘responsibility’ for the misconduct uncovered during the investigation.
Adam Bell, SC, who is leading the investigation, has so far heard evidence that a secret meeting room has been set up at the casino, senior executives have turned a blind eye to money laundering risks and inferred misled the Independent Liquor and Gaming Authority and the National Australia Bank.
Today the investigation learned that Star Casino used a junket operator’s bank account to accept payments from players who had money in China.
Star’s managing director of finance and commerce, Michael Whytcross, said Macau-based accounts used by the casino to accept payment from players with cash in China were shut down in 2017 after a crackdown on the money leaving the continent.
A workaround was established with the help of a travel operator named Kwan Koi, who had bank accounts in Macau.
“Kwan Koi would have funds in Australia, if there was anyone who wanted to repay [their casino debts] in Macau, Star’s sales team would refer them to Kwan Koi,” Mr. Whytcross explained.
“Then Kwan Koi would accept a cash payment and then either transfer funds or make funds available in Australia to repay that debt.”
Mr Whytcross said several million dollars had been transferred in this way.
“I understand it was several million a month,” he said.
“Does it seem fair to you that, from September 2018 to July 2019, A$76 million was spent,” Naomi Sharp SC’s solicitor asked Mr Whytcross.
“No, that wouldn’t surprise me,” replied Mr. Whytcross.
The investigation is continuing.