Star lawyer front inquiry alleged former CEO knew about money laundering risks

A high roller who gambled at Star Sydney and was reportedly under investigation by federal police for money laundering was known to former CEO Matt Bekier.

The Australian Financial Review reports that the individual was still allowed to gamble anyway, with the revelations coming to light during a NSW inquiry into Star Entertainment.

Star’s top corporate legal officer Oliver White told the inquiry he informed Mr Bekier the patron had been advanced $100,000 at the Star via its China UnionPay scheme and was currently flying to the Sydney casino.

He said he told Mr Bekier of the money laundering and reputational risk associated with the patron and CUP, but said the CEO “was of the view” that while the high roller’s relatively small buy-in of $100,000 was “probably not worth the reputation risk”, the person should be allowed to gamble anyway as they were already en route.

It comes amid bombshell evidence to the NSW inquiry, which is considering Star’s suitability to hold a casino licence, that the company allowed billionaires Phillip Dong Fang Lee and Huang Xiangmo to buy $2.7 billion and $1.7 billion in chips respectively through its flagship casino in Sydney over 15 and five years.

Neither Mr Lee nor Mr Huang is the patron who was identified as being under investigation for money laundering.

$900 million worth of China UnionPay transactions used for gaming disguised as hotel expenses

It also heard the Star had facilitated $900 million worth of CUP transactions by disguising them as payments to its hotel arm, despite the fact the payment scheme was renowned for helping users avoid anti-money laundering regulations and Chinese currency controls.

Mr Bekier recently resigned as company CEO and Star told the Australian Stock Exchange he had accepted accountability for issues with the “company’s processes, policies, people and culture” at the casino.

The most recent evidence is the first time allegations of his direct knowledge of the misconduct at the casino have been heard by the inquiry.

However, while it has been said that Mr Beker was aware of a report saying Star was non compliant with anti-money laundering laws, he disputed its findings.

Mr Bekier will give evidence in mid-April.

Counsel assisting the inquiry, Naomi Sharp, SC, tabled a file note Mr White wrote to himself in February 2017, recounting his conversation with Mr Bekier in which he raises the fact the $100,000 player was using the CUP system and that media had reported they were being investigated by police for money laundering.

“In your file note, it says Matt was of the view that for $100,000 it was probably not worth the reputation risk but since the player was already flying to Sydney, given the relatively small buy-in, it was not worth knocking the patron back now,” Ms Sharp said.

Mr White agreed this “accurately recorded the conversation”.

He also said that, when discussing the high roller’s patronage and associated reputation risks with Mr Bekier and Star chief financial officer Chad Barton, “they suggested that we try to keep this low profile”.

Star legal boss said CUP scheme “legally workable”

But Mr White also told the inquiry he believed the casino’s CUP scheme was “legally workable” even though he knew the bank barred the use of its cards for gambling and that he knew “the ultimate use for the funds” used by those involved was for gaming.

He said he did not believe CUP’s prohibition on gambling transactions was applicable, because of “the two-stage process” in which cards were swiped at the Star’s hotel instead of on the gaming floor, even though patrons were then given casino chips to the value of the transaction.

Mr White told the inquiry that he did not think the CUP rules applied to Star but acknowledged this was “an error on his part” and that he should have sought independent legal advice.

He said he knew the swipes occurred at the hotel because the CUP rules prohibited the use of their cards to purchase casino chips and that the transactions were primarily used for gambling.

The inquiry previously heard Star had also disguised at least $900 million worth of China UnionPay transactions as hotel expenses, encouraged a high roller to pay off his losses with the debit card scheme and misled its bank, NAB, about its use of the cards.