Casino bosses spied and mulled 'war' against regulator

Sydney's Star Casino bosses spied on the manager appointed to clean up its operations, with private communications revealing discussions of "going to war" with the regulator.

The casino's operations were handed to regulator-appointed manager Nicholas Weeks to ensure operations continued when its licence was suspended in 2022 after a previous inquiry.

But Mr Weeks on Monday told a new inquiry the casino had not made headway on the structural reforms needed to ensure it operated properly after the probe, which uncovered widespread failings.

The Star Casino in Sydney's Pyrmont
Star hasn't made headway on the structural reforms needed, the inquiry was told.

"The company still has some distance to travel in terms of setting up structures and governance arrangements to do that in the absence of the manager," he said.

This second inquiry, led by Adam Bell SC, into Star Entertainment Group's suitability to run the key facility has begun public hearings to probe concerns the company was not proactively implementing reforms.

The initial investigation, also led by Mr Bell, found Star unfit to hold a casino licence following revelations of a notorious gang-linked junket operator running an illicit cage within a premium gaming room and Chinese debit-card transactions being disguised as hotel expenses.

Mr Weeks delivered two reports to Star management in November outlining deficiencies in the operation that still needed to be addressed.

Despite general acceptance of his first report at a subsequent meeting, the group's then-chief executive Robbie Cooke and chair David Foster sent a response letter with an "extensive amount of commentary and rejection" of its content.

Mr Weeks was "surprised and disappointed" with the response as it was contrary to what the organisation's board had told him.

"The company's rejection of my assessment ... suggested there was an increased chance that the company was not going to take steps to address those findings and observations," he said.

In emails discussing their response to the reports, Mr Foster told Mr Cooke: "If done right, it could be a catalyst to get rid of (Mr) Weeks."

Star Casino in Pyrmont, Sydney.
This is the second inquiry into Star Entertainment Group's suitability to run the casino.

"The (fact) that they were concerned about getting rid of me rather than delivering a response that would be responsive to important matters is a concern to me," Mr Weeks told the inquiry.

A meeting between Mr Weeks, Liquor & Gaming NSW and two law firms in early February to discuss Star's response to the letter was apparently "monitored" by the casino bosses the day prior.

Mr Foster wrote to Mr Cooke: "OK, they are prepping for war. We better do the same."

Mr Weeks said it was extraordinary Star was "monitoring" his diary entries while it was trying to regain trust and confidence with the regulators.

"To suggest that they want to go to war with the regulator and me in circumstances where their licence is suspended and there's a decision about their suspension ... is extraordinary," he said.

The two leaders had also queried grounds for launching a shareholder class action against Mr Weeks and the casino regulator despite their public position that they were working cooperatively to address deficiencies.

The inquiry was told of a "deliberate" and "widespread" culture of record falsification among Star guest support officers tasked with speaking to guests who had been gaming for more than three hours.

"(The) practice of falsification of records of interactions with patrons by gaming support officers ... was endemic in that team in that it appeared to be occurring very often and that a large proportion of the team were involved," Mr Weeks said.

In a separate incident, Star customers were able to reap an extra $3.2 million from the casino through its "ticket in, cash out" system which erroneously returned cash-exchange tickets, an error not rectified for six months.

"What these incidents identified to me was a deep cultural problem in parts of the casino in relation to ... the level of care in which work is conducted and the desire from people in the business to drill down in circumstances where they don't appear," Mr Weeks said. 

The casino was hit with a $100 million fine and its licence was suspended after the previous inquiry's October 2022 report was delivered.

The hearings come as Star Entertainment Group battled falling revenues across its operations, driven by the poor performance of its high roller-focused premium gaming rooms.

The group's shares had fallen by about four per cent on the stock exchange by Monday evening.

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