Operator News

Star’s second inquiry off to a disastrous start with evidence of ‘going to war’ with regulator and spying on special manager

By Phil - 15 April 2024

The first day of the new 15-week inquiry, demanded by the NSW Independent Casino Commission (NICC), following claims that Star hadn’t acted efficiently enough to prove its suitability as a casino operator, could not have got off to a worse start for the casino group with inflammatory texts brought to court along with accusations of ‘going to war’ with the regulator as well as spying on the regulator-appointed special manager.

The initial inquiry ruled that Star was not fit to retain its gaming licence in Sydney, with special casino manager Nicholas Weeks appointed to monitor the company’s day-to-day business.

In explosive correspondence between Star Entertainment’s then-CEO Robbie Cooke, who quit prior to this hearing in March, and current chair David Foster, the two executives discuss detail taken from Mr Weeks’ diary.

“Just sent a message, two law firms attending planning session with NICC in our boardroom,” Mr Foster wrote.

“They are up to something,” Mr Cooke replied, with the pair then identifying attendees from the meeting.

Mr. Foster text, ‘another angle is establishing grounds if possible for a class action from shareholders against Nick Weeks or NICC.’

Mr Cooke responded: “We’ll run that by KWM [the operator’s lawyers] on Monday.”

Mr Foster sent: “They are prepping for war, we’d better do the same, should we talk to KWN?”

Mr. Cooke messaged “We are meeting Monday to get ready for war.”

In response to the messages, Mr. Weeks said: “I find it extraordinary that the chairman of a listed company and the CEO exchanged messages contemplating a class action from shareholders against me personally and the NICC in circumstances where their public position and their position with me was that they were working cooperatively to address deficiencies that they need to address. I expect that somehow they have accessed my diary ahead of the 1 February meeting.”

“I think it’s extraordinary,” he added. “In circumstances where this casino’s license is suspended and I have been appointed to manage the casino – and one of the fundamental objectives of Star is to regain trust and confidence with its regulators, including me as manager – that they were monitoring my diary entries and investigating the people I was meeting with. I find to be extraordinary.

“It’s difficult to reconcile everything that the company has told me, everything it tells the market and everything it tells the regulator in relation to its motivations to reform and to work cooperatively with the regulator.

“To suggest that they want to ‘go to war’ with the regulator and me in circumstances where their license is suspended and there is a decision about that suspension that has already been scheduled to occur in June this year is extraordinary.”

Weeks also expressed his “surprise and disappointment” at a written response from Star, signed by Foster and Cooke and dated 23 January 2024, in which they had pushed back at a raft of observations and suggestions made by Weeks in a report about the company’s remediation efforts.

“I was surprised because it was a very lengthy response [by Star] that took issue with many of the findings, which was contrary to what the Board had told us,” he recalled. “There was also a very extensive amount of commentary and rejection of findings in that report which again I was surprised about. I had several meetings both with the board and with Mr Cooke in relation to the report where very few questions were asked, so I was surprised when there were as many comments received back as I did.

“I was disappointed because the purpose of providing that report to the company was so they could be clear about those things that I considered to be deficiencies and areas that need to be addressed.

“The way they were characterized in the report were as potential impediments to reform, so I was disappointed because the company’s rejection of my assessment of many of those deficiencies suggested to me that there was an enhanced or increased chance that the company was not going to take steps to address those findings and observations which I regarded to be accurate and legitimate.”

The inquiry was also told that for almost seven weeks, a ticket-in, cash-out terminal in Star’s Sydney casino handed out more than $3.2m to players who had already cahsed wins with no urgency from the casino to fix the issue.

Mr. Weeks said this highlighted ‘a deep cultural problem in parts of the casino in relation to the level of rigour through which controls are followed, the level of care in which work is conducted and the desire from people in the business to drill down on things in circumstances where they don’t appear that they’re correct.’

“I was concerned about the cultural issues. Also, concerned about the control environment because this is [where] balancing the books and counting money was one of those things that I anticipated the casino would be very good at,” he added. “There was an absence of people speaking up and saying ‘we’ve got a problem here’ and escalating issues. Until the new leadership takes hold and really sets a different expectation and standards among team members, these types of incidents may continue to occur.”