Investors punished Star Entertainment Group in particular yesterday, but didn’t miss other casino groups after media reports on Sunday night and on Monday about alleged misconduct, in particular regarding money laundering controls at Star’s casinos in Sydney and the Gold Coast.
In an early morning statement Star said it will address all the allegations revealed in the report and claimed, without providing any evidence that several assertions in the articles were misleading.
The articles in the Nine/Fairfax papers and on Nine’s 60 Minutes claimed that Star in Sydney has been enabling suspected money-laundering, organised crime, large-scale fraud and foreign interference within its Australian casinos for years, even though its board was warned several years ago in a report from KPMG that the company’s anti-money-laundering controls were failing.
Star’s board said in the letter to the ASX that it was concerned about ″a number of assertions within the media reports that it considers misleading”. It said it was constrained on publicly discussing specific individuals, but said it would address the allegations.
“The Star operates in a heavily-regulated industry,” the company told shareholders.
“We are subject to thorough and ongoing regulatory oversight including compliance checks and reviews across the company’s operations in NSW and Queensland.”
It also noted the recommendations from the Bergin Inquiry, which found Crown Casino was unfit to hold a casino license.
But since the Bergin inquiry reported earlier this year, Star and other casino groups such as Crown, have been placed on notice by Austrac, the financial intelligence and anti money-laundering group.
In June, the National Australia Bank, Crown Perth, Star Sydney and SkyCity Adelaide casinos said they were all facing the possibility of multi-million-dollar penalties for potential breaches of anti-money laundering laws.
In separate statements to the ASX on June 7, the NAB and casino operators Crown, SkyCity and Star Entertainment Group told investors they had been referred to AUSTRAC’s enforcement team following the identification of potential “serious non-compliance” with anti-money laundering and counter-terrorism financing laws.
Monday’s media reports suggested that Star faced probing by AUSTRAC over money laundering controls.
The Star allegations saw the shares fall 23% at one stage on Monday, with shares in other casino groups such as Crown Resorts (-3.4%) and NZ-based SkyCity (-5.4%) also falling as the industry braced for a monstering from regulators.
The allegations, along with the fact that the NSW casino regulator expressed surprise when told of some of them by Fairfax, indicated Star’s ambitions to takeover struggling Crown are dead.
It is the fate of Crown Resorts that is mostly behind the sharp falls in share prices on Monday, after the findings of the Bergin inquiry that has kept the company out of its Sydney casino at Barangaroo and spurred royal commissions into allegations about the company’s Crown operations in Melbourne and Perth.
Investors in Crown have suffered big losses in the past three years because of inadequacies exposed by the media, the Bergin inquiry and the royal commissions. They have fallen from $13.10 in October 2018 to $8.91 yesterday.