One of the largest casino companies in Australia – Star Entertainment – is being intimidated by a class-action lawsuit after it was revealed that its shareholder value collapsed by almost AU$1 billion following the operator’s alleged failures to comply with anti-money laundering and counter terrorism-financing rules.
The local plaintiff law firm Maurice Blackburn Lawyers has started preparing a class action on behalf of the gambling company’s investors after a number of Australian media hubs revealed that Star Entertainment has been allowing suspected organised crime and money laundering in its casinos in Sydney, Brisbane and the Gold Coast for years.
Vavaa Mawuli, principal of the aforementioned law firm, explained that the casino operator’s shareholders had every right to expect the company to be compliant with counter-terrorism and anti-money laundering laws and regulations because casino companies have always been targetted by criminal activity. As Ms Mawuli shared, the fact that the aforementioned concerns were raised three years ago and had not been disclosed to the market right away raised serious concerns about the governance of Star Entertainment. In her opinion, the gambling company’s shareholders have every right to be concerned with the situation.
Last week, it was revealed that, in 2018, Star Entertainment’s board was provided with two confidential reports that warned the board members that terrorism financing was not considered necessary under the provisions of the Anti-Money Laundering and Counter-Terrorism Financing Act (AML-CTF Act) by the company’s AML risk-assessment system.
The report also raised a red flag that the assessment of some gamblers carried out by Star Entertainment appeared to be portraying the level of money-laundering risk as smaller than it actually was. Furthermore, the report also warned that the Australian gambling operator had no documented assessment of money laundering risk or risk-assessment methodology regarding so-called junket operators.
Star Entertainment Faces Massive Share Value Decline Following Allegations
Only a day after the revelations were made public, the share price of Star Entertainment fell by more than 20%, wiping out an almost AU$1 billion of its overall market value. Since then, the Australian casino company’s shares have slightly recovered, but are still trading at a price that is about 17% lower than the one at the beginning of October.
As revealed by Ms Mawuli, as part of the class action, Star Entertainment would be alleged in deceptive and misleading conduct, violations of its continuous disclosure obligations and conducting its affairs in a way that hurt the interests of its members.
The Sydney Morning Herald revealed that Star Entertainment said it had not been informed of any action started by Maurice Blackburn by the time the media outlet got in contact with it at the end of the previous week.
Until now, Star Entertainment, which is the second-largest casino operator in Australia, has managed to largely avoid the regulatory action that has dragged its major competitor in the country – Crown Resorts – into crisis.
As Casino Guardian previously reported, a number of local media hubs have warned that Crown Resorts entered in partnership with so-called junkets – Asian operators often linked to criminal organisations – in an effort to attract affluent Chinese gamblers to its venues in Australia. The scandalous revelations resulted in the suspension of the gambling operating permit for Crown Resorts’ Barangaroo casino in Sydney, with the NSW Commissioner Patricia Bergin citing evidence that the operator had facilitated money laundering and had been linked to some criminal organisations in Asia.
Star Entertainment Faces Investigations by the Police, AUSTRAC and Queensland’s Gambling Regulator
Last week, Star Entertainment issued a statement revealing that it had previously acted as recommended by KPMG in terms of anti-money laundering and counter-terrorist financing in October 2018. The gambling operator also revealed that it had undertaken a work program aimed at strengthening its compliance framework with oversight from the board. The casino company revealed that the program was conducted from the middle of 2018 to the beginning of 2020.
Furthermore, according to the board of Star Entertainment, some assertions in the media reports have been misleading. The company’s board also noted that it would take the necessary moves to address all allegations with both federal and state authorities and regulatory bodies.
The police, the gambling regulatory body of Queensland and the Australian Transaction Reports and Analysis Centre (AUSTRAC), which operates as an anti-money laundering watchdog, have started investigations into the latest allegations that are currently being faced by Star Entertainment. The state’s attorney-general has so far described the gambling company’s approach to risk warnings as very serious.