Apart from the ongoing turmoil caused by a damning public inquiry into the operations of its Sydney casino, Star Entertainment Group has also faced a class action filed on behalf of some of its investors who are seeking compensation for deceptive or misleading representations made by the company in terms of its regulatory compliance.
As mentioned above, the legal action comes at a time when Star Entertainment is facing the pressure of a royal commission-style public inquiry into its suitability to hold its Sydney casino operating permit following media reports of links to organised crime and facilitating money laundering. The class-action lawsuit alleges that the Australian gambling giant had led its investors to believe the group was a model casino operator, while, in fact, it was unable to tackle corruption, bribery and money laundering activity.
Following the media reports of the casino operator’s misconduct, Star Entertainment’s share price fell by over 25%, wiping over AU$1 billion from the overall market value of the Australian casino and gambling giant.
Now, the law firm that has brought the class action lawsuit in the Supreme Court of Victoria – Slater and Gordon – revealed that Star Entertainment’s shareholders had a strong case to recover their losses.
Ben Zocco, a class action senior associate in the firm, explained that investors are entitled to assume that the company had already disclosed the entire material information relevant to its financial position. Mr Zocco further noted that the Australian casino operator had insisted that its business had been operated in an ethical, honest and transparent manner that kept the integrity of the company, as it had taken compliance very seriously. Unfortunately, the plaintiff’s investigation so far suggested that the operator had done everything but what they had been supposed to do.
Multiple Misconducts of Star Entertainment Found by Ongoing Public Inquiry
David Lynch, a lead plaintiff in the class-action lawsuit, shared his disappointment when he saw the significant decline in the value of his shareholding in Star Entertainment. As an investor, he expected that the company would have publicly listed all details related to its operations in accordance with the law and carried out the appropriate checks to make sure investors are not lied to. However, he felt that Star Entertainment had been deceptive about the values of the company.
The beginning of the week saw Matt Bekier step down with immediate effect from his position as the chief executive officer and managing director of the company, becoming the first executive who left Star Entertainment after the beginning of the probe. The resignation from the company’s board was filed because Mr Bekier wanted to take responsibility for the gambling giant’s misconduct uncovered by the probe.
So far, the inquiry has heard evidence unveiling the existence of a secret junket operator’s room at the casino. Adam Bell, SC, who leads the investigation, also found out that senior officials at Star Entertainment have misled the state’s gambling regulator – the Independent Liquor and Gaming Authority (ILGA) – and the National Australia Bank, not to mention they have done nothing to stop money laundering activities take place at the casino.
Most recently, the public inquiry heard that Star Casino used the bank account of a junket operator to accept payments from affluent Chinese patrons in order to circumvent some legislative restrictions. Michael Whytcross, the general manager of finance and commercial of the company, claimed that Macau-based accounts used by the gambling operator to accept payments from Chinese customers were shut down in 2017 following a crackdown by the Government of mainland China.
- Author
Olivia Cole
