My greatest fear is that one day we may wake up and our democracy is gone. We cannot afford to let that happen.”
— John Lewis: Good Trouble, 2020 documentaryIt may sound strange: satirical novels set in Stalin’s Soviet empire, by an Australian journalist, about Trump’s America. But Knox’s darkly hilarious books have arrived when global politics so often feel like a farce
Google Maps Changes Lake Ontario to Lake America. Totally pathetic and stupid. Maps are wayfinding tools and this toadying political change will help no one find their way.
Leaked recordings show what Star executives really think of regulators
Star Entertainment chief executive Bruce Mathieson jnr has complained the casino operator exists only to pay “disproportionate” fines and may need further relief from regulators to survive, in a meeting that calls into question how seriously the company is taking its compliance obligations.
The Australian Financial Review, The Age and The Sydney Morning Herald have obtained a recording of a meeting of senior executives held earlier this month. The meeting is led by Mathieson jnr, whose family is the biggest local shareholder, and Star Sydney boss John Koster, and suggests the company is struggling to balance its commercial and regulatory obligations.
Star Entertainment’s chief executive Bruce Mathison jnr, Star Sydney chief executive John Koster and chief financial officer Charlie Diao. Tim Beor
In the monthly executive meeting, an exasperated Mathieson jnr is recorded criticising the cost of enforcing compliance and problem gambling, while Koster grills colleagues, including chief financial officer and interim chief risk officer Charlie Diao, for going beyond what was required by regulators to ensure the casino could win back its licence.
“We get these fines, which I think are just disproportionate to what is happening, and … all we’re doing is existing to pay a fine,” Mathieson jnr said.
“We keep on restricting ourselves tighter and tighter. We’re coming to a pretty critical time with licences and all that sort of stuff, but it should be quite obvious to everyone that unless we can breathe … every time we get up to breathe, we cop another hit.”
Star was asked to pay $10 million in fines over system failures in financial crime risk operations in June, and was last week ordered to pay $500,000 for allowing an underage boy to gamble.
The casino giant lost its licence to operate the Sydney casino in October 2022 following a NSW government inquiry run by Adam Bell SC, which heard evidence about anti-money laundering failures inside its flagship precinct.
Star chief executive Bruce Mathieson jnr said the casino operator only exists to pay fines. Oscar Colman
The licence has since been overseen by Nick Weeks, a government manager who also controls Star’s licences on the Gold Coast and in Brisbane.
Star wants the NSW casino regulator to hand the licence back, but that is subject to a range of conditions, including financial stability and sufficient anti-money laundering and counter-terrorism processes.
Over the past four years, Star had paid hundreds of millions of dollars in fines for its historical misconduct and breaches of its internal processes.
On Saturday, a joint investigation by the Financial Review, the Herald and The Age detailed serious concerns about Star’s compliance and problem gambling systems. Eight insiders, speaking on the condition of anonymity, also warned of an erosion of governance under Mathieson jr’s leadership.
Mathieson jnr wrote to staff on the weekend and said the business was continuing to speak with stakeholders about the “matters raised” in the investigation.
Star did not respond to questions about what was said at the meeting, saying the company’s focus was on the release of its results and annual report on Monday. The spokesman said the company had regular monthly compliance meetings that discuss matters from various business units.
NSW Independent Casino Commissioner Philip Crawford has ordered Weeks to conduct an urgent review into the allegations outlined in this masthead. He said Weeks had last week provided him with a report detailing governance issues as he weighed whether to return to Star its gaming licence in Sydney.
NSW Independent Casino Commissioner Philip Crawford has asked for a review into Star’s conduct following Saturday’s investigation. Dominic Lorrimer
“The NSW Independent Casino Commission’s concern has always been to ensure NSW casinos uphold community expectations by maintaining responsible and compliant operations which are resistant to criminal infiltration and equipped to minimise gambling harms,” Crawford said.
“However, the [commission] has requested a supplementary report from the manager to outline any additional matters arising from the article that are relevant to The Star’s NSW operations.”
Koster is a former senior executive at Bally’s who was put in charge of Star’s flagship Sydney casino in March. Bally’s, which operates casinos in the US, has held a 38 per cent stake in Star since December. The Rhode Island-headquartered company’s chairman, Soo Kim, is also the chairman of Star.
Mathieson jnr is the son of publican Bruce Mathieson and a former director at Endeavour, which owns the Dan Murphy’s bottle shop business and a string of pubs with pokie machines. He became chief executive of Star following the completion of a $300 million takeover with Bally’s, which lifted his family’s stake in the business to 23 per cent.
The purpose of Star’s monthly executive meeting was to discuss future challenges and processes. The recording reveals a heated debate over the purpose of critical compliance measures that were designed to help Star win back its casino licence. Koster urged Star’s management to stop “unnecessary garbage”.
“If we don’t need to do something, don’t do it. Don’t add to what we’re required to do,” he said. “We’ve constricted ourselves inside the requirements of the [internal control manuals]. If you guys are talking about adding more stuff on top of what we got, and it’s not a regulatory or ICM requirement, you’re going to have to think about that again quickly.”
Star’s precincts across Brisbane, the Gold Coast and Sydney operate according to strict internal control manuals (ICMs) – rule books that explain how to run the business safely. A large portion of the monthly meeting was related to how the casino monitors transactions, which form part of its ICMs.
Koster also discussed implementing KPI bonuses to make sure no prevention of play notices were being unnecessarily executed and that they were being prioritised from most valuable to lowest, based on the average bet they played over a session.
Prevention of play, known as a POP, is a temporary measure put in place to ensure a person can’t gamble inside the venue. They are coded based on different reasons for the temporary ban. A source of wealth check is a compliance process used to determine how a person made money.
“We go to the highest customer. As soon as that highest one comes back, we take care of that,” Koster said. “My direction to the financial crime team, which is supported by my boss and another boss, is that you guys start that process on the most important customer. How many times do I have to say this?”
Star’s Sydney casino had its licence suspended back in 2022. Sam Mooy
At another point, Koster said that “source of wealth checks” were taking too long. The process, he argued, should take days, not weeks.
“This has to get fixed. This is unacceptable … there’s no way anybody should get POP-ed any more. Nobody should get POP-ed unless they have refused to give us a source of wealth information, or we have to go back to them because for some reason they didn’t give us whatever we needed to begin with,” he said.
“This has to get cleaned up, and if somebody says to me the backlog has to be addressed and we have to jump from one customer to another customer and then back to this customer, I don’t understand that. The good news is our POPs now seem to be falling behind our reactivations, which is the first time that that’s ever happened. So that’s a beautiful thing.”
The group discussed an alternative methodology to improve the backlog of suspicious matter reports – notices sent to AUSTRAC when the casino is concerned about a transaction or customers. They also discussed a failed attempt to ask the NSW regulator to remove a rule that related to transaction monitoring and tracking concession cardholders, such as Centrelink customers.
A critical focus is on the time it takes to complete processes. Star has already loosened rules around the source of wealth checks, potentially making it far easier for people to gamble under multiple identities. The company now uses single-source verification checks for customers instead of fuzzy logic verification – a method that uses algorithms to go through data and identify matches by calculating a similarity score.
“Speed is what we need. We keep on having paralysis of analysis,” risk officer Diao said. “We just have to stand our ground and tell [Weeks’ team] that it’s not productive.”
Koster was scathing of Star’s fraud scoring model, which is used to identify government concession holders and track whether they start spending thousands. “I would call out the people that are asking us to do this and point to that – What are you looking for? There’s nothing here,” he said.
Mathieson jnr responded: “Let’s be honest, it’s [Weeks’ team] who is. It’s a lot of effort for what? I think we’re all asking that question.”
Koster stopped the meeting at various points to ask whether Star was taking steps beyond the obligations of its ICMs.
“I think we should avoid doing that – personal opinion,” he said.
Mathieson jnr said he did not disagree and asked whether he needed to draw a line with Weeks. He argued that a fine issued to Star for allowing a 16-year-old boy to gamble tens of thousands of dollars using a fake ID last week, showed how Sydney’s carded play system was being used in a way that disadvantaged the casino. Unlike in Queensland, patrons in Sydney are required to use a mandatory identification card if they wish to gamble.
“There’s got to be some point in time we actually [draw a line],” he said.
“I’m just mounting an argument at this time, and it comes off the back of this fine last week. I know it’s a fine for an underage thing, but it’s still a weapon. It feels like it’s weaponising the 100 per cent card of play. It’s fantastic what’s been achieved, but now we’re penalised for what it’s delivering, not being sort of steered for benefit.”
“The only way to get anywhere is, you know, once we find out our licence scenarios … to go back and ask for some sort of regulatory relief.”
Star has already received regulatory reprieve from the NSW government, which has twice delayed plans to bring cash limits from $5000 to $1000 per day. In 2023, it received a $310 million tax reprieve in exchange for a commitment to protecting 3000 jobs at its Sydney precinct.
