The Star cries poor, labels $400m fine a casino killer
Miklos Bolza |
The Star has urged a judge not to kill off the casino by issuing a $400 million fine over systemic failures to tackle money laundering and terrorism financing risks.
As financial watchdog AUSTRAC pursues The Star in the Federal Court, the company has cried poor, saying the proposed penalty would push it into administration.
“We contend for a $100 million fine,” The Star’s barrister Steven Finch SC said at a hearing on Tuesday.
“That amount … is all the money that we have and reasonably anticipate being able to borrow, hoping but not certain that we will be able to survive that.”
The $400 million fine was “larger than that necessary” because a quarter of the amount would still deter others from breaching the law in the same manner, Mr Finch said.
“Your Honour would be sending a price signal to other players in the field,” he told Justice Cameron Moore.
“If you engage in this sort of conduct … you are open to being fined every dollar that you’ve got and every dollar you can borrow.”
It follows days of submissions from AUSTRAC detailing Star’s willingness to do business with 117 high-risk customers, offers of $167 million in gambling credit to a known money launderer and falsifying letters to enable overseas bank transfers from unknown individuals
The watchdog’s proposed fine crossed a line from deterrence into “oppression,” Mr Finch said.
Justice Moore was told he had to look at the whole of The Star’s conduct, including its slew of admissions.
“Does this conduct look … like the sort of conduct I need to kill them for?” Mr Finch asked.
“If the answer is yes, it perhaps doesn’t matter whether it’s $400 million or $8 trillion because on the evidence, neither will be paid.”
Crown agreed to pay a $450 million fine in May 2024 for similar money-laundering breaches.
This amount was a “benchmark” which could be used to determine how much The Star could pay, AUSTRAC barrister Simon White SC argued earlier on Tuesday.
“The conduct in this case is measurably worse than that in Crown,” he said.
The Star’s breaches were deliberate, he argued, in contrast to Crown.
Management at The Star continued to engage with high-risk gamblers without proper controls and risk assessments despite clear findings revealed in a public inquiry into Crown, Mr White said.
About $138 billion in cash turnover had come in solely through junkets with an additional $20 billion sourced from high-risk customers, Mr White said.
“$138 billion just from junkets coming through the casino environment is potentially catastrophic in so many ways,” he told Justice Moore.
The business had benefited from the lax security measures, bringing in almost $1.3 billion in revenue through junkets at its Sydney and Queensland casinos and at least $1.33 billion more through high-risk gamblers.
Additionally, very significant volumes of high-risk cash were pushed through its slot machines, the court was told.
While a projected $343 million was expected to be paid to make The Star’s anti-money laundering systems compliant, this should have been an expense made years ago, Mr White said.
And without the proper measures in place, the casino had an unfair competitive advantage over its rivals, he noted.
AUSTRAC rejected The Star’s claims of financial distress, saying US gaming giant Bally’s Corporation had promised to inject $300 million into the firm and further capital could be raised elsewhere.
An independent expert report released in May valued The Star between $1.17 billion and $1.38 billion with liabilities of about $490 million, the court was told.
The hearing continues Wednesday.
AAP
