The Star facing lawsuits on risks
THE Star Entertainment Group is staring at two proposed shareholder class actions after its share price dropped more than 20 per cent last week on allegations of inaction over money-laundering risks at its Australian casinos.
On Monday law firms Slater & Gordon and Maurice Blackburn said they were investigating whether shareholders in the $3.5bn casino group suffered a loss due to The Star’s failure to inform them of material risks facing the business.
Central to the allegations was the claim it had courted high-risk, highrolling gamblers with potential links to organised crime while sitting on independent reports from KPMG that outlined flaws in the group’s anti-money laundering and counter-terrorism financing (AML/CTF) controls in 2018.
The Star branded many of the allegations “misleading” and rebutted the claim it did not act on the KPMG reports, telling the ASX it had acted on their recommendations.
Slater & Gordon class actions practice group leader Emma Pelka-Caven said she was investigating whether shareholders had suffered a loss as a result of “materially incorrect information” when the allegations caused The Star’s share price to collapse 25 per cent at the start of last week, wiping almost $1bn from its market value.
“We consider that the information released may give rise to a claim on behalf of shareholders against the company,” Ms Pelka-Caven said.
“At the time they purchase shares in a listed company, investors are entitled to assume all of the material information relevant to its financial position has been disclosed.”
Maurice Blackburn principal Vavaa Mawuli said its class action would allege The Star had breached continuous-disclosure obligations, engaged in misleading and deceptive conduct “and conducted its affairs contrary to the interests of members as a whole in the period’’.
“Shareholders rightfully expect casino operators to rigorously comply with antimoney laundering and counter-terrorism financing laws because casinos are unmistakably targets for criminal activity,” Ms Mawuli said.
She said the failure of The Star to disclose KPMG’s concerns in 2018 raised concerns about its leadership.
“The fact that these concerns were raised in 2018 and not disclosed to the market raises real concerns about Star’s governance and shareholders should be rightfully concerned,” Ms Mawuli said.
“Anti-money laundering laws are designed to promote public confidence in the Australian financial system. Investors are entitled to expect gaming companies to engage in best practice.
“That doesn’t appear to have occurred at Star.”
Maurice Blackburn is running two shareholder class actions against the James Packer-backed Crown Resorts in the Federal and Victorian Supreme Courts.
The allegations against The Star have also raised fears its NSW and Queensland casino licences could be in danger.
When contacted for comment, The Star said it was “not aware of any proceedings having been filed”.