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The chairman and CEO of Australian casino operator The Star Entertainment Group privately discussed being “ready for war” with the company’s temporary special manager, including suing him and/or the casino regulator while covertly monitoring his communications, an inquiry has heard.
The second inquiry into Star Entertainment’s suitability in New South Wales (NSW) state started dismally for the casino on Monday (April 15), uncovering evidence that its top officeholders sought to bring down the external manager tasked with supervising the return of Star’s Sydney casino to licence suitability.
Temporary special manager and casino licence holder Nicholas Weeks, appointed by the government to supervise the company while under a suspended licence, learned today from company emails presented to the inquiry that chairman David Foster and then-CEO Robbie Cooke, who resigned in March, discussed organising a shareholder class action against him.
The airing of the emails on the first day of the inquiry suggests Foster will struggle to retain his chairman’s post, and that Star has suffered a heavy blow in defending itself ahead of a mid-year deadline to demonstrate suitability.
The inquiry heard that at a meeting on December 15, 2023, NSW Independent Casino Commission (NICC) chair Philip Crawford informed Star and Weeks that the NICC had lost confidence in Cooke to deliver the company’s remediation plan that was agreed to following the first inquiry under Adam Bell SC.
It also noted that Star managers later expressed dissatisfaction with an addendum to Weeks’ progress report on the company.
Counsel assisting the inquiry, Caspar Conde, then quoted a series of company emails in late January 2024, in which Cooke promised to Foster that “fireworks will be bright and loud”, with Foster replying that a strategy under consideration “could be a catalyst to get rid of Weeks”.
Conde also presented evidence that Star managers had covertly monitored Weeks’ Star email account or other hosted data, given that they were aware of the location and participants of a February 1 meeting between Weeks, the NICC and lawyers at The Star’s boardroom at least one day ahead of time.
A January 31 email from Foster to Cooke read: “OK, they are prepping for war, we’d better do the same, should we talk to [a lawyer from the King & Wood Mallesons firm]?”
Cooke replied: “We are meeting Monday to get ready for war, though,” according to Conde.
Conde also showed evidence that, ahead of the meeting, Star had probed at least one of the lawyers scheduled to attend.
“I think it’s extraordinary,” Weeks told the inquiry. “In circumstances where this casino’s licence is suspended, and I’ve been appointed to manage the casino, and one of the fundamental objectives of Star is to regain trust and confidence with its regulators, including me as manager, that they were monitoring my diary entries and investigating people I was meeting with, I find to be extraordinary.”
Weeks testified that throughout this period, no Star manager or executive had told him that it wanted to be rid of him, instead insisting that their working relationships was constructive.
Yet on February 1 and 2, Foster sent emails to Cooke identifying indemnity provisions for Weeks’ work, apparently probing supposed weaknesses that could be turned into a lawsuit.
“Another angle is establishing grounds, if possible, for a class action from shareholders against NW [Nicholas Weeks] and/or NICC,” Foster told Cooke in an email presented to the inquiry. The strategy was also to be run past “KWM” (King & Wood Mallesons).
“It’s difficult to reconcile everything that the company has told me and everything it tells the market, and everything it tells the regulator in relation to its motivations to reform and to work cooperatively with the regulator,” Weeks said.
“To suggest that they want to go to war with the regulator and me in circumstances where their licence is suspended, and there’s a decision about that suspension that has already been scheduled to occur in June this year, is extraordinary.”
Weeks also told the inquiry that CFO Christina Katsibouba, whose resignation was announced in tandem with Cooke’s on March 22, informed him that her working relationship with Cooke and the Star Entertainment board had “deteriorated”, that the group leadership team had been “dysfunctional … for some period of time”, and that she had “lost faith and confidence in the integrity of the CEO”.
However, in an email to the NICC, Foster said both Cooke and Katsibouba had been “terminated without cause”.
Weeks added that Cooke’s board-approved resignation had not come as a surprise, even though he only learned about it in the media, despite being special manager and licence holder.
This was not only because the NICC had lost confidence in Cooke by the December 7 meeting, but also because of a “high level” of dissatisfaction with Cooke among the leadership team, he said.
Weeks said a formal whistleblower complaint had also been lodged against Cooke and that this ongoing matter had been referred to an external law firm to investigate.
Meanwhile, Weeks said he is yet to receive full details from the company on a post-resignation consultancy agreement between Star Entertainment and Cooke, although he has been assured Cooke will play no role in casino operations.
Other witnesses scheduled for the first week of public hearings include Katsibouba, acting CEO Peter Humphreys, and several current and former Star managers.
The second Bell inquiry, which is likely to play a decisive role in Star Entertainment’s viability in NSW and possibly Queensland state, will deliver its report to the NICC by July 31.
Star Entertainment is also expecting a likely massive fine from federal money laundering watchdog and financial transactions regulator AUSTRAC over non-compliance matters raised in the first Bell inquiry and AUSTRAC's own investigations.
