After testimony from an investigation into the group’s casino operations in Sydney, Star Entertainment stock plummeted to its lowest level in 17 months.
According to Bloomberg, the stock dropped 7% before closing at AU$3,215 at 11:40 a.m. local time, down 2.9 percent. The group’s market value fell to AU$3 billion ($2.22 billion) in October 2020, the lowest since October 2020.
This comes amid a probe into The Star, which is evaluating the company’s suitability for a major casino in Sydney.
The Sydney Morning Herald outlines that the operator disguised $900 million in Australian gambling transactions on Chinese debit cards as hotel spending on the first day of the investigation. Fraud was committed by misrepresenting the funds to banks.
The involvement of Harry Theodore, the CFO, and Oliver White, the general counsel, was detailed in a New South Wales Independent Liquor and Gaming Authority investigation. Both of them are accused of lying to NAB and China UnionPay about the 2019 transactions.
Allegedly, payments from UnionPay bank cards were accepted at a number of the operator’s partner hotels and were transferred to The Star casino in Sydney and Brisbane.
This technique exposed the company to money laundering, allowing its customers to circumvent Chinese capital regulations while also breaking an agreement with the trade bank NAB.
Interestingly, after individual cardholders spent more than $20 million on ostensibly hotel and luxury costs but were actually gaming-related, a Chinese debit card company wanted to restrict their cards from being used at The Star casino.
According to an investigation, China UnionPay discussed ordering the National Australia Bank to stop providing the UnionPay card at the casino in 2019 after concerns were made by China’s central bank.
The People’s Bank of China was “struggling to fathom how the level of spending could be made on non-gambling entertainment,” according to a November communication from NAB to the casino.
After similar misdeeds by Crown Resorts in Australia last year, public hearings are still ongoing, and there is a lot of fear surrounding the operator. Crown has been subjected to stringent regulations and scrutiny since then.
The Star Entertainment Group
The Star Entertainment Group (previously known as Echo Entertainment Group) owns and runs The Star Sydney, The Star Gold Coast, and Treasury Brisbane, all of which are listed on the ASX 100. In a joint venture, the Star Entertainment Group purchased the Sheraton Grand Mirage on the Gold Coast and runs the Gold Coast Convention & Exhibition Centre on behalf of the Queensland Government.