Star Entertainment Faces a Third Legal Claim for Negligence Towards Protecting Shareholders
In the midst of its escalating crisis in Australia, gaming company Star Entertainment faces another lawsuit piling up. Accusations of money laundering, gambling by known criminals, and other severe lapses have drawn the scrutiny of regulators and investors who demand accountability from the company.
This marks the third class-action lawsuit against Star, claiming noncompliance with anti-money laundering and counter-terrorism financing laws (AML/CTF). This time, it is brought forth by Phi Finney McDonald law firm on behalf of investors.
Star has acknowledged the securities class action suit, which is now in the hands of the Supreme Court of Victoria system. It points out that it pertains to the period from March 29, 2016, to June 13, 2022, aligning with the other allegations.
Questionable Business Practices and Leadership
During that time, it is alleged that the company's The Star casino issued deceptive statements about its AML/CTF policies and procedures. Moreover, it is claimed that the casino concealed essential information from the market regarding such issues. In addition, the casino's executives are said to have directed the property's activities against the general public's interests.
Star stated that it would reject the lawsuit, arguing that the allegations are similar to those it's already battling. Almost a year ago, Australian law firm Slater and Gordon filed a class-action lawsuit against Star due to what they described as misleading statements about legal compliance.
Some investors have requested refunds because of the share price plummeting over 25% since the scandal erupted, causing the company to lose over AUD1 billion (US$692.3 million) in corporate profits.
Star then received a second class-action lawsuit in the Supreme Court of Victoria on November 7 of the previous year. The Maurice Blackburn law firm initiated the case, and both are still ongoing.
State governments across the country initiated inquiries into the company's actions following Crown Resorts' similar predicament. They all reached the same conclusion – the company had a poor track record of adhering to regulations and should not retain its casino license.
However, none of them made a permanent revocation of Star's status. Instead, regulators have been working on financially penalizing the company. For example, New South Wales fined it AUD100 million (US$69.23 million), and Queensland did the same.
Star's Ascent and SkyCity
Crown initiated the movement, Star provided the momentum, and SkyCity Entertainment Group added more fuel. Based in New Zealand, the casino operator manages the SkyCity Adelaide property in South Australia, which is at the center of a money-laundering investigation.
The investigation has been ongoing for the past seven months. An expectation existed that the final judgment would now be ready. While the investigation has now concluded, a decision on the subsequent action must wait.
A retired Supreme Court judge, Brian Martin, has compiled his findings and recommendations. However, releasing the results has been delayed because the Australian Transaction Reports and Analysis Centre (AUSTRAC), the country's financial watchdog, is also pursuing SkyCity.
AUSTRAC has taken the company to federal court over its AML/CTF failures. Consequently, Martin believes that determining the company's suitability cannot occur until that case concludes. As a result, South Australia will have to wait. But the duration is undetermined.
There's currently no specific deadline for the conclusion of the AUSTRAC case.
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