The $400 million sting that could snuff out Star for good
The adage 'you do the crime you do the time' springs to mind when listening to Star Entertainment's protestations that if stung with a legal fine of $400 million for money laundering, it will go broke.
And its no idle threat from the casino operator, which narrowly escaped bankruptcy two months ago after a US-based white knight (Bally's) agreed to lead a rescue mission that involved injecting $300 million into the business.
Star has so far only received $100 million, just enough to keep the doors open for a few months, with the rest to come later.
So, Star simply doesn't have a lazy $400 million lying around even as the financial transaction regulator, AUSTRAC, asks a federal court judge to throw the book at the casino operator. According to AUSTRAC, $400 million is the appropriate penalty for Star's alleged serious and systemic non-compliance with Australia's anti-money laundering and counter-terrorism financing laws.
While Star argues a fine of that size is oppressive and AUSTRAC brands it appropriate, both parties might be correct.
AUSTRAC feels it is on solid ground – it's position guided by its agreed settlement a few years ago with Crown Resorts on a $450 million fine for similar breaches of the law. The regulator maintains that Star's parlous financial state is due to other factors – which is correct but effectively academic.
If the aim of AUSTRAC's action is to provide a deterrence to others, then a fine of the magnitude it is seeking would certainly hit the mark.
A fine of $400 million will certainly jeopardise Star's current rescue plan.
In Crown's case, the AUSTRAC matter never saw the inside of a courtroom – the parties settled. So strictly speaking there is no precedent, but the settlement did serve as a template of sorts for the financial crime regulator.
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