Cooke would later tell an inquiry he didn’t recall the warning, which wasn’t news anyway. “We had financial updates, as I said, through that period,” he told an inquiry into Star on April 24.
Christina Katsibouba giving evidence in the Star inquiry on April 16.
Former Star executives say the Pyrmont event was classic Cooke: preach openness, and keep information tight; promise to delegate, and centralise control, and always, always bear good news.
“Robbie comes across as a very nice; very personable; supportive,” said one former executive. “But he doesn’t like receiving advice that challenges him or goes contrary to the direction he wants to go in. He likes to fly solo.”
Negative 109 per cent
Star was Cooke’s fourth CEO job, and may be his last. On October 17, 2022, when he took over the company, which operates casinos in Sydney, Brisbane and the Gold Coast, Star was valued at $2.14 billion. Today, after raising $1.55 billion from investors, Star is worth $1.35 billion, a loss under his leadership of 109 per cent.
A graduate of Brisbane Grammar and the University of Queensland, Cooke had before Star led Tyro, which rents payments terminals to retailers. In an interview in 2020, he said he liked working in businesses that “had the DNA of disruption” and were still owned by their founders.
He portrayed himself as the ultimate team player.
“You have got to give people the power and authority to push good ideas,” he told the Scaling Up podcast. “It doesn’t come from the top. You create an environment that nurtures good ideas.”
At Star, Cooke employed a different style, according to people who worked with him. Of his 12 direct reports, all but three had worked with the previous chief executive, Matt Bekier, who resigned after admitting to overseeing “systemic” problems at the company.
The Bekier-era managers operated under a tacit agreement, according to a former executive: “Go along with what the CEO wants, and you can keep your jobs.”
The new team, mostly inherited from the old, included an ex-rugby writer, Peter Jenkins, who Cooke promoted from head of external affairs to be his “chief of staff”.
Cooke kept unusual hours. He would arrive at the casino around 3am, according to former employees, and work until 5pm or 6pm. Sometimes, if he had to attend evening functions, he would stay until 10pm or 11pm.
“He said he slept on weekends,” another former executive said. “He looked tired, every day.”
The extreme work style reflected a determination to lead every important project, according to the former executives. They included high-stakes lawsuits, capital rescues, tough commercial negotiations, relationships with assertive regulators, a broken workplace culture and operations in serious decline.
Tough gig
To be fair on Cooke, the job would have challenged the most capable executive.
Cooke officially started on October 17, 2022, the day NSW imposed a $100 million fine on the company. Four days later, Star’s NSW gambling licence was suspended indefinitely. The casino continued operating under the control of an external manager, former rugby league lawyer Nicholas Weeks.
Criminal activity seemed to be down. Earnings were too. Operating profits fell from $200 million in the six months ended December 31, 2022, to $117 million in the following six months, and $114 million after that.
The NSW government wanted to make it pay tens of millions in extra tax every year. AUSTRAC began legal action to impose a fine that may be in the hundreds of millions. The construction of a huge new casino in Brisbane was going badly.
Star had $1.3 billion in debt. In normal times it would have been manageable. These were not normal times. In February, to avoid breaching a debt covenant, Cooke raised $800 million from investors, mostly to pay off lenders. He said the money would be enough for three years. It kept the company going seven months.
At least outwardly, Cooke’s confidence was undiminished. Star had 8000 employees. Not long after he became CEO, Cooke held a series of group employee meetings. As he talked up the company’s prospects, Cooke repeatedly promised there would be no job losses, according to a person present at some of the meetings. “I am not a cost-cutting guy,” he said, according to the source. “I’m not going to do that.”
She wondered why Cooke had ruled out such an obvious way to reduce expenses when the company was obviously in trouble.
In April, Cooke agreed to fire 500 staff. For the first time, the top Star team saw their CEO’s confidence shaken. “I know it was very difficult for him by then when it became clear we had to cut jobs,” one said. “He did not want to be that guy.”
Agenda setting
In the finance department, the fear was for the company’s future. The board was worried too. At least one director, Anne Ward, pushed for action, according to a company source. Very quietly, preparations were begun for the worst case. Restructuring specialist FTI Consulting was put on a retainer, according to two sources. (Ward declined to comment.)
“Had AUSTRAC come to a head sooner we would not have survived,” said one ex-executive. “We were ready to have administrators come in.”
Despite Katsibouba’s tearful warning at their two-day work conference, it is unclear if the group leadership team grasped how fragile the business was.
Cooke told the inquiry last month the committee met daily to discuss the finances “because we were trying to get costs out of the business”. “And any member of GLT or exco were able to put any matters on the agenda that they saw fit,” he said.
Katsibouba told the inquiry Cooke kept the GLT in the dark about the debt. “Robbie and I didn’t necessarily agree on how much disclosure we should have with our leadership team,” she said.
If anything, Cooke’s offer to accept any agenda item may have made the GLT less effective. Cooke’s secretary, Monique Rennell, posted the GLT meeting agenda two days beforehand. They were held once a week, for two hours, although once a month they ran four hours or more. Because there was so much to get through, topics weren’t prioritised based on their importance, say people who attended.
The staff Christmas party might get as much discussion time as a regulator’s complaint. In other cases, hundreds of pages of documents would be sent the night before on a complicated topic like financial crime.
No minutes were kept, making it harder to track decisions.
“We never got through an executive meeting getting through all the agenda items,” said on attendee. “It was always rushed.”
Star’s Sydney casino. Dion Georgopoulos
Delegate to no-one
One of Cooke’s great challenges, to avoid repeating the Bekier-era mistakes, was to change a culture that seemed to regard rules as problems for others. An external study found staff believed Star’s values were: “profit matters most”, “just get it done” and “play politics to stay alive and thrive”.
In January or February last year, Cooke went to the board with a solution. In keeping with his delegator persona, he proposed that all important responsibilities for Star’s three casinos would devolve to their own, in-house CEOs.
Instead of Cooke or the GLT trying to ensure floor supervisors weren’t fabricating records of how long gamblers spent at the tables or poker machines (which they did in Sydney), each casino manager would have full accountability for what happened in their venue.
Cooke announced the policy in July. There was one problem: none of the three casinos had a CEO. The Gold Coast wouldn’t get one until October, when Jessica Mellor was approved by the regulator. (She lasted six months.) Brisbane and Sydney would have to wait until the following February, a year after their jobs were proposed.
Weeks, the regulator running the Sydney casino, regarded the vacant CEO jobs as a reason Star failed to clean itself up. “Its staff have long tenures and have been socialised into legacy behaviours,” he told the inquiry last month.
Building problems
To be fair on Cooke, he was trying to save the company. One of the big problems was a breakdown of its relationship with Multiplex. The construction contractor is building a $3.6 billion casino and hotel for Star at Queen’s Wharf on the Brisbane River. The project was Star’s main growth prospect, which makes it central to the company’s future.
A rendering of Queen’s Wharf’s hotel and casino in Brisbane, which was meant to open in 2023. Destination Brisbane
Concerned it was being blamed for unavoidable costs, Multiplex sued Star and its co-investor in the Queensland Supreme Court. Star claimed the contractor deliberately slowed work and sought damages.
The timing couldn’t have been worse. The huge project was scheduled to open in December 2023, financed by a $1.6 billion loan due in 2025. Star’s share was 50 per cent. Revenue from the casino would be crucial to refinance the debt.
Cooke could have left the complex dispute to the project’s inhouse lawyers, who knew the contracts inside out, or Star’s legal department, which was manned by practisng lawyers, or Star’s external law firm, King & Wood Mallesons.
A lawyer by training, Cooke decided to personally lead negotiations. He didn’t seek advice or update his legal department on the progress of discussions, said a person involved.
“He would just tell us outcomes,” the source said. “The external lawyers said: ‘This is not what we recommended. We’re not sure it’s in the best interests of the organisation. He is running rogue on this’.”
In September, Cooke went to investors asking for more money. At a price of 60¢ a share, he raised $750 million. Star used the cash to shuffle its debt out to 2028.
Then, on the Friday before Christmas, after the day’s share trading had ended, Cooke unveiled a deal with Multiplex. Star agreed to pay an extra $110 million. The contractor dropped its lawsuit. The completion date was pushed back to August 2024.
Once again, Cooke had made himself invaluable.
In Monday’s The Australian Financial Review: Star’s decision to keep its do-everything CEO may have backfired.