Chairman David Foster decided to keep Cooke, mainly because Cooke was leading – against the wishes of subordinates – delicate negotiations with construction contractor Multiplex over a new casino and hotel in Brisbane that was late and over budget.
It was an example of how Cooke’s management style worked, until it didn’t. By taking on the Multiplex job, in addition to every other major problem facing the company, Cooke had made himself indispensable.
Had the board fired Cooke then, former executives believe, the casino commission would have avoided a second inquiry. The inquiry will recommend whether Star is suitable, or likely to become suitable, to operate a casino in Sydney.
If the Sydney casino is shut down, Queensland may follow. Star’s operations in Sydney, Brisbane and the Gold Coast hang in the balance.
Star Sydney’s manager, Nicholas Weeks, at the inquiry into the casino on April 15.
Board briefings
After Cooke finally quit, or was fired, on March 22 – the evidence is contradictory – he left behind important corporate governance questions: was the board blindsided by its do-everything chief executive, or did it prefer not to know too much about how the company really operated?
Star’s board was reconstituted in 2022 after an inquiry identified misconduct under the previous chief executive, Matt Bekier, including about $1 billion of gambling money that was disguised as hotel expenses. The Australian Securities and Investments Commission is suing 11 former directors and executives.
Cooke became CEO in October 2022. Foster, a former Suncorp Bank CEO, was elected chairman five months later. It was a tough job. Overwhelmed by a torrent of legal, financial and operational problems, the five-person board (which included Cooke) would sometimes be expected to read 1000 pages of documents before meetings.
They weren’t much help in understanding why the business was in trouble, or how to fix it. The board papers were “short on insights about the business”, Weeks told the inquiry last month.
Sometimes key information was missing. When chief legal officer Betty Ivanoff told Cooke last September that she was resigning, after four months at the company, Cooke didn’t tell the board. He later said Ivanoff had not given him written confirmation, an assertion she said was untrue.
Despite holding a crucial job, Ivanoff complained to colleagues she was frozen out while she worked her six months’ notice. She wasn’t invited to a board discussion on money laundering allegations by financial crimes regulator AUSTRAC, which could cost Star hundreds of millions. Cooke began to communicate with her through a subordinate, according to a person involved.
Star’s chief legal officer, Betty Ivanoff, quit after four months. Anna Kucera
Cooke held weekly meetings of his top executives. Sometimes, though, the meetings would be cancelled at short notice after managers had flown interstate to attend.
Scott Wharton resigned as the head of transformation and the Sydney casino chief last April, nine months after he was hired. Yet, the board didn’t seem concerned, according to a source who attended meetings.
“The board never asked why two top executives left within one year,” the person said. “The board didn’t want to ask hard questions. Perhaps it was afraid of what they might be told.”
Weeks, the external manager, thought the directors were not assertive enough. “The board has played a passive role over the last year,” he told the casino commission in one of the letters Cooke complained about. “It has not overseen an investment in building the expertise needed for a significant cultural transformation.”
Cooke denied being a corporate lone ranger. Foster was an “exceptionally hands-on” chairman and the board met more than 120 times in 2023, Cooke’s lawyer told the inquiry.
Foster was replaced as chairman April 29.
Free drinks
Star’s main problem is that casinos are popular with criminals. After the Bekier era, regulators tried to change Star’s culture to make it less criminal-friendly. They struggled.
Bad behaviour persisted, or crept back, according to Weeks’ reports to the casino commission.
When Star was struggling to complete background checks on 32,000 customers by a government-set deadline, someone at Star changed the vetting procedure. The source of the gamblers’ wealth was ignored, speeding up the process but leaving out the most crucial information.
There were other problems. Someone proposed to reintroduce complimentary drinks in private gambling rooms. It was sure to be popular. Money launderers like free drinks and privacy.
Chairman David Foster at the Star inquiry on April 23.
Last June and July, customers stole $2.3 million from cash machines at the Sydney casino. Staff who should have known the machines were paying out too much on winnings didn’t bother to tell anyone in authority, and no one else noticed for six weeks.
“Balancing the books and counting money was one of those things that I had anticipated the casino would be very good at, having done it for many years,” Weeks told the inquiry.
A trial of cashless gambling machines was delayed three or four months. The trial was an important step to reduce money laundering. By August this year, gamblers at Star Sydney should not be allowed to gamble more than $1000 cash on individual poker machines or in chips.
Going to war
As Weeks and the casino commission tracked every problem, they began to doubt that Cooke could reform the company. They shared their views in two reports and at a December 7 meeting with the board. Cooke disclosed the content of the reports at the Parlar dinner.
Star was four months away from an opportunity to get back the Sydney casino licence. Yet not only did it take almost two months to respond to the damming critique, it bluntly dismissed many of Weeks’ concerns.
On January 23, as they prepared to send the reply, Cooke and Foster traded messages about how it would go down.
“Lets hold on to our hats,” Foster told Cooke.
“The fireworks will be bright and loud,” Cooke replied.
“If done right could be a catalyst to get rid of Weeks,” Foster said.
From then on, Star seemed to treat Weeks as a hostile agent.
A week later an alert popped up on Cooke’s secretary’s computer. Weeks, who worked from Star’s Pyrmont casino, had booked a conference room near Cooke’s office for the following day, February 1.
Cooke was immediately suspicious. “They are up to something,” he texted Foster. Then: “I have some intel.”
Cooke had looked up the list of attendees. They included three law firms and the casino commission. He contacted one of Star’s external lawyers, who told him he didn’t need to worry. The meeting was mundane.
“We are meeting Monday to get ready for war though,” Cooke replied.
One option for the “war” was helping shareholders initiate a class action against Weeks or the casino commission for a fall in Star shares from $2.21 to 55¢ while Cooke was CEO. The lawsuit would probably have to prove that Weeks or Crawford went beyond their legal powers or were unfair. It would be an attack on the regulators’ professional competence, and a rebuttal to Weeks’ implicit criticism of Cooke.
Robbie Cooke outside his Brisbane home last week. Robert Burrow
On February 19, instead of returning its licence, the casino commission announced barrister Adam Bell would oversee a second inquiry into Star.
Cooke’s conflict with Weeks was a prominent part of the case presented by the inquiry’s barrister, Caspar Conde. On May 22, Conde told Bell that Star was not fit to run a casino and would not become so.
On the inquiry’s eighth day, Cooke gave evidence. He was no longer CEO, and a consultancy at the company was terminated after the messages about Weeks became public.
Conde asked him this question: “Do you accept the allegation that you spent a significant amount of time and effort scheming about how to outwit and outplay Star Entertainment’s regulators?”
“Disagree with that,” Cooke replied.
Conde also said: “Do you accept the allegation that Star Entertainment had a toxic culture and this toxic culture emanated directly from you, proliferated by poor behaviour and double standards endorsed by you?”
“Disagree with that,” Cooke replied again.
The Star inquiry is due to report by July 31.