SkyCity Adelaide historically put profit ahead of compliance, according to an independent report’s findings out yesterday, although significant changes have since been made.
Retired Australian Supreme Court Judge Brian Martin, AO, KC, found past failures and ongoing issues at the business owned by NZX-listed SkyCity Entertainment Group.
But he also decided that it could continue to hold South Australia’s only casino licence.
Significant changes were made at SkyCity, which last year paid a A$67 million ($73.42m) fine for breaching anti-money laundering/countering financing terrorism laws.
Martin found examples of culture which he said prioritised revenue over regulatory compliance.
He cited an analyst being “met with significant resistance from many heads of business divisions. In particular, international business and the VIP division were hostile and did not wish to pursue customers in order to obtain appropriate information,” he wrote.
In an anti-money laundering analyst’s view, the primary concern was generating income.
This attitude was demonstrated when management lamented losing a high-value customer to barring, stating “not a good result to have this barring in place for two years ... [the customer] is sitting on roughly A$900,000 loss year to date.”
Jarden’s Auckland-based analysts Adrian Allbon and Mark Seddon noted this in a desk note on the review, released yesterday.
“For SkyCity, suitability has been confirmed: Adelaide to continue holding its casino licence and SkyCity as an ongoing owner of Adelaide casino. This was an expected outcome for us following the SKC management changes and the material cost commitment over the next three years to lift its operating standards,” the analysts wrote.
Martin’s report highlighted significant failings of the casino management.
Yet both his and the investigations undertaken by the financial regulator, the Australian Transaction Reports and Analysis Centre (Austrac), also noted SkyCity Adelaide’s substantial commitment to addressing those failings.
“If I had been asked to determine the suitability of the licensee and SkyCity Entertainment Group at the end of October 2021, the inevitable answer would have been that neither were suitable,” Martin wrote.
“Since then, the situation has changed.”
Later in his report, he wrote: “The significance of past failures needs to be considered in the context of the licensee’s subsequent behaviour, changes in personnel and the licensee’s current corporate culture and governance.
“I am satisfied that, today, the licensee is a suitable person to hold the licence and operate the casino.”
Martin’s review began in mid-2022, building on extensive investigations then being progressed by Consumer and Business Services.
The review was put on hold between February 2023 and June 2024, while Austrac took civil action against SkyCity Adelaide in the Federal Court of Australia for breaching Australia’s national Anti-Money Laundering and Counter-Terrorism Financing Act 2006.
The report detailed systematic anti-money laundering failures through case studies.
Martin found material corporate governance failures spanning more than two decades.
From 1999 until November 2021, “the board of the licensee, SkyCity Adelaide, the holder of the licence to operate the casino, did not meet” and “no reports were provided to the board of the licensee relating to SkyCity Adelaide’s compliance obligations or functions”.
Last May, the Herald reported SkyCity had agreed to pay a penalty of A$67 million for anti-money laundering breaches in Adelaide.
SkyCity Adelaide had reached an agreement with Austrac to settle civil penalty proceedings relating to the breaches from December 2016 to mid-December 2022.
Under the agreement, SkyCity Adelaide and Austrac filed a statement of agreed facts and admissions, as well as joint submissions, with the Federal Court.
SkyCity’s executive chairman, Julian Cook, acknowledged the casino operator’s failure to meet the required standards and apologised for it.
Yesterday, SkyCity chief executive Jason Walbridge said in a statement to the NZX that it accepted the findings of the report.
“We fully accept and acknowledge the findings of the report that we did not measure up to the standards required, and we apologise for those failings.
“We further acknowledge Mr Martin’s findings and the commissioner’s comments that we still have work to do.”
Walbridge said it remained committed to constructive engagement with all its regulators.
“We have made significant enhancements in terms of leadership, resourcing and systems, including a commitment to invest ~$60m over three years to transform our culture, to uplift our financial crime and host responsibility practices.
“Our team has worked hard to raise our standards, better meet our obligations and improve how we look after our customers.”
SkyCity’s shares were trading flat this morning at 99c but are down nearly 35% over the past year.
Anne Gibson has been the Herald‘s property editor for 25 years, written books and covered property extensively here and overseas.