A report into Star's compliance with anti-money laundering and counter-terrorism financing laws, which eventually sparked an inquiry into the company, was earlier subject to a "very tense" meeting of its audit committee.
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Star CEO Matt Bekier was the last to arrive at the May 2018 meeting, "making a show of throwing (the report) on to the table" and saying it was inaccurate, according to Star's former chief risk officer Paul McWilliams.
Mr McWilliams, who commissioned the 2018 KPMG report, fronted a NSW Independent Liquor & Gaming Authority inquiry to determine whether Star should keep its casino licence on Tuesday.
The "broad theme" of the CEO's reaction was that the report contained multiple errors and KPMG did not know what they were doing.
The KPMG partners who authored the report, Alexander Graham and John O'Sullivan, could have addressed some of Mr Bekier's concerns.
The pair were sitting in a waiting room after being invited to be available for the meeting, but they were never called in.
Mr McWilliams told the inquiry the CEO's reaction made him "wonder if there is in fact something materially wrong with the report".
Not that Mr Bekier was clear about what the inaccuracies were. Former internal audit head Tarnya O'Neil said he made a comment about junkets but didn't go into specifics.
Mr McWilliams and Ms O'Neil both agreed the report found a lack of due diligence in relation to junkets, a significant revenue source that carried numerous risks relating to transparency around the source of funds being used to gamble.
Mr Bekier eventually did meet with the KPMG partners.
He was "hostile" and did not greet the pair or make eye contact, "essentially berating us for the entirety of that meeting", Mr Graham said.
He recalled Mr Bekier turning over pages of the report, "pointing to things saying 'this is wrong', turning the page, 'that is wrong' ... doing that for a sustained period of time".
Mr O'Sullivan said Mr Bekier's concerns related mainly to the language used in the report and things he disagreed with.
"I did not receive sufficient clarity in that meeting as to the specific areas," Mr O'Sullivan said.
The meeting ended with an agreement to provide Mr Graham a specific list of the issues.
Mr Graham was surprised by Mr Bekier's response.
"We'd already gone through a comprehensive process to validate the findings. I would expect a CEO would have an appreciation of the findings we'd raised," he said.
Star became a "challenging" client following the May 2018 report.
By late July however, following more meetings, the KPMG partners formed the view that Star was now willing to accept the findings and move forward to address the issues.
The KPMG findings sparked media reports in 2021 that Star's casinos allegedly enabled suspected money laundering, organised crime, fraud and foreign interference, which led to the ILGA inquiry.
Mr Graham said at the time of the KPMG report, Star did not have a mature program to combat money laundering or terrorism financing.
The report also raised concerns about Star's risk assessment of gamblers, which assumed that gambler's coming into the casino carried the same, low potential risk of money laundering or terrorism financing regardless of how much money they had on them.
That assumption was never raised with Ms O'Neil as a potential risk during her annual audit meetings with general managers prior to the KPMG report, she told the inquiry.
Star says it has an unwavering focus on preventing criminal activity at its casinos, which also include The Star Gold Coast and Treasury Brisbane.
The hearing continues.
Australian Associated Press
