Support for Former Sky City Finance Chief Withdrawn

Rob Hamilton, the former finance chief of SkyCity Entertainment, no longer has the endorsement of the board of NZX, the share market operator, to become its new chair. The board decided to drop support for Hamilton because of the court proceedings against SkyCity in Australia.

So far, the board wanted Hamilton to replace James Miller, the incumbent chair of the NZX, as Miller is scheduled to retire at the NZX annual shareholder meeting next month.

Reasons for Withdrawal of Support

The NZX board decided it would no longer support Hamilton as its next chair because news broke out in December 2022 that SkyCity Entertainment is facing civil penalty proceedings for allegedly violating counter-terrorism financing (CTF) and anti-money laundering (AML) laws in its Adelaide casino.

Hamilton was the chief financial officer of SkyCity Entertainment from 2014 to early 2021 when he resigned from his position. When the board withdrew its support, Hamilton resigned as the NZX director with immediate effect so that the operator could move on without distractions.

In a statement issued to the share market, NZX said that the board carefully considered the situation and decided to stop endorsing Hamilton as its proposed chair till the resolution of the civil penalty proceedings against SkyCity.

NZX considers this decision to be in its best interests because it is operates capital markets across New Zealand. Miller agreed to continue as the NZX chair till the operator appoints a new one.

SkyCity's Legal Trouble in Australia

This is by no means SkyCity's first run in with the law. On December 7, 2022, the Australian Transactions Reports and Analysis Centre (AUSTRAC) announced its decision to file civil penalty proceedings against SkyCity Entertainment for the alleged violation of CTF/AML laws in its Adelaide Casino.

AUSTRAC initiated an investigation of these allegations in June 2021 and made the following observations:

SkyCity failed to assess terrorism financing and money laundering risks appropriately in its Adelaide Casino, so that it could effectively identify and respond to risk changes in the future. SkyCity’s AML/CTF programs did not include controls and systems to manage and mitigate the risks to which its casino properties were exposed. The operator did not create an appropriate framework for oversight of AML/CTF programs for its senior management and board members. The operator failed to create a monitoring program to monitor financial transactions and identify suspicious activities. SkyCity did not subject ongoing due diligence on many players who displayed high money laundering risks.

Peter Soros, the deputy CEO of AUSTRAC, said that AUSTRAC discovered a systemic failure in the operator’s approach to CTF/AML obligations. He said that regulated entities must establish appropriate CTF/AML systems and controls and that all AUSTRAC-regulated businesses must take this seriously.

SkyCity Responds to Allegations

In response to the allegations, SkyCity said that the casino prioritizes complying with regulatory obligations. The operator said that it would respond officially after receiving the claim.

The company also admitted that it may face civil penalties if the federal court accepts the claim. It informed the share market that it understands AUSTRAC is yet to identify the penalty it wants to impose.

SkyCity Entertainment Lost Three Executives

In November 2020, SkyCity Entertainment lost three executives.

CEO Graeme Stephens stepped down at the end of November after spending a little less than two years in the position. Liza McNally, the chief marketing officer, and Rob Hamilton, the chief financial officer, also resigned and left their positions early in 2021.

SkyCity Entertainment appointed Michael Ahearne, its chief operating officer, as its next CEO. Ahearne supervised the company’s operations across Australia and New Zealand from Dec 2017.

SkyCity Chair Rob Campbell said that Ahearne has several years of international experience in the gambling industry across both online and land-based casinos, adding that this industry experience will help Ahearne lead SkyCity in the future.

Life has not been easy for SkyCity Entertainment for the past 12+ months. In addition to civil procedures and allegations of breaching AML/CTF obligations, the company suffered financial loss when a fire broke out in the international convention centre it was constructing.

Moreover, it had to shut down its land-based casinos during the pandemic, as a result of which 1,000 employees lost their jobs. In 2020, till October 31, SkyCity stated that trading in its Australian and New Zealand casinos was down by 8% and 12%, respectively.