An expert in cultural transformation who worked with Australia’s two casino giants on rebuilding their organizations has described Star Entertainment Group’s efforts as paling into insignificance when compared to those of Crown Resorts.
In yet another troubling day for Star during a second inquiry into its suitability to hold a casino license for The Star Sydney, Dr Attracta Lagan painted a picture of a company reluctant to embrace genuine cultural change and possessing a culture of “low accountability” and “fear”.
Dr Lagan is Co-Principal of Managing Values, a specialist management consultancy in business ethics, values and cultural change. She has been working in the field of business ethics for over 30 years.
“Star never listened,” Dr Lagan said during testimony on Thursday. “[CEO] Robbie Cooke was too busy raising funds. There was no feedback loop.
“They spent a fortune on consultants but never built an organization from within and never hired someone [as an internal position] to help manage any cultural change.”
According to Dr Lagan, Cooke “worked incredibly hard” to save the Star as it faced growing financial concerns and “saved the business” with his capital raisings, “but it came at the cost of the cultural reform program.”
Despite telling the company to “bring the outside world in,” Dr Lagan said Star had a “very closed culture” that developed into an “us versus them” mentality.
“An internal story emerged ‘that the regulator didn’t like us, they don’t like gambling.’ It was a very different orientation at Crown,” she said.
“It (Star) is a closed culture and a fear culture.”
On her own role within the company, Dr Lagan added, “Nothing would be shared voluntarily, I would always have to follow up. There was so much power in the hands of the CEO and he wasn’t communicating.”
Asked by counsel assisting whether her relationship with Cooke had deteriorated during the second half of 2023, she replied, “No, he just stopped talking to me.”
Dr Lagan detailed a similar experience for regular Star employees, suggesting, “Everyone was scared for their job.”
“These people were always trying to do the best they could, but the leadership hasn’t been there,” she continued.
“It’s often the middle managers that shape culture but those people haven’t been included in any way. In Crown we spent a lot of time on the middle managers.”
Asked further about Star’s progress towards cultural remediation and transformation, Dr Lagan said, “In terms of policies and systems there has been improvement but in terms of taking people along with them it hasn’t started.”
It was a very different scenario at Crown, Dr Lagan explained, stating, “Crown was in the same situation and it’s managed to rebuild.
“With Crown, we walked alongside them. We would do regular pulse checks. We were working in tandem cooperatively to get to the standard that the regulator wanted.”
Dr Lagan’s testimony also saw her claim that Star appeared to have no real interest in reform.
“I would describe it as a culture of low accountability,” she said. “There was a low-cost strategy using key internal influencers but that wasn’t done well. That would have been a good strategy had it been executed effectively.”
Asked if she would describe the absence of an internal narrative to shape cultural reform as a failure of the CEO and the board, Dr Lagan replied, “Yes, I would.”
As reported by IAG, Crown was last month deemed suitable to operate its Melbourne casino and that it was in the public interest for the company to be handed back the casino license for Crown Melbourne.
Fran Thorn, chairperson of the Victorian Gambling and Casino Control Commission, said at the time, “Our own work with Crown Melbourne substantiated that the various suitability requirements have been met. As the Special Manager has reported during our investigations, we have observed a very different Crown emerging with a clear understanding of the privilege and obligations of holding the licence.
“Crown recognized that to reach its own aspirations to be more than suitable, to be excellent, it needed a comprehensive transformation plan referred to by the Special Manager to continue its reform efforts and against which it will be held accountable.”
