ClubsNSW is at the center of a money-laundering scandal. The company is now suing Troy Stolz, the whistleblower who reported its compliance failures to Parliament. The New South Wales courts have issued a cost order against Stolz. As a result, Stolz has had to sell his house and move his autistic son to a new home. Money from the sale of the house will go to fighting the cost order.
ClubsNSW is a lobbying company that describes itself as "is the peak representational body for the NSW club industry."
The company represents 1,200 clubs in New South Wales, Australia. The list of services ClubNSW provides to its members is extensive. From their own website: "ClubsNSW [...] makes an important contribution to state and national policy direction, including the development for industry-specific legislation relating to alcohol, gambling, taxation, and industrial relations. In addition to these services, ClubsNSW executes media and PR communications, tailored training solutions, financial services, events, and responsible gambling services."
Anti-money laundering compliance failures
Many of ClubsNSW customers use gambling machines as an income stream. However, Stolz provided an internal report to his MP. This report showed that 95% of ClubNSW's 1,200 clubs were non-compliant with Australian regulations. These violations centered on anti-money laundering and combatting the funding of terrorism regulations. Violations of AML/CFT are a major problem for a company that provides financial and gambling services to its clients.
Many clubs use slot machines as a revenue stream. The NSW police view slot machines, called pokies in Australia, as a high risk for the laundering of criminal proceeds. This is because pokies can be played anonymously with cash. They can then be cashed out electronically. This fact can be used to move dirty money into the banking system without it being subject to the usual reporting procedures.
Reports like this do not help the gambling industry's reputation.
Instead of moving to fix the problem, ClubsNSW fired the whistleblower. And then they sued him for $150,000 in costs. The suit may well be overturned, but the sheer expense of fighting the case might bankrupt Stolz. Or force him to drop his own wrongful dismissal suit against the company.
Stolz has already had to sell his house to pay for legal council. He also has a wrongful dismissal suit pending.
“They want to use the court system to run me out of money," Stolz said to the Brisbane Times. "They’re using ClubsNSW money against me, which is meant to be for the betterment of the industry. I never thought I’d have to sell my house for reporting criminal activity in clubs. I feel like I’m on my own.”
Whistleblowers down under
Stolz reported the misdemeanor to his MP Andrew Wilkie. Mr Wilkie presented the report to Parliament last year. At that time he pointed out that the clubs are all expected to report suspected money laundering to the government. Most were failing to do so.
Suing whistleblowers is a standard practice in NSW, where the protections for whistleblowers have been gutted by the government.
Jeff Morris blew the whistle on Commonwealth Bank and found himself subject to similar tactics. Morris told the Brisbane Times that "the corporations don’t care if the litigation goes anywhere — they’re exhausting your resources and can tie you up in court for years. Eventually, your morale has to crack."
A ClubsNSW spokeswoman issued a statement claiming that whistleblower protections do not apply to Stolz. "Mr Stolz has claimed that he is entitled to whistleblower protections in these proceedings. However, in ClubsNSW’s view, he has not made any whistleblowing disclosures under the law."
The courts agreed and have issued a cost order against Stolz. He and his family are having to move home in order to fight the cost order.
Featured image source: Flickr by Michael Coghlan
