Australia's Corporate Watchdog Imposes Penalties on Two Former Star Executives for Breaching Duties

Australia's corporate watchdog, the Australian Securities and Investments Commission (ASIC), has imposed penalties on two former executives of The Star Entertainment Group for breaching their duties under the Corporations Act. The penalties come as part of ongoing investigations into the company's alleged money laundering and criminal associations.

ASIC alleges that the former executives, John O'Neill and Matthias Bekier, failed to give sufficient focus to the risk of money laundering and criminal associations, which are inherent in the operation of a large casino with an international customer base. The regulator claims that the board members approved the expansion of The Star's relationship with certain individuals with reported criminal links, rather than addressing money laundering risk by inquiring into whether The Star should be dealing with them. Additionally, when provided with information about money laundering risks affecting Star, the board members did not take steps to make further enquiries of management about those critical risks.

ASIC further alleges that Mr. Bekier, along with former company secretary and group general counsel Paula Martin and former chief casino officer Greg Hawkins, breached their duties by not adequately addressing the money laundering risks that arose from dealing with Asian gambling junket Suncity and its funder, as well as continuing to deal with them despite becoming aware of reports of criminal links. They also failed to appropriately escalate money laundering issues to the board.

Moreover, Ms. Martin and former chief financial officer Harry Theodore are alleged to have knowingly permitted misleading statements being provided to National Australia Bank (NAB) regarding the use of debit cards issued by China Union Pay International at NAB ATMs located on Star's premises. Those statements disguised the fact that The Star was permitting CUP cards to be used for gambling, which was prohibited by CUP. Over $900 million was obtained by Star customers using CUP cards in NAB ATMs from 2013 to 2019. ASIC also alleges that they, and Mr. Bekier, failed to report these matters to The Star's board.



ASIC chair Joe Longo stated that the role of directors is critical to a company's general standing and performance, including how a company deals with significant issues. He emphasized that directors and officers are a critical part of the conduct of business in Australia and have a duty to understand the operations of the company over which they preside, as well as the particular risks faced by the business.

The penalties imposed on the former executives serve as a reminder of the importance of corporate governance and the consequences of failing to meet the required standards. The ongoing investigations into The Star Entertainment Group highlight the need for companies to maintain robust risk management strategies and comply with relevant regulations to prevent money laundering and criminal associations.