Two days in and the Sydney-based Federal Court case by ASIC into the actions of former Star board members is already being seen as a potential test case on “directors' duties” that all boardrooms will be watching closely.
Day one of what’s expected to be a six-week affair saw ASIC allege that between 2017 and 2019 10 former directors of Star Entertainment breached their duties under the Corporations Act.
The corporate regulator’s lawyer Ruth Higgins SC claims Star’s top brass not only failed to address but also enabled money laundering and criminal associations at its casinos. Higgins told the court that Star’s leadership team's failure to "live up to standards could result in the loss on casino license that the Star group depended".
"The risk of criminal infiltration that inheres in running a casino is widely known, obvious and of long-standing, and the need for scrupulous probity and honesty to prevent that infiltration is widely known, obvious and of long-standing,” Higgins said.
Directors allegedly behaving badly
Colourful examples included alleged references to bags of $50 notes tied with elastic bands, hidden from CCTV cameras, and cheques made out in cash.
It’s also alleged that money was also delivered to a service desk in a blue Esky bag and that some transactions were conducted under blankets to avoid CCTV cameras. The casino is also alleged to have acted as a financial institution by issuing cheques made out in cash.
Defendants in the case, including former chair John O'Neill and former chief executive Matthias Bekier are also being accused of approving relationships with people linked to organised crime, rather than questioning whether Star should be dealing with those individuals.
‘Blind eye’ to Asian gambling junkets
ASIC also alleges that former company secretary and group general counsel, Matt Bekier, ex-chief casino operator, Paula Martin and Greg Hawkins, neither addressed money laundering risks associated with Asian gambling junket Suncity nor escalated these concerns to the board.
Then there are former executives Paula Martin and Harry Theodore who are defending ASIC accusations of misleading National Australian Bank (ASX: NAB) about the use of prohibited China Union Pay debit cards that were issued at Star's ATMs.
It’s understood that Harry Theodore former chief financial officer has agreed to settle with ASIC and will have his penalty decided at a hearing by another judge. Settlement arrangements preclude Theodore from managing corporations for nine months.
Star in talks to offload Queen’s Wharf casino
Court action against former Star directors coincides with confirmation by the beleaguered casino operator that it has entered talks to sell off its stake in the recently opened Queen's Wharf casino development in Brisbane.
The market reacted favourably to this news with share prices moving off former lows yesterday.
The company said it had received "several confidential, indicative and non-binding proposals" from Hong Kong investors Chow Tai Fook Enterprises and Far East Consortium International Limited to buy its 50 per cent stake in Queen's Wharf.
The casino operator has been looking for a financial lifeline since revealing its cash reserves at the end of 2024 were around $79 million.
It has since started to sell off non-core assets to free up extra cash flow.
