Two former senior executives of Star Entertainment (ASX: SGR) breached their duties in their handling of money laundering and criminal activity risks at one of Australia’s major casinos, a court has found.
The Federal Court found former Chief Executive Officer and Managing Director Matthias Bekier and former Chief Legal & Risk Officer Paula Martin breached their duties under section 180 of the Corporations Act 2001.
But the court dismissed the Australian Securities and Investments Commission's (ASIC) case against seven former non-executive directors after finding they did not breach their duties, ASIC said.
ASIC Chair Joe Longo said the regulator pursued the case because of the questions it raised about trust, governance and accountability at Star, which operated the Star Sydney casino, among others.
“The Court found that senior executives have a critical responsibility to identify serious risks, ensure those risks are properly managed, and escalate them to the board,” Longo said in a media release.
“ASIC will always require directors and executives to meet the highest standards of corporate governance because of the crucial role they play in maintaining trust.”
ASIC will ask the court to impose a financial penalty on them and disqualify them from managing corporations when the matter is listed for a further hearing.
“Given the length of the judgment, ASIC will carefully consider its implications as these proceedings move to the penalty phase,” Longo said.
Bekier was found to have breached his duties arising from his:
- Failure to properly deal with a KPMG report that identified deficiencies in Star’s processes for managing anti-money laundering and counter-terrorism financing.
- Failure to properly manage the risks of the gambling junket Suncity’s operations in Salon 95, an exclusive gaming room provided by Star, even after becoming aware of media allegations concerning Suncity.
- Failure to properly manage and escalate to the Board issues about the impermissible use of China Union Pay (CUP) cards by Star’s casino customers.
Martin was found to have breached her duties:
- in failing to properly inform and advise the Board about the risks of Star’s dealings with Suncity, and
- in misleading Star’s banker, National Australia Bank, about the use of CUP cards by Star customers, and in failing to inform the Board.
