ASIC launches Federal Court proceedings against 11 The Star executives, including former GC
The corporate regulator has commenced civil penalty proceedings in the Federal Court of Australia against 11 current and former directors and officers of The Star Entertainment Group, including its former group general counsel and company secretary, for alleged breaches of the Corporations Act.
In a statement issued earlier this morning (Tuesday, 13 December), Australian Securities and Investments Commission (ASIC) deputy chair Sarah Court said that the regulator is alleging that The Star’s board and executives “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”.
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The proceedings are being brought in the Federal Court for alleged breaches of their duties under section 180 of the Corporations Act.
The news follows the commencement of civil penalty proceedings against The Star by the financial crime watchdog, AUSTRAC, in late November, as well as the launching of a second class action against the entertainment group in early November by national plaintiff firm Maurice Blackburn.
ASIC is bringing its case against members of The Star board from 2017 to 2019 — including former chair John O’Neill, former managing director and chief executive Matthias Bekier, Kathleen Lahey, Richard Sheppard, Gerard Bradley, Sally Pitkin, Benjamin Heap and Zlatko Todorcevski.
The regulator is alleging that 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.
It is further alleging that board members, “when provided with information about money laundering risks affecting Star, did not take steps to make further enquiries of management about those critical risks and that this was a breach of their director duty obligations”.
Elsewhere, ASIC has submitted that Mr Bekier, as well as 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” and also “not appropriately escalating money laundering issues to the board”.
In addition, Ms Martin and former chief financial officer Harry Theodore are alleged by ASIC to have “knowingly permitted misleading statements being provided to National Australia Bank regarding the use of debit cards issued by China Union Pay International at NAB ATMs located on Star’s premises”.
Those statements, ASIC posited, disguised the fact that The Star was permitting CUP cards to be used for gambling, which was prohibited by CUP.
ASIC is aware, it noted, that “over $900 million was obtained by Star customers using CUP cards in NAB ATMs from 2013 to 2019”.
They, and Mr Bekier, failed to report these matters to The Star’s board, the regulator is alleging.
ASIC chair Joe Longo said that the role of directors is critical to a company’s general standing and performance, including how a company deals with significant issues.
“As I’ve said on many occasions, directors and officers are a critical part of the conduct of business in Australia.
“Their duty is to understand the operations of the company over which they preside, and the particular risks faced by the business. They are required to bring an inquiring mind to business operations. It is not ‘set and forget,” he argued.