Federal Court finds Star Entertainment directors and officers breached duties over money laundering risks

On 5 March 2026, the Federal Court delivered one of the most significant recent decisions on directors’ and officers’ duties arising from corporate governance failures in Australia’s casino industry.

In Australian Securities and Investments Commission v Bekier (Liability Judgment) [2026] FCA 196, Justice Michael Lee considered civil penalty proceedings brought by the Australian Securities and Investments Commission (ASIC) against eleven former executives and directors of The Star Entertainment Group Limited (Star). The case concerned Star’s dealings with international gambling junket operators, alleged money laundering risks and misleading communications with its principal banker.

ASIC ultimately succeeded in establishing breaches against Star’s former Chief Executive Officer and General Counsel. However, its claims against the former Chairman and six non-executive directors were dismissed.

Although the non-executive directors avoided liability, Justice Lee made observations about corporate governance, board oversight and the responsibilities of senior executives to escalate serious risks.

Background

Star is an ASX listed company that operates major casino and entertainment venues across Australia, including The Star Sydney.

ASIC commenced civil penalty proceedings alleging that Star’s directors and officers failed to exercise duty of care and diligence under section 180(1) of the Corporations Act 2001 (Cth) (Corporations Act).

The allegations focused on Star’s ongoing business relationships with international gambling junket operators, including Suncity. ASIC alleged that those relationships exposed the company to serious legal, regulatory and reputational risks arising from potential money laundering activity within the casino.

The proceedings also concerned misleading communications sent by Star to National Australia Bank Ltd (NAB) regarding the use of China Union Pay debt cards by casino patrons.

Prior to the delivery of judgment, ASIC had already resolved its claims against the Chief Casino Officer and CFO. Star’s former Chief Casino Officer agreed to pay a civil penalty of $180,000 and was disqualified from managing corporations for 18 months, while the former CFO was ordered to pay $60,000 and was disqualified for nine months.

The Court’s decision

Justice Lee found that Star’s former CEO and General Counsel breached their duties under section 180(1) of the Corporations Act.

The CEO was found to have contravened the statutory duty of care and diligence on four occasions. These breaches included:

• Failing to properly inform the board about deficiencies in Star’s processes for assessing the integrity of junket operators;
• Failing to escalate information suggesting potential money laundering activity within the Sydney casino; and
• Failing to properly address misleading communications sent to NAB.

The former General Counsel and Company Secretary were also found to have breached their duties by failing to escalate key matters within the organisation including, knowledge of potential money laundering risks, concerns regarding the criminal links of certain junket operators and misleading correspondence sent to NAB.

ASIC’s case against the non-executive directors was not made out. Justice Lee emphasised that the Court’s role was not to conduct a general review of Star’s corporate governance, but to determine whether ASIC had established the specific contraventions alleged in its pleadings.

On the evidence presented at trial, ASIC was unable to show that a reasonable nonexecutive director, with the information available at the relevant time, would have taken the specific steps identified in this case.

Governance observations from the Court

Although the non-executive directors were not found to have breached their duties, the judgment contains several important observations about the role of boards in overseeing corporate risk.

Justice Lee reaffirmed that directors have an ongoing duty to raise matters which pose a risk to their company and, must exercise the degree of care and diligence that a reasonable person in their position would exercise. For non-executive directors, this includes what Justice Middleton described in the well-known Centro decision as the “core, irreducible requirement” to be involved in the management of the company and to take reasonable steps to guide and monitor management.¹

At the same time, non-executive directors are entitled to rely on the judgment, information and advice of management, except where they know, or ought to reasonably know, facts that would make reliance upon such information inappropriate. Non-executive directors may also rely on management to bring operational issues to their attention unless there is reason to doubt management’s honesty, competence or reliability.

However, non-executive directors cannot adopt a passive role. They must actively engage with the information presented to them and apply an enquiring mind when exercising their oversight responsibilities.

The importance of information

A central theme of the judgment was the role of information in enabling boards to properly discharge their duties.

During the proceedings, the non-executive directors argued that the sheer volume of material contained in board packs made it unrealistic to read and absorb all of the information presented to them. Justice Lee rejected this argument.

Instead, his Honour emphasised that boards must control the information they receive. Information provided to directors should be presented in a form that is both comprehensive and capable of proper digestion. Directors must take reasonable steps to understand that information and remain actively engaged in monitoring management.

While emerging technologies may assist directors in processing large volumes of information, Justice Lee noted that technology cannot replace the exercise of independent judgment. The duty imposed by section 180(1) remains a personal obligation requiring informed human decision-making.

Key takeaways

While the circumstances of the case were unusual, the decision highlights several key obligations on directors and officers, including:

• Directors and officers of a company must exercise the appropriate care and diligence;
• Serious compliance risks must be escalated to the board. Non-executive directors and management play a critical role in ensuring that boards are properly informed about matters that may expose the company to regulatory or reputational harm;
• Executives must understand internal risk management systems. This is particularly important where external reviews identify weaknesses in compliance or governance processes;
• Where a General Counsel also acts as a Company Secretary, that person may be treated as an officer of the corporation. Statutory duties under the Corporations Act apply across the full scope of their role; and
• Boards cannot adopt a passive oversight role. Directors and non-executive directors must actively engage with the information presented to them and apply an enquiring mind when exercising their oversight responsibilities.

If you require advice on directors’ duties, corporate governance obligations or responding to regulatory investigations, please reach out to Aaron McDonald or Nick Malone.

¹ _{Centro Case Summary ASIC v Healey & Ors [2011] FCA 717}