The Australian Securities and Investments Commission (ASIC) has launched civil penalty proceedings against 11 current and former directors and officers of The Star Entertainment Group Limited for alleged breaches of their duties under the Corporations Act.
Citing a failure to sufficiently address risks around money laundering and criminal association in their dealings with Asian junkets, ASIC alleges the directors instead approved the expansion of Star’s relationship with them. By not taking steps to make further enquiries of management about such risks they breached their director duty obligations, the watchdog said on Tuesday.
The directors named in the proceedings are former chairman John O Neill, former Managing Director and CEO Matt Bekier, Kathleen Lahey, Richard Sheppard, Gerard Bradley, Sally Pitkin, Benjamin Heap and Zlatko Todorcevski. Also named are former Company Secretary and Group General Counsel Paula Martin and former Chief Casino Officer Greg Hawkins.
Bekier, Martin and Hawkins are separately accused of not addressing the money laundering risks posed by Macau’s Suncity Group, continuing to deal with them despite being aware of reports of Suncity’s alleged criminal links, and not appropriately escalating money laundering issues to the Board.
“ASIC alleges that 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,” said ASIC Deputy Chair Sarah Court.
In its response, Star confirmed plans for the two current directors named in the proceedings, Ben Heap and Katie Lahey, plan to step down once additional directors are appointed, likely in early 2023, claiming it is vital for the Board to maintain a sufficient number of directors while the company carries out its reform efforts.
Heap, Star’s interim chairman, said, “Ms Lahey and I intend to contest the ASIC allegations, but to remain on the Board beyond the transitional period would be a distraction to the company when remediation needs to be our unwavering focus. A search is currently underway for new directors.
“I am proud and privileged to have had the opportunity to lead The Star during a difficult and important time in the company’s history, and will continue to do so until an appropriate handover is complete.”
The proceedings represent yet another hurdle for Star to overcome with the company having already been found unsuitable in the two Australian states in which it operates and fined AU$100 million by the governments of each.
ASIC Chair Joe Longo said the role of directors was critical to a company’s general standing and performance, including how it deals with significant issues.
“Directors and officers are a critical part of the conduct of business in Australia,” Longo said. “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’.”
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