Star Entertainment director duties: Key lessons for boards and executives from ASIC v Bekier

Regulators continue to focus closely on the conduct of boards and senior management during periods of heightened compliance and reputational risk. Recent decisions emphasise that failures in governance and information flow can have serious personal consequences for directors and officers.

Against that background, the Federal Court of Australia recently delivered an important decision in Australian Securities and Investments Commission v Bekier (Liability Judgment) [2026] FCA 196 (Bekier).

The decision reinforces the need for directors and officers to act with transparency, care and diligence in their core governance duties.

What happened at The Star Entertainment Group

Two former senior executives of The Star Entertainment Group Limited (Star), the former Managing Director and CEO and the former General Counsel and Company Secretary (together the executive officers), were found to have breached their statutory duties under the Corporations Act 2001 (Cth) (the Act).

Australian Securities and Investments Commission (ASIC) alleged that the executive officers breached their duties by approving or enabling the illicit use of China UnionPay cards by Suncity at the Star Casino. ASIC also alleged that they permitted misleading communications to Star’s bank and were aware of deficiencies in Star’s anti-money laundering and counter-terrorism financing (AML/CTF) approach and failed to take corrective action.

ASIC claimed that seven non-executive directors breached their statutory duties regarding Suncity’s relationship with Star. The Court found no such breach, noting that these non-executive directors were not fully informed by their executive officers about the gravity of the risks and relevant conduct.

Directors’ and officers’ duty of care and diligence

The duty at the core of Bekier, the statutory duty of care and diligence, is defined in section 180(1) of the Act. This section requires directors and officers to exercise their powers and fulfil their duties with the care and diligence a reasonable person would demonstrate in the same position, under similar circumstances.

Section 180(2) of the Act subjects this duty to the ‘business judgment rule’, which states that directors or officers meet their duty regarding a judgment if they:

• make the judgment in good faith for a proper purpose;
• lack a material personal interest in the subject matter;
• inform themselves on the subject matter to an extent they reasonably believe appropriate; and
• rationally believe the judgment serves the corporation’s best interests (a belief that is presumed unless no reasonable person in the same position would hold it).

The Managing Director pleaded the business judgment rule as a defence. However, the Court dismissed it because he failed to make relevant enquiries about whether Star should end or suspend relations with Suncity.

Relating to the Company Secretary (also the Chief Legal & Risk Officer), the Court noted an officer with legal training may be expected to identify risks other officers might not appreciate and that other members of the company are relying on them to guard against the realisation of those risks. Despite reporting dynamics in which risks were first brought to the attention of the Managing Director, the Court found that her role extended to reporting to the Board matters that posed risks to Star. The fact that the Managing Director also sat on the Board did not excuse her failure to disclose information to the Board.

How directors and officers breached their duties in practice

The duty of care and diligence is foundational. It requires directors and officers to remain vigilant to avoid breaches by both action and omission. The Court found the executive officers breached this duty through omissions, such as failing to recommend that the Board suspend or terminate relations with Suncity and its associates, and through actions, such as Star’s misleading response to its banker about clients’ use of China UnionPay cards.

This duty applies equally to non-executive directors, though the decision is broadly reassuring for non-executive directors.

The non-executive directors received board packs and management presentations assuring them Star’s processes were sound, concerns had been addressed, compliance was being maintained, and there were no material issues. The Court concluded that the non-executive directors were entitled to rely on management to bring material risks to the Board, and that the information available to them at the time did not require them to independently interrogate the information they had been given or override management’s recommendations.

Consequences for directors and officers: Civil penalties, compensation and disqualification

While Bekier proceedings are adjourned for orders on civil penalties and disqualification, breaching the statutory duty of care and diligence can have severe consequences. A court may:

• order the greater of 5000 penalty units ($1.65 million), three times the benefit gained, or detriment avoided by the officer’s conduct as a penalty;
• order an officer to compensate a corporation, scheme or notified foreign passport fund for damage the officer’s conduct caused. This can include profits any person made and any diminution to the scheme or fund’s value resulting from the contravention; and
• disqualify a person from managing corporations for an appropriate period if it finds that such disqualification is justified following a breach.

Key takeaways for boards and executives

In light of the Court’s decision, boards and senior executives should note the following:

• CEOs and senior officers must ensure the Board is informed of material compliance and ethical risks and is given clear recommendations to allow full risk analyses to occur.
• Board members should insist on and absorb targeted board reporting. The Board is ultimately responsible for controlling the information it receives.
• The use of artificial intelligence requires transparency about how information is being reduced and relied upon in either the preparation of board packs by management or the digestion of board packs by the Board. The use of technology may assist comprehension, but it cannot displace judgment. The statutory duty of care and diligence remains personal, and it requires informed human judgment.
• A person occupying combined roles (for example, officer and general counsel) should expect the statutory duty of care and diligence to track the full span of their responsibilities to the corporation and is not limited to a particular role.

What directors and officers need to consider

While the Court drew a clear distinction between the executive officers (who possessed detailed operational knowledge of Suncity’s conduct and the China UnionPay arrangements) and the non-executive directors (who did not), the decision:

• confirms that directors who are immersed in the day-to-day operations, and who possess specific knowledge of risk, particularly legal, regulatory or reputational risk, are expected to act on that knowledge, including by informing the Board;
• carries a warning for non-executive directors that they must remain authentically engaged, ensure that board papers are structured so that they can be properly absorbed and ask questions when something does not look right; and
• clarifies that an officer with legal training must be alive to the risks that their legal training makes them distinctly well-suited to identify and bring to the Board’s attention.

Boards should ensure strong risk management and decision-making procedures, so business decisions are informed, rational and appropriate.

If you would like to discuss directors’ duties, board reporting or strengthening governance around compliance and AML/CTF risks, please reach out to a member of our Commercial team.

The information contained in this article is general in nature and cannot be relied on as legal advice nor does it create an engagement. Please contact one of our lawyers listed above for advice about your specific situation.