ASIC starts civil proceedings against Star Entertainment executives

ASIC alleges that the board approved The Star Entertainment’s relationship with people with criminal connections and failed to address money laundering concerns.

Australia.- The Australian Securities and Investments Commission (ASIC) has commenced Federal Court civil penalty proceedings against 11 current and former board members of The Star Entertainment Group Limited. The watchdog says they breached their duties under the Corporations Act by approving an expanded relationship with individuals with reported criminal links and failing to address money laundering risks.

ASIC is taking action against members of the Star’s board between 2017 and 2019: John O Neill (former chair), Matthias Bekier (former CEO), Kathleen Lahey, Richard Sheppard, Gerard Bradley, Sally Pitkin, interim chair Benjamin Heap and Zlatko Todorcevski.

ASIC deputy chair Sarah Court said: “ASIC alleges 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.”

The Australian watchdog alleges that Bekier, Paula Martin (former company secretary and group general counsel) and Greg Hawkins (former chief casino officer) 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
• not appropriately escalating money laundering issues to the Board.

ASIC alleges that Martin and Harry Theodore (former chief financial officer) knowingly permitted misleading statements to be made to National Australia Bank (NAB) regarding the use of debit cards issued by China Union Pay International Ltd (CUP) at ATMs located on Star’s property.

They allegedly disguised the fact that Star was permitting CUP cards to be used for gambling, which was prohibited by CUP. ASIC is aware over AU$900m was received by Star customers using CUP cards in NAB ATMs from 2013 to 2019. ASIC also alleges that they, and Bekier, failed to report these matters to Star’s Board. 

ASIC chair Joe Longo said: “‘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.”

See also: Queensland fines The Star AU$100m for casino failings

The Star’s response

Heap said: “At the recent Annual General Meeting, I committed to provide stability during a period of significant leadership change and to ensure the Company is firmly on the path back to suitability. That journey to become a better, more robust and more sustainable company is in progress as necessary improvements continue to be embedded across systems, processes and culture. 

“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. I would like to take this opportunity to thank the Board and management for their support since becoming Chairman earlier this year.”