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The Federal Court has disqualified former Star Entertainment Group (ASX: SGR) chief executive Matt Bekier from managing corporations for six years and ordered him to pay a $700,000 pecuniary penalty for breaching his duties as a director under the Corporations Act.
Former general counsel and chief legal and risk officer Paula Martin was handed a seven-year disqualification and a $400,000 penalty, with Justice Lee finding her failures constituted "a very serious departure" from the standards expected of a solicitor occupying such a position.
Both were found to have breached section 180 of the Corporations Act by failing to properly manage serious risks related to money laundering and criminal activity at the casino operator's properties.
The penalties stem from failures across three key areas: the operation of the Suncity junket in a private gaming salon known as Salon 95, deficiencies identified in a KPMG report on anti-money laundering and counter-terrorism financing controls, and misleading representations made to National Australia Bank about the use of China Union Pay (CUP) cards.
More than $900 million was obtained via CUP cards by Chinese high rollers gambling at Salon 95 which was specially set up for them within The Star Sydney between 2013 and 2019.
The saga has been weighing on The Star since 2022 following the Bell inquiry into the company's management of its high roller business in relation to its oversight of anti-money laundering and anti-terrorism financing responsibilities.
Justice Lee warned that senior executives who fail to discharge their duties face "substantial personal consequences", reinforcing the court's view that the breaches warranted significant deterrent penalties.
ASIC had originally sought $1.3 million in penalties and an eight-year disqualification for Bekier, and $1.1 million and seven years for Martin.
The court imposed lower financial penalties but matched ASIC's requested disqualification period for Martin and came close on Bekier. Both former executives were also ordered to pay 45 per cent of ASIC's costs.
"Senior executives have a critical responsibility to identify, escalate and properly manage serious risks within their organisations," says ASIC chair Sarah Court.
"These failures occurred in a highly regulated environment and contributed to significant governance breakdowns at Star.
"Penalties of this scale reflect the seriousness of their conduct and send a strong message to other senior executives of listed companies that failures of this type are unacceptable."
The outcome follows an earlier liability finding handed down by the Federal Court in March, when Justice Lee determined that Bekier and Martin had breached their duties.
In the same proceeding, ASIC's case against seven former non-executive directors was dismissed, and the regulator has confirmed it will not appeal that result.
Two other former Star executives settled with ASIC ahead of the penalty hearing.
Former chief casino officer Greg Hawkins was ordered to pay $180,000 and disqualified for 18 months, while former chief financial officer Harry Theodore was hit with a $60,000 penalty and a nine-month disqualification.
"Senior executives of casino operators, and public companies conducting enterprises pregnant with risks more broadly, must understand that failures of the kind established by the contraventions may attract substantial personal consequences," said Justice Lee in relation to the penalties handed to Bekier.
In reference to Martin, he said the community was "entitled to expect that a solicitor occupying such positions and having such responsibilities, within one of Australia’s largest casino operators, will display professional independence, accuracy and judgment of a high order".
"The conduct established ... represented a very serious departure from those standards," he said.
"Ms Martin knew of a miscellany of alarming information pertaining to [an overseas gambling junket] ... She was required to report such matters to the board but failed to do so.
"This is all the more concerning when considered against the backdrop of Ms Martin being the most senior solicitor employed by Star.
"The more pervasive the failures of governance and culture become, the greater the obligation upon those entrusted with legal and risk responsibilities to insist upon compliance with legal obligations and proper standards of corporate conduct."
The ASIC action is one of several regulatory proceedings confronting Star Entertainment Group.
In a separate civil action, AUSTRAC has alleged "serious and systemic" non-compliance with AML/CTF obligations by Star entities, with that matter still before the Federal Court.
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