One of two current directors of The Star Entertainment Group (ASX: SGR) who are subject to civil action by the corporate watchdog has announced her resignation from the board, effective at the end of this month.
Katie Lahey was among 11 directors and senior executives targeted by the Australian Securities and Investments Commission (ASIC) in the latest fallout from the findings of separate reviews in NSW and Queensland this year, which found The Star unfit to hold a casino licence in each state.
Chairman Ben Heap, the sole remaining board member on ASIC’s ‘hit list’, says Lahey will stand down from the board effective 30 December 2022.
“Katie has made a significant contribution as a director of The Star for the past nine years, including as chair of the People, Remuneration and Social Responsibility Committee,” says Heap.
“The board thanks Katie for her dedication to the role and wishes her well in her future endeavours.”
Lahey’s exit was accompanied by the announcement that former Suncorp (ASX: SUN) CEO David Foster has obtained regulatory approval to join The Star’s board as an independent non-executive director as part of the company’s much publicised board renewal plan.
Heap says Foster brings to the board ‘a breadth of experience, and highly relevant expertise, that will be instrumental as The Star seeks to return to suitability in Queensland and NSW’.
Foster’s appointment was first announced in August and it has taken this long to obtain regulatory clearance for his appointment to The Star’s board. Former corporate lawyer Anne Ward, who was among the new board appointments at Melbourne’s Crown Resorts before the Blackstone Group’s takeover, is among the recent recruits on The Star’s board which is now by new CEO Robbie Cooke.
Heap’s role as chairman of The Star is untenable following the launch of civil action by ASIC against 11 members of the former leadership team of the casino group.
The Star admitted as much this week when it announced on Tuesday that Heap would step down ‘once additional directors are appointed, and appropriate transition arrangements are in place’.
“This process is expected to be finalised in the early part of 2023 and is designed to ensure the company maintains a sufficient number of independent directors at this critical juncture,” said the company.
Heap and Lahey were named alongside former CEO Matt Bekier, former chairman John O’Neill, and former non-executive directors Richard Sheppard, Gerard Bailey, Sally Pitkin and Zlatko Todorcevski in the civil action.
Also included are former company secretary and group general counsel Paula Martin, former CFO Harry Theodore and former chief casino officer Greg Hawkins.
ASIC alleges that between 2017 and 2019, 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 lawsuit relates to alleged breaches of directors’ duties under section 180 of the Corporations Act, each of which attract a maximum penalty of $1.05 million per breach.
Heap told the ASX on Tuesday that Lahey and he 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 under way to secure new directors for The Star’s board.
The Star has been hit by a total of $200 million in fines from NSW and Queensland authorities in the wake of damning findings that the casino operator exposed itself to criminal activities due to failings in its anti-money laundering and anti-terrorism finance responsibilities.
The company currently has an external manager in place to ensure The Star adheres to its remediation plans and returns to suitability over the next 12 months.
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