Key Insights
The CEO and General Counsel of Star Entertainment were each found to have breached their statutory duty of care under s 180(1) of the Corporations Act 2001 (Cth). ASIC failed to establish any contravention of s 180(1) against the seven non-executive directors. The judgment draws a bright line between failures of management and failures of oversight, and has immediate implications for how executives, officers, in-house lawyers and boards approach risk, information and governance.
What officers, directors and general counsel need to know now:
- CEOs cannot filter what the board sees. If you possess information material to the company’s regulatory compliance or legal risk, it must reach the board – fully and accurately. Understating serious matters in board reports could itself be a breach of duty.
- A general counsel who is also an officer cannot shelter behind reporting lines. If serious legal and regulatory risks are not being brought to the board, the obligation to escalate is owed to the company, not to the CEO.
- Non-executive directors can rely on management, but only up to a point. Reliance is legitimate where management has not disclosed material risks, but directors must still ask difficult questions, control the quality of board packs, and not accept routine compliance assurances at face value.
- AI tools for board materials should be transparently governed. Lee J found nothing objectionable in using AI to assist with board materials, but cautioned that AI cannot displace human judgement and that any such use should be the subject of transparent collective governance.
- Section 180(1) liability is assessed on what you actually knew; not on a hypothetical. The Court rejected ASIC’s attempt to construct liability on the basis of steps a director would have taken after first obtaining information they did not possess.
Background
On 5 March 2026, Lee J of the Federal Court of Australia delivered judgment in Australian Securities and Investments Commission v Bekier (Liability Judgment) [2026] FCA 196, a civil penalty proceeding spanning 1,959 paragraphs and concerning the conduct of former directors and officers of The Star Entertainment Group Limited (Star). The judgment is essential reading for any person who serves, or advises those who serve, as a director or officer of a company, and particularly those in regulated industries. It addresses, in granular detail, what the law expects of a chief executive officer, a general counsel who is also company secretary, and non-executive directors.
The case arose from two broad aspects of Star’s casino business during the period from November 2016 to March 2020. The first concerned Star’s relationship with Suncity, its largest junket customer, whose personnel engaged in conduct at Star’s Sydney casino that was suggestive of money laundering and other criminal activity. The second concerned the “CUP Process”, whereby Star facilitated the use of China UnionPay (CUP) cards to fund gambling, despite repeated warnings that CUP cards were not to be used for gambling, and sent misleading communications to its banker, NAB, about the true nature of those transactions.
The results were stark. Star’s CEO and Managing Director, Mr Matthias Bekier, and its Company Secretary and Chief Legal and Risk Officer, Ms Paula Martin, were each found to have contravened s180(1) of the Corporations Act 2001 (Cth) – the statutory duty of care and diligence – on multiple occasions. ASIC failed to establish any contravention of s 180(1) against the seven non-executive directors. The judgment thus draws a line between failures of management and failures of oversight, with profound implications for how boards, executives and in-house lawyers should approach their respective roles.
The Duty: What Section 180(1) Requires
Section 180(1) requires a director or officer to exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they were a director or officer of a corporation in the corporation’s circumstances and occupied the office held by, and had the same responsibilities within the corporation as, the director or officer. The standard is objective but contextual: it is assessed by reference to the specific corporation, the specific office, and the specific responsibilities of the individual concerned. It does not demand perfection; making a mistake does not in itself demonstrate a lack of care and diligence. Critically, the assessment must be undertaken without the benefit of hindsight.
Lee J emphasised that the content of this duty is now settled. Its application, however, is necessarily evaluative and fact-dependent. A director’s conduct must be judged by reference to “the snapshot of knowledge and perspective then available”, not by what is known after the event.
The CEO: The Critical Information Conduit
The judgment’s treatment of Mr Bekier is a case study in the obligations of a chief executive officer who sits at the intersection of management and the board. Mr Bekier was found to have contravened s 180(1) in relation to four matters: the KPMG Reports (and the related “Power Email”), Suncity in 2018, Suncity in 2019, and the CUP Process. Three earlier allegations, concerning the approval of cheque cashing facility increases for Mr Qin and Mr Chau, and the December 2017 Board meeting, were not established.
The core of Mr Bekier’s failure was that he sat at the centre of the flow of material information between management and the board, yet did not ensure the board was properly informed of serious legal and regulatory risks. He possessed alarming information – most significantly, the “Power Email” from Mr Andrew Power, the General Counsel of Star’s Sydney casino operation (as distinct from Ms Martin, who was the Group General Counsel) which identified that Suncity’s conduct had exposed Star to an “unacceptable level of risk” – and failed to disclose it to the board. He received and read the full KPMG Reports, which identified serious deficiencies in Star’s anti-money laundering risk assessment processes concerning junkets, but did not ensure the board was apprised of their full significance. His response to the KPMG Reports “does not reflect how a reasonable director would have responded to the information contained within them”.
The Court rejected Mr Bekier’s attempt to treat the Power Email and the KPMG Reports as unrelated matters rather than recognising their combined significance. A reasonable director in his position would have “synthesised” the two together and been “particularly alert” to the combined significance. His reliance on earlier, more favourable reviews of Star’s AML/CTF programme was inadequate once the more recent KPMG review had revealed the deficiencies those earlier reviews had not identified.
By the time of the Board meeting on 15 August 2019 – the first Board meeting after the Crown Allegations became public in late July 2019, at which the non-executive directors had specifically requested a comprehensive briefing on whether Star had similar exposure to Crown – Mr Bekier knew of a constellation of additional alarming matters – including police exclusions of Suncity associates, reports that Suncity had contravened Chinese law, and Mr Chau’s visa refusal – yet the ‘Crown Allegations Board Paper’ prepared for that meeting omitted all of this information. Mr Bekier himself acknowledged that the paper did not disclose all matters of which he was aware. The Court found that a reasonable director would have ensured the board was fully informed.
Regarding the CUP Process, Mr Bekier received the CUP 2020 Warning Letter but took no steps to inform himself of the terms of Star’s communications with NAB, made no enquiries as to whether those communications had conveyed that CUP transactions were only used for accommodation, and did not brief the board. The Court found that the contravention was established on the basis of Mr Bekier’s failure, following receipt of the CUP 2020 Warning Letter, to ask for Star’s communications with NAB concerning CUP cards. Mr Bekier confirmed in cross-examination that he had made no such enquiries, and the Court held that a reasonable director in his position would have done so.
The practical lesson for CEOs and executive directors is unambiguous: if they possess information material to the company’s regulatory compliance, legal risks or commercial position they must ensure that information reaches the board. Withholding or understating such information – even if management believes it can be handled operationally – is not a reasonable exercise of the duty of care. The board cannot discharge its governance responsibilities if it is not properly informed, and the CEO and other executive directors bear primary responsibility for ensuring that it is.
The General Counsel: Whose Client Is the Company
The judgment’s treatment of Ms Martin is of particular significance for in-house lawyers. Ms Martin held the roles of Company Secretary, Group General Counsel, and (from August 2019) Chief Legal and Risk Officer. She was found to have contravened s 180(1) in relation to three matters: Suncity in 2018, Suncity in 2019, and the CUP Process.
Ms Martin initially sought to argue that her roles were “divisible” – that her duties as Company Secretary were distinct from her duties as Group General Counsel, and that in the latter capacity she reported to Mr Bekier rather than to the board. This argument was rejected, following the High Court’s reasoning in Shafron v ASIC (2012) 247 CLR 465. The Court held that her responsibilities under s 180(1) encompassed all of her roles, regardless of how the reporting lines were formally structured.
Lee J made a critical observation about the position of an in-house solicitor who is also an officer of the company. Such a person may reasonably be expected to apply their legal knowledge, training and skills to identify risks that other officers might not have appreciated, and to recognise that other officers within the company may be relying on them to be aware of legal risks and to guard against the realisation of those risks. At the risk of stating the obvious, Lee J added, “an officer in the position of Ms Martin would know the officer has a client, and that client is the company that employs the officer, and not the CEO of the client.”
Ms Martin knew of the substance of the Power Email and the findings of the Operation Money Bags investigation – an internal inquiry by Star’s Investigations Team into suspicious cash transactions by Suncity personnel in Salon 95, a dedicated VIP gaming salon at Star’s Sydney casino that was subject to an exclusive use arrangement with Suncity – yet did not ensure the board was informed. Her contention that Mr Bekier and Mr Hawkins already possessed the information, and therefore she had no additional duty to inform them, was rejected: “Mr Bekier did not bear sole responsibility for informing the Board.” Her argument that her reporting obligations were confined by the scope of the board’s specific requests was described as “unsustainable for obvious reasons” – a senior executive who knew of matters of which the board was not apprised “cannot circumvent the aspect of her role which extended to reporting such matters to the Board”.
On the CUP issue, Ms Martin was found to have reviewed and approved the sending of a misleading email to NAB (the “7 November Email”), which falsely represented that CUP card transactions were used for non-gambling purposes such as accommodation, private jet travel, luxury goods and tourism services. Her evidence that she had only approved sample invoices without reading the full email chain was rejected as “deliberately false”. The Court also rejected her argument that telling the truth to NAB might have been more harmful than allowing a false communication to stand, observing: “The notion that allowing a lie to be told is better than ensuring the truth is conveyed (because truth telling would amount to an admission of a prior lack of candour) is an instinctively unattractive one.”
Ms Martin was the subject of significant adverse credibility findings. She gave directly contradictory evidence in the Bell Inquiry (the 2022 public inquiry into The Star Sydney conducted by Adam Bell SC on behalf of the NSW Independent Casino Commission) and in the present proceedings about her awareness of NAB’s changed position regarding CUP, leading the Court to find she was “a witness willing to tell an untruth on an important matter”.
The practical lesson for general counsel is threefold. First, an in-house lawyer who is also an officer of the company cannot shelter behind reporting lines or role descriptions to avoid the obligation to ensure the board is informed of serious legal and regulatory risks. Secondly, the lawyer’s client is the company, not the CEO; when the CEO fails to bring material information to the board, the general counsel has an independent obligation to do so. Thirdly, approving or permitting misleading communications to third parties – even where the alternative may be commercially uncomfortable – is incompatible with the duty of care.
Non-Executive Directors: Entitled to Rely, But Not to Be Passive
ASIC failed to establish any contravention of s 180(1) against the seven non-executive directors. This outcome, however, should not be read as a charter for passivity. The Court’s reasoning reveals both the protections available to non-executive directors and the limits of those protections.
The Court affirmed that non-executive directors are entitled to rely on management to bring material matters to their attention, at least except where they know, or by the exercise of ordinary care should have known, facts that would deny reliance. They are not required to be involved at the operational level, and they may rely on management to a greater extent than executive directors. However, the standard to which non-executive directors are held now “sits closer to those of executive directors” than it once did.
In this case, the Court accepted that the non-executive directors were not apprised by management of the full substance and significance of the relevant risks, and that this mattered materially to the evaluation of ASIC’s case against them. The Power Email was never disclosed to the board. The full KPMG Reports were never uploaded to the board portal. The references to “concerns” and “compliance risk increases” at Salon 95 were, in the Court’s words, an “exercise in dramatic understatement” by Mr Bekier, framed in a way that was “unlikely to raise any suspicion or invite attention”. And the Crown Allegations Board Paper was only made available at 8:57am on the morning of the Board meeting, with directors in back-to-back committee meetings until the Board meeting commenced at 11:30am.
The Court identified a fundamental tension in ASIC’s case: it could not easily argue that the executives failed to inform the board while simultaneously arguing that the board should have recognised the information was inadequate. ASIC’s own submission – that the Salon 95 reference was “an exercise in dramatic understatement” – directly undermined its case that non-executive directors should have been alerted by the very same reference.
Lee J was, however, careful not to bestow unqualified praise upon the non-executive directors. He observed that the contemporaneous minutes did not reveal “a portrait of directors actively pressing management with difficult questions as to whether the business was being conducted ethically, lawfully, and to the highest available standard”. There was “little by way of sustained scrutiny or insistence upon explanation in circumstances where risks were obvious”. The “more self-congratulatory submissions of the non-executive directors” were described as “jarring”.
The practical lesson for non-executive directors is that reliance on management is legitimate but has limits. Directors must take a “diligent and intelligent interest” in the information provided to them, and must exercise control over the information they receive – including by insisting that board packs are manageable and comprehensible. Formal compliance alone is insufficient. The job, particularly in a high-risk enterprise such as a casino, “requires intelligent people prepared to engage actively” and demands “a willingness to interrogate, to probe, and, where necessary, to challenge”.
Board Packs and Information Overload
One of the judgment’s most practically significant contributions concerns the management of board information. Lee J rejected the argument that directors cannot be expected to scrutinise voluminous board packs, observing that “an important initial step in taking an intelligent interest in the information relevant to guiding and monitoring management is exercising control and preventing Brobdingnagian electronic document dumps masquerading as board packs”.
The Court also addressed the emerging use of artificial intelligence by directors to navigate board materials. Lee J found there was “nothing inherently objectionable” in obtaining such assistance, but cautioned that the use of AI “cannot displace judgment” and that “the statutory obligation imposed by s 180(1) remains personal, and it requires informed human judgment”. The Court recommended that boards should “discuss and deliberately govern any AI use by formal adoption of policies, rather than just wink at informal ‘shadow’ use”.
The practical lesson is that boards – and particularly their chairmen and company secretaries – should take active steps to ensure board packs are structured, focused and navigable. If directors find themselves unable to engage meaningfully with the volume of material provided, the answer is not to accept the overload, but to insist on discipline in the preparation and presentation of that material.
The Business Judgement Rule
The business judgement rule in s 180(2) of the Corporations Act provides a safe harbour for directors who make business judgements in good faith, for a proper purpose, without material personal interest, after informing themselves to the extent they reasonably believe appropriate, and in circumstances where they rationally believe the judgement is in the best interests of the corporation. Mr Bekier sought to invoke the rule in respect of certain allegations.
The Court confirmed that the rule operates as a defence, with the onus on the defendant to establish its elements – it is not a rebuttable presumption that shifts the onus to the plaintiff. In practice, the rule availed Mr Bekier little. The Court was not satisfied that he had made the relevant conscious business judgement in the statutory sense, and in any event found that he had not informed himself to the extent required by s 180(2)(c). His reliance on information and advice from Mr Hawkins was found not to have been made “after making an independent assessment” as required by s 189(b)(ii) – but this was only one thread in a broader finding that Mr Bekier had not turned his mind to the matter in the way the statute requires.
The Danger of Hindsight
A recurring theme of the judgment is the danger of hindsight bias. Lee J quoted Kierkegaard: “life can only be understood backwards; but it must be lived forwards”. The three earlier allegations against Mr Bekier – concerning the CCF approvals for Mr Qin and Mr Chau, and the December 2017 Board meeting – were dismissed in part because the Court found that ASIC’s case was “clouded by hindsight”. Mr Chau, for example, was at the time a gaming industry leader, the CEO of companies listed on the Hong Kong Stock Exchange, whose junket operated in all major casinos worldwide. “It is not obvious”, Lee J observed, “why it would be assumed that an apparent gaming industry leader, with whom all of Star’s peers were doing business, was operating as some form of organised crime figure.”
The lesson is that the duty of care must be assessed by reference to what was known or reasonably knowable at the time, not by what later transpired. This is a protection for directors who act reasonably on the information available to them, even if that information later proves incomplete.
Primary and Alternative Cases: A Pleading Lesson
An important but sometimes overlooked aspect of the judgment is the distinction between ASIC’s primary and alternative cases. ASIC’s primary case against Mr Bekier regarding Suncity in 2018 and 2019 was framed as a “cascading” counterfactual: it alleged that a reasonable director would first have made further enquiries, obtained information the director did not in fact possess, and then taken further steps on the basis of that hypothetical information. The Court held this approach was impermissible. Contraventions were only established on ASIC’s alternative case, which was based on the information Mr Bekier actually possessed – namely, that he should have ensured the board was informed of the Power Email Information and related matters.
This distinction matters for regulators and those advising defendants: s 180(1) does not impose liability on the basis of steps a director would have taken in a hypothetical world where they had first obtained information they did not have. The breach, if any, lies at the anterior point of failing to act on information actually known.
Corporate Culture and the Limits of Regulatory Architecture
Lee J concluded with observations that resonate beyond the immediate facts. He noted that “no regulatory architecture, no matter how well-conceived, can substitute for the competence and integrity of management, or for the active and informed supervision of directors”. The “culture” that prevailed at Star was “so dysfunctional and unethical that senior management was tardy in preventing junket operators from behaving inappropriately and lied to its bankers to secure an ongoing commercial advantage”. “Ultimately, it fell to investigative journalism, and then a statutory inquiry, to expose the extent of the problems.”
Star’s Corporate Governance Statement identified that the board’s role included “overseeing the Company’s organisational culture and values”. Lee J observed: “It is easy to be cynical about these sorts of statements, so beloved by consultants drafting such documents. But to the boards who adopt them, one presumes they are supposed to be more than platitudes.”
Summary of Key Takeaways
For general counsel and directors, the judgment yields the following practical guidance:
For CEOs and Executive Directors:
You sit at the centre of the flow of material information between management and the board. If you possess information material to the company’s regulatory compliance, legal risk or commercial position, you must ensure it reaches the board – fully, accurately and in a timely manner. Understating or omitting serious matters in board reports is a failure of your duty of care.
- Disclose adverse information proactively: Do not wait for the board to ask. If you receive internal reports, emails or intelligence identifying serious compliance or regulatory risks, escalate them to the board promptly – even if management believes the issue can be handled operationally.
- Synthesise, do not silo: When multiple sources of adverse information arrive from different parts of the business, connect them. Mr Bekier’s failure to appreciate and synthesise the combined significance of the Power Email information and the KPMG junket risk information was central to his contravention.
- Interrogate communications with third parties: When a warning letter or enquiry from a counterparty, regulator or banker reveals that false or misleading information may have been conveyed on the company’s behalf, immediately request and review the relevant communications and brief the board.
For General Counsel and Company Secretaries:
Your client is the company, not the CEO. If the CEO fails to bring material information to the board, you have an independent obligation to do so. Your legal expertise elevates the standard to which you are held: you are expected to identify legal and regulatory risks that others might not. You cannot approve or permit misleading communications to third parties, and the commercial inconvenience of telling the truth is not a defence to failing to do so.
- Maintain an independent reporting line to the board: Do not assume that informing the CEO is sufficient. If you are aware of serious legal or compliance risks that the board has not been told about, you must escalate directly – regardless of internal reporting structures or whether the CEO already knows.
- Never approve misleading external communications: Before signing off on any communication to a bank, regulator or counterparty, read it in full and satisfy yourself that it is accurate. If it is not, insist on correction – even if the truth is commercially inconvenient or amounts to an admission of prior lack of candour.
- Do not confine your reporting to what the board specifically asks for: Your obligation extends to matters the board needs to know, not merely matters the board has requested. A senior officer who possesses material adverse information cannot wait for the board to pose the right question.
For Non-Executive Directors:
You are entitled to rely on management to bring material matters to your attention, but this reliance has limits. You must take an intelligent and engaged interest in the information provided to you, exercise control over the quality and completeness of board packs, and bring an enquiring mind to your responsibilities. Non-executive directorships, particularly in high-risk enterprises, “are not just tokens or glittering prizes decorating a CV”.
- Demand focused, readable board packs – and read them: Insist that management delivers concise, structured papers with clear escalation of material risks. If board packs are voluminous and unfocused, direct the company secretary to reform the process. Where probity or compliance information appears in appendices, ensure it is drawn to the board’s attention in the covering paper.
- Ask difficult questions – and minute that you did: The Court observed that board minutes did not reveal directors actively pressing management on whether the business was being conducted ethically and lawfully. Make sure your questions and challenges are recorded, particularly in relation to high-risk areas of the business.
- Verify that compliance assurance reports reflect reality: Do not accept routine assurance declarations at face value. If a compliance report references “concerns” or “risk increases” even in passing, follow up with management to understand the substance and significance of those references.
For Boards Collectively:
Control the information you receive. Do not tolerate voluminous, unfocused board packs. If AI tools are being used to assist in the review of board materials, adopt a transparent, board-agreed policy governing their use. Ensure that corporate governance statements about culture, values and risk management are substantive commitments, not platitudes. And remember: no amount of regulatory compliance can substitute for the integrity of management or the active engagement of directors.
- Address AI use transparently: If AI tools are being used to assist in the preparation or review of board materials, boards should address that use transparently and govern it through an agreed policy or protocol, rather than permitting informal or unregulated reliance.
- Ensure board papers are delivered with adequate lead time: The Crown Allegations Board Paper was provided on the morning of the meeting, leaving directors no realistic opportunity to read it before the discussion. Mandate minimum lead times for the delivery of board papers, particularly on significant or novel risk matters.
- Treat corporate governance commitments as operational obligations: Statements about overseeing culture and values must be backed by concrete mechanisms – including regular, substantive board discussion of ethical conduct, compliance culture and whistleblowing reports – not left as aspirational platitudes in annual reports.
The proceeding has been adjourned part-heard for the making of orders in conformity with the reasons, with further steps to address issues including the possible application of ss 1317S and 1318 of the Corporations Act (relief from liability), and any penalty and disqualification orders. The personal consequences for Mr Bekier and Ms Martin remain to be determined. But the liability judgment itself has already delivered its most important message: directors and officers of public companies are expected to exercise real judgement, informed by real engagement, in real time. The law does not demand omniscience, but it does demand diligence – and diligence, in this context, means more than merely going through the motions.
Further Information
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