High stakes governance: Federal Court clarifies directors’ duties in The Star decision

The Federal Court has delivered a significant judgment in Australian Securities and Investments Commission v Bekier [2026] FCA 196 providing important guidance on the scope of directors’ and officers’ duties under the Corporations Act 2001 (Cth) (Corporations Act).

The proceedings were brought by Australian Securities and Investments Commission (ASIC) against eleven current and former officers and directors of The Star Entertainment Group Limited (Star).

The judgment provided a detailed examination of directors’ oversight responsibilities in Australia, in particular noting that the duties of directors under section 180(1) of the Corporations Act is well settled and there was no novel legal principle in this case.

However, the judgment provides important guidance on: 

• the respective roles of management and boards;
• when directors may rely on management;
• when senior executives and in-house counsel must escalate regulatory risk; and
• how courts will assess directors’ conduct when regulatory failures emerge within complex organisations.

The background

ASIC alleged that several officers and directors of Star breached the duty of care and diligence under s 180(1) of the Corporations Act between 2016 and 2020.

The allegations centred on two areas of Star’s operations:

1. Star’s dealings with junket operators, particularly Suncity (a major VIP junket operator at Star’s casinos), including concerns regarding suspicious activity associated with the private gaming room known as “Salon 95”; and
2. the use of China UnionPay (CUP) cards, where customers were allegedly able to obtain funds for gambling through transactions processed as hotel expenses, despite restrictions communicated through National Australia Bank (NAB).

ASIC alleged that senior executives failed to respond appropriately to emerging risk indicators and failed to ensure the board was properly informed of those risks. It was also alleged that non-executive directors failed to recognise deficiencies in the information provided to them.

The decision

The Court found that Star’s former CEO and Managing Director, Mr Bekier, and its Group General Counsel and Company Secretary, Ms Martin, breached their statutory duties under s 180(1).

However, ASIC’s case against the non-executive directors failed.

Justice Lee stressed that whether the statutory duty has been breached requires a contextual assessment, noting that the statutory standard is applied to what he described as “fact-value complexes, not mere facts”.

The Court therefore examined what information was available to each officer and what a reasonable person in their position would have done with that information at the time, without the benefit of hindsight.

Key issues that led to the breaches

The Court found that the breaches by Star’s executives largely arose from failures to properly escalate significant regulatory and compliance risks to the board. In particular, external KPMG reviews had identified deficiencies in Star’s AML/CTF framework, but the seriousness of those issues and their potential regulatory implications were not clearly conveyed to directors.

Issues arose in relation to Star’s dealings with Suncity junkets operating in Salon 95. Information within the organisation suggested suspicious transactions and potential law enforcement interest. Justice Lee found that the board was not clearly informed of the nature and seriousness of those concerns or placed in a position to assess whether Star’s relationship with Suncity should continue.

The Court also examined arrangements involving CUP cards, under which transactions were processed as hotel expenses despite restrictions on the use of those cards for gambling. The board was not adequately informed of the risks associated with those arrangements and certain external communications inaccurately represented how the system operated in practice.

Importantly, the Court rejected ASIC’s argument that non-executive directors breached their duties by approving increases in Star’s credit exposure to certain junket funders. Justice Lee accepted that these approvals involved commercial credit decisions relating to existing facilities, rather than fresh probity assessments. In those circumstances, it was reasonable for directors to assume that appropriate probity checks had been undertaken by management.

Why weren't the non-executive directors liable?

ASIC argued that the non-executive directors should have recognised deficiencies in the information provided to them.

Justice Lee rejected this argument, noting a conceptual tension in ASIC’s case: executives were alleged to have failed to disclose information to the board, while directors were simultaneously alleged to have failed to discover that undisclosed information.

Section 180(1) does not impose a standard of perfection, rather that directors are required to take reasonable steps to be able to guide and monitor the management of the company.

The Court accepted that:

1. key information about suspicious activity had not been escalated to the board by management; and
2. the board materials did not clearly convey the seriousness of the issues relied upon by ASIC.

It is important to note that issues such as these will turn on the facts and circumstances of each case. While the legal principles of section 180(1) are well established, directors should not be complacent in ensuring that the governance structures within which they operate enable them to meet the expected standard.