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Australia’s corporate regulator has launched civil prosecutions against 11 current and former directors and senior managers of casino operator The Star Entertainment Group, marking a new phase of legal accountability for powerful individuals in the Australian gambling industry.
The Australian Securities & Investments Commission (ASIC) on Tuesday (December 13) alleged in Federal Court filings that Star chairman Ben Heap, former chairman John O’Neill, former managing director and CEO Matt Bekier, former chief legal and risk officer Paula Martin, former CFO Harry Theodore, former chief casino officer Greg Hawkins and five other directors failed to exercise due care and diligence under Section 180 of the Corporations Act 2001.
The other defendants are current director Katie Lahey and former directors Richard Sheppard, Gerard Bradley, Sally Pitkin and Zlatko Todorcevski.
ASIC is seeking fines, disqualification orders and declarations against all defendants, according to the regulator’s concise statement to the court. A separate filing indicates that in all cases ASIC is seeking fines of up to A$1m ($680,000) for each contravention.
In a Star filing to the Australian Securities Exchange later on Tuesday, Heap and Lahey said they will resign upon locating replacements, likely in the first quarter of 2023.
"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," Heap said.
The prosecutions of individual casino executives and board members comes more than three years after a series of media reports exposed compliance failures at Crown Resorts’ Melbourne casino and overseas.
The land-based casino sector has since been upended by cascading probes in five states, the purging of boards, fines, retaliatory legislation and ongoing investigations and prosecutions at state or federal levels.
However, this litigation marks the first substantial move by a state or federal organ to hold top-tier company identities individually responsible for their actions in the gaming sector, potentially strengthening deterrence against lawbreaking and raising the question of whether ASIC prosecutions of other companies’ operatives will follow.
“ASIC alleges that 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,” ASIC deputy chair Sarah Court said in a media statement.
ASIC alleges that Bekier, Martin and Hawkins failed to address money laundering risk associated with now-defunct junket operator Suncity and its “funder” and continued to deal with the group despite “reports of criminal links”, as well as failing to report on such issues to the board, according to the statement.
It said Martin and Theodore “knowingly permitted misleading statements” to be given to the National Australia Bank (NAB) regarding fraudulent use of the China UnionPay debit card, amounting to A$900m over six years, which was used to disguise gaming transactions as hospitality expenses.
ASIC also alleges that Star board members breached their duties by approving “expansion” of dealings with operators with “reported criminal links” and by failing to probe senior managers on money laundering risks despite receiving information that obligated them to do so.
ASIC said in the concise statement that “some of those risks” that board members and managers failed to address “have now crystallised” in the form of regulatory inquiries in New South Wales (NSW) and Queensland states, the suspension or deferred suspension of licences, the appointment of an external manager to run operations and fines totalling A$200m.
The compliance failure allegations in the concise statement largely mirror the content of the NSW Independent Liquor and Gaming Authority’s (ILGA) review into Star, a process that resulted in a finding of unsuitability to hold a casino licence and the resignation of almost all board members and senior executives.
