Asic Files Lawsuit Against Star Executives
Legal troubles continue for Star Entertainment Group. On Tuesday, the Australian Securities and Investments Commission (ASIC) announced they are suing 11 current and former officers and directors of The Star Entertainment Group Limited for breaches of section 180 of the Corporations Act.
The breaches took place from 2017 to 2019 and involve both board members and a former chief executive. Penalties from this lawsuit could be massive as each breach could cost the casino $1 million.
ASIC Files Lawsuit Against Star Entertainment
Various sources, including Reuters, reported on Tuesday that ASIC is suing 11 former officers and directors of Star Entertainment Group. The lawsuit alleges violations of section 180 of the Corporations Act.
According to ASIC Deputy Chari Sarah Court, ‘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.’
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According to ASIC, the following Star Board Members had violations from 2017 to 2019:
- John O’Neil (former Board chair)
- Matthew Bekier (former Managing Director and CEO)
- Kathleen Lahey
- Richard Sheppard
- Gerard Bradley
- Sally Pitkin
- Benjamin Heap
- Zlatko Todorcevski
Among the violations, ASIC alleges that Star approved of expansion relationships with individuals that had links to organized crime. Furthermore, when the Board became aware of the information regarding money laundering risks, the board did nothing to investigate the matter.
Former company Secretary and Group General Counsel Paula Martin and former Chief Casino Officer Greg Hawkins are also facing accusations of additional violations. They also face accusations of not addressing money laundering risks involving Asian junket Suncity. Also, they did not appropriately escalate money laundering concerns to the Board.
Ms. Martin, along with former Chief Financial Officer Harry Theodore, also face accusations of giving misleading statements. Those statements came from National Australia Bank regarding the use of debit cards at the casino. Over $900 million in funds were acquired by customers using debit cards illegally from 2013 to 2019 at Star casinos.
Star Facing Significant Civil Fines
Star Entertainment Group could be facing some significant penalties from this lawsuit. Each breach of the Corporations Act can net penalties of up to $1.05 million. The number of penalties the casino will face is unknown at this time. However, we do know that the turnover from Suncity was approximately $12 billion from 2017 through 2019.
ASIC Chair Joe Longo said that a company’s performance and general standing lie with the directors and Board of a company. This also includes how a company deals with major issues like money laundering.
Chair Longo states, “As I’ve said on many occasions, directors and officers are a critical part of the conduct of business in Australia. Their duty is to understand the operations of the company over which they preside, and the particular risks faced by the business. They are required to bring an inquiring mind to business operations. It is not ‘set and forget.’”
It has not been a good month for Star. Last week, the company was handed penalties of $100 million from the Queensland government. However, the casino did avoid losing its license for the time being. The government will also monitor the casino for a year to see if it can come into compliance.
Also, AUSTRAC has also begun its own lawsuit against the company. The AUSTRAC lawsuit alleges numerous violations that include a failure to protect customers. These penalties could reach into the billions.
This is all on top of the NSW penalty of $100 million in October. The NSW regulator also appointed a special manager to operate Star Sydney. We will update you on any future developments.
