25/03/2026
In March 2026, the Federal Court of Australia handed down a well written judgment in a well publicised case involving directors of The Star Entertainment Group Ltd in Australian Securities and Investments Commission v Bekier [2026] FCA 196.
The Federal Court found that The Star’s former Chief Executive Officer and Managing Director as well as the former Chief Legal & Risk Officer contravened the law by breaching their duties owed to Star under section 180 of the Corporations Act 2001 (Cth). Seven former non-executive directors, however, were found not to have breached their duties under the same section.
Essentially, the two Executives were held responsible for failing to take seriously the risk that Star was being used to facilitate money laundering and the risks around the use of China UnionPay cards. The Executives lied to their banker on the use of the cards and failed to keep the Board properly informed.
The Australian Securities and Investments Commission (ASIC) had alleged that the non-executive directors failed to recognise the deficiencies in the information provided to them by management. The non-executive directors were not found to have breach their duties because they were entitled to rely on senior management who in this case failed to inform them of critical risks or provide materials which made clear the seriousness of the issues.
Justice Lee made a number of comments throughout the Judgment on the expected conduct of non-executive directors. They included that:
- Directors can rely on management (with caveats)
- Directors are responsible for overseeing that management is honest, trustworthy and competent
- Information overload cannot be used as an excuse by directors for failing to grasp material issues
- Directors have the power and duty to control the information they receive
- If directors rely on technology, such as AI, to get through large volumes of material, this does not replace their judgement or personal duty under section 180(1) of the Corporations Act 2001.
In the aftermath of this decision, Boards should be considering what information they ask for and how it is provided. Management should be critically considering whether they are making Boards aware of risk, and providing relevant materials to help the board perform their oversight functions.
Griffin Legal provides a variety of governance support to Boards and management of companies.