Star decision sends powerful warning to management and boards across Australia

ASIC commenced proceedings against 11 executives and board members of Star, alleging failures to manage risks arising from Star’s dealings with certain junket operators and the misuse of China Union Pay cards (CUP). The decision signals a fundamental shift in how Australian courts will construe executive responsibility.

Justice Lee found Mr Bekier breached his duties by failing to:

• act on an independent report identifying serious deficiencies in Star’s AML/CTF risk management processes; and
• address and manage risks associated with Star’s junket business and other high-risk products, even after significant media exposure.

Ms Martin was also found to have breached her duties by participating in conduct that misled Star’s primary banking partner about CUP usage. 

Critically, both failed to appropriately inform the Star board of known risks relating to Star’s exposure to ML/TF and other non-financial risks. 

The judgment provided a stern reminder of what ‘reasonable care, skill and diligence’ means for management teams, particularly those working in high-risk environments: high-risk enterprises require high-engagement leadership.

The statutory standard applies with reference to the specific circumstances of the corporation's operating environment, without the bias of hindsight. Executives in high-risk industries face a correspondingly high standard of vigilance, and must be persons of 'probity, vigilance and sound judgment.'

Management must balance the foreseeable risk of harm against the potential benefits to the company. This extends beyond commercial or monetary considerations to ‘all of the interests of the corporation.’^[1]   

Management must escalate risks. If facts have come to an executive’s attention that arouse suspicion, then management has a duty to enquire into the matter and escalate the risk (including to the board when of particular gravity). Failure to do so is a breach of an officer’s duties. 

As Justice Lee observed: '[N]o 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’.

Section 180(1) does not impose a standard of perfection, but executives must do far more than tick compliance boxes. An enquiring mind is not optional. 

The Court rejected the argument that Ms Martin’s roles as company secretary and CRLO were divisible, finding she was obliged as Company Secretary to inform the board of matters she learned as CRLO. As an experienced lawyer, she was required to exercise the care, skill and diligence expected of an officer with her training and experience, and could not compartmentalise her duties or knowledge.

The Court reaffirmed a simple point: an in-house counsel’s client is the company (not the CEO, or any other employee), and their advice must always serve the best interests of the company, and not management.

The decision confirms that directors:

• are not required to be involved in the affairs of a company at an operational or day-to-day level; and
• can rely on management to a greater extent than executive directors, including to escalate matters through internal reporting channels.

However, this reliance is limited: if red flags arise, directors must actively enquire. 

Directors, particularly of ASX-listed entities, must:

• actively engage with their companies and management teams;
• recognise the limits of reliance on management, especially when red flags emerge; and
• meet the heightened standard that high-risk enterprises demand.

Justice Lee reminds directors that handsome remuneration for board service comes with a corresponding obligation of diligence:

Non-executive directorships of public companies, particularly those conducting high-risk enterprises, are not just tokens or glittering prizes decorating a CV; the job requires intelligent people prepared to engage actively. 

The decision ultimately reflected the way the case was pleaded: on one hand, it was alleged that management failed to inform the board about risks faced by the Star’s gaming business; but on the other hand, ASIC alleged the directors should have known about these risks that had not been escalated to them. This paradoxical approach to the claim undermined the case against the directors, leaving liability to fall at the feet of management.

New reforms to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) effective from 31 March 2026, may change this. Section 26H places a positive duty on the governing bodies of reporting entities to enquire into and ensure compliance with the AML/CTF Act and Rules, and to mitigate the risks of ML/TF.

Generally, oversight of these obligations was already incorporated into s180(1). By making this explicit, Parliament has imposed a greater standard of compliance on directors managing ML/TF risks. This adds to the already-enhanced exposure of directors for corporate breaches in areas including workplace health and safety,^[2] taxation,^[3] financial accountability,^[4] sustainability reporting,^[5] and client/customer safety.^[6]

The express addition of s26H raises the bar for directors of reporting entities; what was a permissible level of reliance in the Star case is unlikely to suffice after 31 March 2026.

The warning is clear: directors cannot adopt a 'hear no evil, see no evil' posture. Asserting ‘management didn’t tell us’ will carry far less weight under s26H, or any of the increasing suite of obligations imposing active duties on boards.

In a passage likely to attract considerable attention, Justice Lee also acknowledges that directors are increasingly using artificial intelligence to review and navigate board materials. However, technology cannot displace judgment. The obligation under s180(1) remains personal and requires informed human judgment:

The use of technology may assist comprehension, but it cannot displace judgment.

While directors are exploring artificial intelligence to reduce ‘information overload’, the decision warns that, no matter the technology, directors must actively engage with the information presented to them, irrespective of its volume.

It remains to be seen whether boards will push management to be more succinct and clear raising the standard of board reporting – or whether information overload will continue to disguise, rather than manage, risk.