Australia‘s corporate regulator has commenced legal action against current and former directors and officials of casino operator Star Entertainment Group Ltd. The Australian Securities and Investments Commission (ASIC) announced on Tuesday that it launched civil proceedings in the Federal Court against eleven people linked to the company for poor management of money-laundering risks.
Breach allegations:
The claims of the Australian Securities and Investments Commission refer to Star Entertainment’s board members between 2017 and 2019, including former Chairman John O’Neill and former CEO Matthias Bekier. The Commission alleges that board members breached their duties under the Corporations Act between 2017 and 2019.
ASIC Deputy Chair, Sarah Court, said that board members “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”.
Failure to prevent critical risks:
According to ASIC, board members approved the company’s continued relations with certain individuals who reportedly had criminal links thus making the money laundering risks pending to the company and taking no steps to prevent these ”critical risks” even after respective notifications. ASIC claims that the executives thus committed a “breach of their director duty obligations”.
ASIC Deputy Chair added that the regulator would seek from the court contraventions, penalties, and disqualification orders for individuals who were members of the organization’s top management.
Significant governance failures:
“This court case really deals with who are the people that should be held accountable for these [alleged] significant governance failures,” said Ms. Court. “Individuals that have engaged, if ASIC’s case is made out … in the conduct of this kind should not be appropriately able to act as directors for other companies.”
An individual breach of corporate governance in this regard incurs a maximum penalty of $1.05 million.
Star Entertainment noted that the company and its subsidiaries are not parties to the court proceedings and that the proceedings ”concern matters which were the subject of regulatory inquiries in New South Wales and Queensland”.
Anti-money laundering deficiencies:
Star Sydney operation was fined $100 million by the NSW Independent Casino Commission earlier this year for money laundering, fraud, and organized crime links. Severe deficiencies in the company’s anti-money laundering procedures were also found in the Queensland branch.
ASIC also focused on the casino’s relationship with Asian gambling junket Suncity which generated $5.9 billion in turnover for the Star in 2019. ASIC alleges that the group executives Mr. Bekier, Paula Martin, and Greg Hawkins failed to address money laundering risks pending to this customer.
Misleading statements:
Finally, the Commission said some group executives had “knowingly permitted misleading statements” provided to National Australia Bank (NAB). The statements allegedly revealed that Star allowed the use of cards issued by China Union Pay (CUP) for gambling purposes, which CUP prohibited. ASIC informed that it was ”aware over $900 million was obtained by Star customers using CUP cards in NAB ATMs from 2013 to 2019.”
As a result, Star’s casino license in Sydney was suspended in October and the company paid a $100 million fine. Now, eleven current and former board members of the Brisbane-headquartered company are facing breach allegations and accusations of The Australian Securities and Investments Commission before the Federal Court for misleading statements provided to the National Australia Bank and the respective failure of the company’s anti-money laundering practices.