The duty of care and diligence for directors and officers - lessons from ASIC v Bekier

The statutory duty of care and diligence is set out in section 180(1) of the Corporations Act 2001 (Cth) (the Act) and applies to both company directors and officers. It requires them to exercise their powers and discharge their duties with the care and diligence that a reasonable person in their position, within the circumstances of the corporation, would exercise. An objective standard is used to determine whether this has occurred.

Case law has delivered important examples of how this duty should be exercised. This includes proceedings brought against various directors and other officers of The Star Entertainment Group Limited (Star), a publicly listed casino operator. The highly publicised decision in Australian Securities and Investments Commission v Bekier (Liability Judgment) [2026] FCA 196 (ASIC v Bekier) provides the most recent important guidance on the officers within its scope and the extent of the duty’s applicability.

In this case, the Federal Court found that two senior executives of Star contravened s 180(1) - Matthias Bekier, Star’s managing director and CEO, and Paula Martin, who was company secretary, group general counsel and later, chief legal and risk officer. Each failed to exercise the degree of care and diligence expected of a reasonable person in their respective positions, having regard to Star’s circumstances.  

This article is the first in a two-part series. It examines the governance duties of executive directors, officers and general counsels, particularly in high-risk industries that may be vulnerable to criminal exploitation, such as casinos. The second article will consider the role of non-executive directors and why ASIC’s case against them failed.

What happened? 

ASIC commenced civil penalty proceedings against eleven former directors and officers of Star, alleging that each contravened section 180(1). The proceedings arose from serious concerns about two aspects of Star’s casino operations between 2016 and 2020. Those concerns related to whether senior officers of the Star responded appropriately to information that raised various legal, regulatory and reputational risks for Star.

First, ASIC alleged that Star’s dealings with junket operators, particularly its largest junket customer, Suncity, raised risks of suspicious conduct at the Star Pty Limited (Star Sydney), including apparent money laundering and other potential criminal activity.

Second, ASIC alleged that Star knowingly permitted customers to use China UnionPay (CUP) cards to obtain money for gambling while representing those transactions as hotel or non-gambling expenses. This occurred despite repeated warnings and enquiries from CUP and NAB, Star’s principal’s banker, that use of the CUP cards for gambling purposes was prohibited.  

The case also involved Star’s compliance with its obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML/CTF Act). ASIC alleged that failures in Star’s junket oversight and AML/CTF controls exposed Star to foreseeable risks of regulatory investigation, substantial civil penalties and reputational harm. Those concerns raised broader questions about Star’s ongoing suitability as a casino operator.

Officers and the objective standard

Section 180(1) of the Act imposes an objective standard.

In ASIC v Bekier, Lee J affirmed that this standard is contextual and must be applied by considering the facts in their surrounding circumstances, not in isolation.

His Honour observed that the following principles inform the objective assessment:

• The Court considers what a reasonable person in the same role, with the same responsibilities, knowledge and experience, could be expected to have done in the corporation’s circumstances.

• The corporation’s circumstances include its business, size, constitution, board composition, competence of management/advisers and allocation of responsibilities.

• The exercise is forward looking and must be made without the benefit of hindsight.

• An officer’s responsibilities under section 180(1)(b) of the Act include both statutory duties and the responsibilities they in fact held within the corporation.  

• In determining whether a director or officer has contravened s 180(1), the Court balances the foreseeable risk of harm to the company against the expected benefits of the conduct and the burden of taking action. This includes all of the corporation’s interests, not just financial or commercial matters.

• Section 180(1) does not require perfection. A mistake alone does not establish a breach.

Mr Bekier’s failures

As Star’s CEO and managing director, Mr Bekier’s responsibilities included ensuring compliance with applicable legal and regulatory requirements, acting as the key point of contact and facilitating the flow of information between the Star board and executive management team and taking reasonable steps to ensure the board was informed of matters which exposed Star to legal, financial or reputational risk.

He was Star’s most senior manager and reported directly to the Star board. He was also a director of each Star group company that held a casino licence, including Star Sydney.

The Court found that his failures were concentrated around the following key episodes:

1. KPMG Reports: Mr Bekier failed to escalate findings in reports prepared by KPMG that demonstrated real deficiencies in Star’s ML/TF risk assessment processes as to junkets, including lack of substantive inquiries regarding the source of funds or wealth of junket operators or funders.

2. Suncity (2018): In 2018, Star employees reviewing surveillance and CCTV footage of activity in Salon 95 (Suncity’s exclusive VIP gaming room at Star Sydney) identified suspicious cash transactions, including cash for chip exchanges and large withdrawals of cash in bags. Mr Bekier received the Power Email from Star Sydney’s then general counsel, which described evidence that Suncity’s Salon 95 operations posed an ‘unacceptable level of risk’ to Star’s compliance with its legal and regulatory obligations.
   
   Despite this, Mr Bekier did not ensure the Star board was informed of the substance of the Power Email or recommend suspending Star’s business associations with junket operators until adequate probity information was provided. Instead, he relied on colleagues notwithstanding alarming facts had arisen which ought to have awoken his suspicion and provoked independent inquiry.
   
   Suncity (2019): In 2019, Mr Bekier became aware of further adverse information concerning Suncity, including the Hong Kong Jockey Club Report, media reports alleging criminal associations, the NSW Commissioner of Police’s exclusions of Suncity associates and confirmation of Australian law enforcement interest in Suncity. Despite those matters, including information suggesting there was ‘a very high chance that Suncity might be engaged in money laundering, including at Star’s premises’, Mr Bekier did not ensure that the Star board was given a proper account of the significance of the accumulating information or the risks arising from Star’s continued association with Suncity.
   
   Notably, his Honour rejected Mr Bekier’s attempt to characterise responsibility for legal and regulatory risk as falling only within Ms Martin’s remit, holding that a reasonable director[BP1]  in his position would have appreciated that the Star board would expect him to bring matters of this kind to its attention and that Ms Martin did not bear sole responsibility for informing the Star board of matters with potential legal or regulatory significance for the Star group as a whole.

3. CUP (2020): In 2020, NAB forwarded to Star a warning letter from CUP stating that CUP cards were not permitted to be used for gambling-related transactions (CUP 2020 Warning Letter). By that time, Mr Bekier knew that Star had falsely represented the transactions to NAB/CUP as hotel or other non-gaming expenses, when Star had used the CUP process to allow patrons to obtain funds for gambling. Mr Bekier failed to ask for all of Star’s communications with NAB concerning CUP cards or apprise the Star board that Star had provided false or misleading information to its banker.

Ms Martin’s failures

Ms Martin’s responsibilities made her the principal custodian for legal compliance, risk identification and advising both the CEO and the Star board. Her failures similarly unfolded across the following main episodes:

1. Suncity (2018): Ms Martin held alarming information, including the Power Email, cash withdrawals, KPMG findings, evidence of suspicious Salon 95 behaviour) but failed to inform the Star board of legal and regulatory risks stemming from continued associations with Suncity.

2. Suncity (2019): Ms Martin became aware of further adverse information concerning Suncity, including the Hong Kong Jockey Club Report, media reports alleging links between Suncity and organised crime, the NSW Commissioner of Police’s exclusions of Suncity associates and confirmation of Australian law enforcement interest in Suncity. Despite this, she failed to take reasonable steps to ensure that the Star board was properly informed of the seriousness of those matters or the legal, regulatory and reputational risks arising from Star’s continued association with Suncity.

3. CUP: Most egregiously, Ms Martin approved communications to NAB and CUP conveying misleading representations about CUP card usage. On this point, Lee J observed that ‘the sending of a false email by Star to its banker on a topic so central to the operation of the casino, with the knowledge of the operator’s senior lawyer, raises real questions as to suitability.’

Court’s reasons

Lee J found that Mr Bekier and Ms Martin’s failures were not protected commercial judgments, but failures to exercise proper care and oversight in the face of clear legal, regulatory and reputational risks. In a highly regulated casino business, Lee J stressed that directors and officers cannot simply rely on delegation, formal processes or the volume of board materials as an answer to their duties. They must take reasonable steps to guide and monitor management, engage with the information they receive and ensure that serious warning signs are properly escalated.

Lee J rejected Mr Bekiers’ reliance on the business judgment rule in section 180(2) of the Act in relation to the 2018 Suncity allegation. His Honour held that the alleged failure was not properly characterised as a protected business judgment as Mr Bekier had not adequately informed himself about the subject matter of the judgment before failing to act.

Implications for in-house legal counsel

The decision is particularly important for in-house counsel because Lee J rejected a narrow view of Ms Martin’s responsibilities: 

1. Divided responsibilities: Ms Martin sought to characterise her responsibilities as divided between her roles as company secretary and group general counsel and argued that she did not have a direct reporting line to the Star board on matters outside her company secretary role, because she reported to Mr Bekier and he determined what matters were brought to the Star board’s attention. His Honour held that Ms Martin’s responsibilities could not be divided in that way. She was accountable for matters relating to the proper functioning of the Star board, including ensuring that material legal and regulatory risks were appropriately escalated. All directors also had direct access to her for advice.

2. In-house counsel: An in-house lawyer who also holds senior officer or governance roles cannot avoid responsibility by saying that legal or regulatory risks were for the CEO to escalate. Where serious risks are known to the lawyer and may affect the company’s legal compliance, regulatory standing or reputation, the lawyer may have a duty to ensure those risks are brought to the board’s attention.

Penalty judgment

Lee J observed that neither Mr Bekier nor Ms Martin demonstrated genuine insight into their failures. Their penalties were as follows:

• Mr Bekier: six year disqualification and $700,000 pecuniary penalty.   

• Ms Martin: seven year disqualification and $400,000 pecuniary penalty. 

Both were held jointly and severally liable for 45% of ASIC’s costs. 

By comparison, two other former executives (Mr Hawkins and Mr Theodore) admitted liability and received lower penalties and disqualification.

Key takeaways

• Stay actively involved and ask questions: Senior directors and officers need to ask questions, test assumptions and escalate risks when warning signs appear. Taking a passive approach can breach section 180(1), even where there is no personal benefit.

• Role matters: The duty of care and diligence depends on the officer’s actual role and responsibilities. Legal and risk officers, in particular, are expected to act independently, give clear advice and raise issues promptly.

• Delegation is not enough: Officers cannot rely on information overload, formal processes or delegation as an excuse for inaction. If serious risks are known or should be obvious, they must be properly considered and escalated.

• Be accurate and complete: Communications with regulators, banks and the Board must be accurate and not misleading. Partial or incomplete information can create serious legal and reputational consequences.

• How officers respond matters: A genuine acceptance of wrongdoing and insight into what went wrong can affect the penalties imposed by the Court.

ASIC v Bekier demonstrates that governance failures often arise because people do not confront difficult information, not because the information was unavailable.

If you require advice, assistance or training on your responsibilities or governance structure and documents, please contact our Corporate & Commercial team.

Authors: Rebecca Hegarty & Isabella Costa.

This publication is intended as a source of information only. No reader should act on any matter without first obtaining professional advice.