ASIC Goes After Star Entertainment Executives
The Australian Securities and Investments Commission (ASIC) launched civil proceedings against 11 former and current executives and directors of casino games giant Star Entertainment Group. The ASIC seeks heavy penalties for what it describes as alleged breaches of the Corporations Act. Also, failures to properly oversee anti-money laundering protocols. Each of the 11 executives faces fines of up to $1,050,000 for each breach. In addition to the fines, the ASIC seeks directorship disqualifications. There are 48 breaches in total.
The 164-page statement of claim ASIC submitted names the likes of former chairman John O’Neill and former CEO Matt Bekier. Katie Lahey and chairman Ben Heap are the only active directors the statement names.
Star Entertainment released a statement to the Australian Securities Exchange on Monday. ASX-listed companies, including real money casinos, submit statements that could affect its share price.
“Mr Ben Heap and Ms Katie Lahey are the current directors subject to these proceedings. They have supported The Star’s Board renewal plans announced earlier this year and will step down once additional directors are appointed and appropriate transition arrangements are in place. This process is expected to be finalised in the early part of 2023. It is designed to ensure the company maintains a sufficient number of independent directors at this critical juncture.”
Mr Heap and Ms Lahey are contesting the charges. Mr Heap explained the reasons for him and Ms Lahey stepping down.
“Ms Lahey and I intend to contest the ASIC allegations, but to remain on the Board beyond the transitional period would be a distraction to the company when remediation needs to be our unwavering focus. A search is currently underway for new directors.”
Ms Lahey Leaves on December 30, 2022
Star announced the departure date for Ms Lahey. The under-fire executive leaves her post on December 30, 2022. Chairman Heap thanked Ms Lahey for her efforts while working for Star.
“Katie has made a significant contribution as Director of The Star for the past nine years, including as Chair of the people, Remuneration, and Social Responsibility Committee. The Board thanks Katie for her dedication to the role and wishes her well in her future endeavours.”
Star gained a new director on the same day the company announced Ms Lahey’s official departure. David Foster joins the company with immediate effect. Star first announced Foster’s appointment on August 15, 2022. However, his appointment was subject to regulatory approval. Regulators approved Foster, and he is now an Independent Non-Executive Director.
“We also welcome David to the Board. He brings a breadth of experience, in addition to his highly relevant expertise, that will be instrumental as The Star seeks to return to suitability in Queensland and NSW,” said Mr Heap.
ASIC Seeks Heavy Penalties
ASIC deputy chair Sarah Court spoke about how the regulator is pressing for the most severe financial penalties in addition to disqualifying the 11 executives from holding current or future directorships.
“One of the challenges with asserting culpability in big companies is that it can be hard to work out who made which decision. After a long investigation, we allege it is appropriate these individuals are held to account, and we call for pecuniary penalties and disqualifications to be imposed on those individuals for their failures to exercise their duty of care.”
Former CEO Matt Bekier stands accused of seven breaches, with a combined maximum penalty of $7.35 million. Several others, including Ms Lahey, face allegations of six breaches, with potential fines of $6.3 million, whereas Mr Heap faces a $2.1 million fine if found guilty of his two alleged breaches.
Public inquiries discovered excess of $12 billion of Star’s turnover between 2018-19 came from Suncity junkets. Star continued using its services even though it was are of the junket’s ties to organised crime. The ASIC alleges the named executives did not address the anti-money laundering risks of dealing with Suncity. Furthermore, the executives allegedly turned a blind eye even when the junket’s criminal links became known. The junkets brought in wealthy Chinese VIPs that spent vast sums playing high-stakes baccarat. Those VIPs spent fortunes at the casino, however, Star hid gambling expenses as legitimate hotel bills. Furthermore, Star facilitated casino deposit methods away from the traditional cage, which allowed VIPs to circumnavigate China’s strict currency rules.
