Star casinos case: appeal decision a long way off
The corporate regulator is disappointed that its civil case against former non-executive directors of one of Australia’s biggest casino groups has failed, but it is too early to say whether it will appeal.
Former Star Entertainment CEO Matthias Bekier and former general counsel Paula Martin were charged by the Federal Court on Thursday with breaching their duties while leading the embattled casino operator.
Judge Michael Lee said the pair had failed to inform the board of potential risks associated with overseas shows, which included alleged criminal links and false allegations of customers using credit cards for gambling purposes.
But it also found the Australian Securities and Investments Commission had failed to prove Star’s former chairman John O’Neill and six board members had breached the law.
In his 501-page decision, Judge Lee dismissed the allegations against them, but also noted that the board had not actively pressured management after being continually confronted with large amounts of material “that no rational person could consider…at the time available.”
Outgoing ASIC chairman Joe Longo acknowledged on Friday that boards being inundated with documents was a real problem, despite boards being those who ultimately control how information is presented to them.
“This is something that I think Australian boards are still grappling with,” Mr Longo told a federal parliamentary committee at a privileged hearing.
“Most executives I talk to at large corporations complain about the volume of material they are expected to deliver at each board meeting.”
Earlier, Mr Longo had admitted under questioning that the outcome of the case may not have met society’s expectations (aka pub testing) but the regulator accepted the decision.
“The standards of evidence and process are high in these matters,” he told the hearing in Sydney.
He emphasized that managers’ right to remain silent in civil criminal cases is legal. None of the seven Star board members sued were required to enter a defense.
Asked whether ASIC would appeal, Mr Longo insisted the regulator did not know at this stage, given the court still needed to make further decisions.
“We will just follow our normal process and consider this decision carefully,” he said.
“But I want to emphasize that… we are a long way from that.”
Mr Longo said the Australian Institute of Company Directors, whom he will meet on Tuesday, had taken note of the findings.
In the Star case, 2 of the 11 people sued settled, it was determined that 2 of them violated the law, and the remaining 7 people did not violate the law.
“There is no doubt that it was the right thing to initiate the trial,” Mr. Longo said.
