ASIC v Bekier: red flags, risk and directors’ duties

Ben Sewell has recently published an article in the Law Society Journal on ASIC v Bekier, one of the most important directors’ duties decisions in recent years.

The case concerns Star Entertainment Group and the way senior management and the board responded to serious money-laundering by junket operators. The Federal Court found that Star’s CEO and general counsel breached their statutory duty of care and diligence under s 180(1) of the Corporations Act 2001.

The decision is significant because it shows directors and officers the importance of AML/CTF compliance to the Courts. It is also significant because the non-executive directors were criticized but not sanctioned for breach of their duties as directors. The decision confirms that boards may generally rely on what they are told by management.

The case is also important for in-house lawyers and company secretaries. A lawyer who holds an executive or officer role may be judged by reference to all of the responsibilities attached to that position. Wearing multiple hats does not reduce the scope of the duty. The inhouse lawyer taking on the role of company secretary exposed them to all the officer duties under the Corporations Act.

Ben’s article considers the factual background, the findings against the CEO and general counsel, the position of the non-executive directors, and the practical governance lessons for boards.

Read the full article in the Law Society Journal: ASIC v Bekier: red flags, risk and directors’ duties. https://lsj.com.au/articles/asic-v-bekier-red-flags-risk-and-directors-duties/