ASIC v Bekier: Federal Court imposes $1.1 million in penalties and lengthy disqualification, and costs against former Star Entertainment CEO and General Counsel

The penalty decision

The Federal Court today delivered its judgment on penalties, disqualification and costs in ASIC v Bekier. The Court imposed a pecuniary penalty of $700,000 and a disqualification order of 6 years on Mr Bekier (Star's former CEO) and a pecuniary penalty of $400,000 and a disqualification order of 7 years (unopposed) on Ms Martin (Star's former Group General Counsel, Company Secretary and Chief Legal and Risk Officer). Both were also ordered to pay 45% of ASIC’s costs, jointly and severally. The orders follow the Court’s earlier finding that both contravened their duty of care and diligence under section 180(1) of the Corporations Act 2001 (Cth). Notably, the requirement to pay 45% of ASIC's costs is substantial given that the proceedings involved 11 defendants and were on foot for over 3 years.

As we outlined in our earlier article on the penalties hearing, ASIC had sought a pecuniary penalty of $1.3 million and a disqualification order of 8 years against Mr Bekier, and a pecuniary penalty of $1.1 million and a disqualification order of 7 years against Ms Martin.

The Court ultimately imposed materially lower pecuniary penalties than ASIC sought, principally due to the need to maintain rational parity with the earlier agreed outcomes for Mr Hawkins ($180,000 penalty, 18 months’ disqualification) and Mr Theodore ($60,000 penalty, 9 months’ disqualification). The Court described these outcomes as “objectively generous” and emphasised that the penalties would have been substantially higher, absent those earlier settlements.

A new benchmark for oversight failures

The decision is significant because of the scale of penalties imposed for conduct that was characterised as negligent rather than intentionally dishonest. Penalties of this magnitude have historically been reserved for cases involving heightened levels of misconduct. As Justice Lee observed, corporate governance failures seldom arise because information is entirely absent but rather because "the watchman sees the sword coming and does not blow the trumpet" or because warning signs are insufficiently pursued and obvious questions are left unasked. This judgment sends a stark warning for directors and officers who fail in their oversight obligations, regardless of their motives or honesty.

The key factors in the Court's reasoning included:

• the seniority of the roles occupied: Mr Bekier as Managing Director and CEO, and Ms Martin as the most senior solicitor within the organisation aggravated the seriousness of the conduct;

• the absence of genuine insight or contrition: the Court found that neither defendant demonstrated a developed understanding of why their conduct was wrong, as distinct from regretting the consequences;

• obligations attaching to inherent risks of the business: the Court emphasised that casinos operate under licences conferring extraordinary commercial privileges on the assumption that management will maintain standards of probity equal to the risks inherent in the enterprise; and

• general deterrence: senior executives and legal officers of major corporations must understand that sustained oversight failures, including those in negligence, may attract substantial personal consequences.