Federal Court’s $1.1M Penalty Message to Directors: What the Star Entertainment Ruling Means for You

On 17 June 2026, the Federal Court delivered its penalty judgment in Australian Securities and Investments Commission v Bekier [2026] FCA 756. Two former senior executives of The Star Entertainment Group were ordered to pay $1.1 million in combined penalties and disqualified from managing corporations for a combined 13 years — for negligent governance failures, not fraud. If you hold any position of management or oversight in an Australian company, this decision matters to you.

What Happened: The Star Entertainment Case in Brief

ASIC commenced civil penalty proceedings in December 2022 against 11 former directors and officers of The Star Entertainment Group Limited — operator of major casinos in Sydney and Queensland — for alleged breaches of the statutory duty of care and diligence under section 180(1) of the Corporations Act 2001 (Cth).

The central allegations: Star’s management failed to properly identify, escalate and manage serious risks associated with money laundering and criminal activity connected to gambling junket operators. ASIC alleged that senior executives either knew about these risks and failed to act, or failed to put themselves in a position to know.

On 5 March 2026, the Federal Court (Lee J) delivered its liability judgment, finding two executives had breached their duties:

• Mathias Bekier — former CEO and Managing Director. Found to have breached s180(1) on four occasions.
• Paula Martin — former General Counsel, Company Secretary, and Chief Legal and Risk Officer. Found to have breached s180(1) on three occasions.

The Court dismissed ASIC’s case against the seven former non-executive directors, finding they had not breached their duties. (For the implications of that finding, see our earlier analysis on director duties at Boss Lawyers.)

On 17 June 2026 — the penalty judgment — the Court imposed the following orders:

Executive	Role	Pecuniary Penalty	Disqualification
Mathias Bekier	CEO / Managing Director	$700,000	6 years
Paula Martin	GC / Company Secretary / CLRO	$400,000	7 years

Both were also ordered to pay 45% of ASIC’s legal costs — a substantial additional liability given the proceedings ran for over three years with 11 defendants.

What the Court Found: The Legal Principles

Section 180(1) of the Corporations Act 2001 (Cth) requires every director and officer to exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they held the same office, had the same responsibilities, and operated in the same circumstances.

This is an objective, not subjective, standard. “I didn’t know” is only a defence if a reasonable person in your position would not have known either.

In respect of Bekier, Justice Lee found:

“Senior executives of casino operators, and public companies conducting enterprises pregnant with risks more broadly, must understand that failures of the kind established by the contraventions may attract substantial personal consequences.”

In respect of Martin — who was simultaneously the most senior lawyer, the Company Secretary, and the Chief Risk Officer — Justice Lee was particularly pointed:

“The community is entitled to expect that a solicitor occupying such positions and having such responsibilities, within one of Australia’s largest casino operators, will display professional independence, accuracy and judgment of a high order. The conduct established … represented a very serious departure from those standards.”

And perhaps the judgment’s most quoted line on corporate governance:

“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.”

A New Benchmark: Negligence Is Enough for a 7-Year Ban

This is the aspect of the judgment every director and senior officer in Australia needs to understand.

Neither Bekier nor Martin was found to have acted dishonestly, fraudulently, or with intent to harm the company. The contraventions were characterised as negligent governance failures — failures of oversight, escalation, and judgment. Yet the penalties imposed rival those historically reserved for deliberate misconduct.

The key aggravating factors the Court identified:

• Seniority of role: Both respondents held positions of elevated responsibility with direct access to information about the risks. The higher the role, the higher the standard.
• Absence of genuine insight: Neither respondent demonstrated a developed understanding of why their conduct was wrong — as distinct from regretting the consequences. Courts expect genuine contrition, not just regret about the outcome.
• Obligations attached to inherent business risk: Companies operating under regulatory licences accept obligations commensurate with those privileges. Those in charge carry the responsibility of the licence.
• General deterrence: The Court was explicit that the penalties were designed to send a clear message to all senior executives of listed companies — and beyond.

What This Means for Directors and Officers in Queensland and Australia

Section 180(1) applies to every director and officer of every company registered under the Corporations Act — not just ASX-listed companies or casinos. The duty applies to the director of a private company in Brisbane just as much as it applies to the CEO of a $3 billion casino operator.

Risk escalation is a legal obligation, not a management choice

If you become aware of a risk — financial, regulatory, compliance, reputational, or legal — and you fail to escalate it appropriately (to your board, co-directors, or advisers), you are potentially in breach of s180(1). The “watchman sees the sword” principle applies to every director who sees a red flag and does nothing.

Your role title compounds your liability

Paula Martin was held to a higher standard precisely because she simultaneously held legal, risk, and compliance responsibilities. If you combine senior management with legal, financial, governance, or risk functions — as many directors of private companies do — your obligation to identify and address risks is correspondingly higher.

Honest but negligent governance is still a breach

If you were genuinely trying to do the right thing but made poor judgments — failed to ask hard questions, failed to follow up on warning signs, or failed to put the board on notice about serious matters — you can still be found to have breached s180(1). No dishonest intent is required.

ASIC is actively enforcing directors’ duties in 2026

ASIC has confirmed that its 2026 enforcement priorities include a continued focus on governance and directors’ duties failures. The regulator has doubled new investigations. The Star Entertainment judgment gives ASIC a powerful precedent. This is not a theoretical risk — it is an active enforcement landscape.

Five Action Points for Directors and Officers Now

1. Review your risk escalation processes. Do you have a clear, documented process for escalating material risks to the board? Is it being followed? Does everyone who carries risk or compliance responsibilities know their obligation to escalate?
2. Ensure board papers reflect reality. A board that never sees bad news may itself have a governance problem. An ASIC investigation will examine what was and was not disclosed to the board.
3. Document your decisions and your reasoning. If you consider a risk and decide it does not require escalation, document that reasoning contemporaneously. If ASIC later investigates, you will need to demonstrate your basis for that judgment at the time.
4. Understand the specific obligations attached to your role. If you hold multiple functions, seek advice about how each role’s obligations interact. You cannot compartmentalise liability.
5. If you are aware of a risk that may constitute a breach of law or serious financial exposure: take advice immediately. Delaying or hoping a problem resolves itself is precisely the pattern the Court criticised. The sword was visible long before it arrived.

How Boss Lawyers Can Help

We regularly act for directors, company officers, and shareholders facing governance investigations, ASIC inquiries, or disputes about the exercise of powers and duties. We also act for companies and shareholders who need to take action against a director or officer who has breached their obligations.

If you have received a notice from ASIC, become aware of a governance issue in your company, are in dispute with a co-director, or simply want to understand your personal exposure as a director, contact Boss Lawyers.

For strategic commercial legal advice, call Mark Harley on 1300 267 711 or visit our office at Level 27, Santos Place, 32 Turbot Street, Brisbane QLD 4000.

Learn more: Director Disputes → | Commercial Litigation →

Frequently Asked Questions

What is section 180 of the Corporations Act and who does it apply to?

Section 180(1) of the Corporations Act 2001 (Cth) imposes a statutory duty of care and diligence on every director and officer of an Australian company. It requires them to exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person in that position would exercise. The duty applies to all companies registered under the Act — public and private, listed and unlisted. Breach can result in civil penalties and disqualification from managing corporations.

Can a director be disqualified for negligence alone — without dishonest conduct?

Yes. The Star Entertainment penalty judgment confirms that a director or officer can be disqualified for multiple years for negligent governance failures, without any finding of dishonesty or fraud. The duty under s180(1) is breached by negligence: failing to apply the care and diligence that a reasonable person would apply in the same role and circumstances.

Does this ruling affect directors of small private companies in Queensland?

Yes. Section 180(1) applies to the director of a private company with two shareholders just as much as it applies to the CEO of a billion-dollar listed company. The dollar amounts and profile in Star Entertainment were influenced by the scale of the company — but the legal principles about risk escalation, board oversight, and the duty of care and diligence apply equally to every director in Queensland and Australia.

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This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances. Prepared by Mark Harley, Principal Solicitor, Boss Lawyers Pty Ltd (ACN 143 136 645). Current as at 30 June 2026.