By: Yen Seah and Bella Marazita

ASIC v Bekier (Liability Judgment) [2026] FCA 196

If you read nothing else, read this:

The Federal Court’s 500-page liability judgment in ASIC v Bekier delivers a clear message for directors and officers: passive oversight is not enough.

• Executives must escalate serious risks – failing to act on red flags can breach s 180(1)
• Non-executive directors may rely on management but must actively interrogate information
• In high-risk industries, the expected standard of care may be assessed higher by a Court
• Information overload or dual roles do not reduce responsibility

In an era of information overload, heightened regulatory scrutiny and increasingly complex risk environments, the judgment is a timely (and comprehensive) reminder about what the duty to exercise reasonable care and diligence demands in a contemporary context.

What happened

ASIC brought civil penalty proceedings against former directors and officers of The Star Entertainment Group Limited in relation to the casino’s handling of money laundering risks. Specifically, ASIC alleged each director and officer contravened s 180(1) of the Corporations Act, which relevantly provides that a director or officer must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person in an equivalent position would exercise.

Star’s former CEO and Group General Counsel were alleged to have failed to act on information and ensure that the board was informed of material information in their possession giving rise to serious regulatory risk. By contrast, the non‑executive directors were alleged to have failed to appreciate that the information provided to them was inadequate, and failed to make further enquiries to address those deficiencies and act as stewards overseeing Star’s management of risk.

Justice Lee ultimately found:

1. Former CEO and executive director Matthias Bekier and former Group General Counsel and Company Secretary Paula Martin breached s 180(1) of the Corporations Act. 
   • Mr Bekier failed to respond appropriately to information giving rise to serious and foreseeable legal and regulatory risks and failed to ensure the board was properly informed.
   • Ms Martin failed to ensure that material risks were brought to the board’s attention and permitted misleading communications to be sent to Star’s bank, NAB, concerning money laundering risks.
2. The case against the former nonexecutive directors, including the Chairman, failed.
   • The non-executive directors were not presented with facts or circumstances that would have awoken the suspicion of a prudent director or otherwise denied them the ability to rely on management. As such, there was nothing to give rise to any duty to enquire further.

Justice Lee was critical of the way ASIC pleaded its case, particularly the tension between ASIC alleging that executives failed to properly inform the board of certain material risks, while at the same time alleging the non-executive directors failed to enquire based on information that was also said to be inadequate.

While ASIC was defeated in relation to the non-executive directors, its Chairman Joe Longo has stated that it will continue to require directors and executives to meet the highest standards of corporate governance, and that there is nothing in the judgment that would be considered a “relaxation”. ASIC has not yet confirmed whether it will appeal.

The case has otherwise been adjourned for the determination of penalties, including potential pecuniary penalties and disqualification orders.

In addition to the ASIC proceeding, Star is also the subject of a shareholder class action and a civil penalty proceeding issued by AUSTRAC. All of these were issued following extensive media coverage and a series of regulatory and independent inquiries into Star’s handling of money laundering risks, including the Bell Review and Bergin Inquiry.

Key takeaways

Despite ASIC’s partial defeat, the judgment serves as a sobering reminder that all directors, whether executive or non-executive, and company officers at large, are required to take reasonable steps to place themselves in a position to guide and monitor the management of the company. The Court summed it up eloquently:

“Times have changed. Toleration of the languid, listless indifference of gentleman directors of the Victorian and Edwardian ages is a thing of the past. The law now expects significantly more of officers of a corporation in discharging their duties and when delegating to others.”

So, how can directors and officers ensure they are properly discharging their duties where the law expects “significantly more” of them? The judgment provides several practical reminders.

Executives are responsible for escalation to the board

Executive directors and officers carry a primary responsibility for recognising and escalating material risks to the board. The Court rejected the notion that executives could avoid responsibility by relying on delegation or organisational structures. Where facts arise that expose the company to serious and foreseeable risk, a failure to act, including a failure to escalate, is not acceptable. The judgment makes clear that inaction in the continuation of risk can constitute a failure to exercise reasonable care and diligence.

Practically speaking, these responsibilities reflect executives’ positions inside the business, as compared with non-executive directors who typically do not engage in the day-to-day management of the company. Non-executive directors are not expected to have the same knowledge of the company’s operational activities as executive directors and are therefore broadly entitled to rely upon management to bring issues to their attention. The Court will have regard to what a reasonable director or officer, acting in the corporation’s specific circumstances, would have done, and that test is applied to each individual director.

So, what does escalation actually look like? Executives should not wait for perfect information, formal requests from the board or final reports before escalating emerging risks, particularly if they are operating in a high-risk environment (like Star was). Early escalation allows the board, including its non‑executive directors, to engage, exercise judgment and make further enquiries in real time.

No uniform standard for non-executive directors, but they need to engage actively

There is no objective standard of a reasonably competent non-executive director. As the Court noted, “the diversity of corporations and the variety of business endeavours undertaken by them are such that uniformity of standards is only possibly for very general matters”.

However, the Court emphasised that non-executive directors are not just “tokens or glittering prizes decorating a CV” and that the job requires intelligent people prepared to engage actively, including by a willingness to interrogate, to probe, and, where necessary, to challenge materials presented to them.

In this case, the non‑executive directors were not found liable because ASIC failed to show that the information they received was sufficient to displace their reliance on management or to put a reasonable director on notice that further enquiry was required. In practical terms, the Court was not persuaded that the information before the non‑executive directors was enough to require them to go digging further. The Court reaffirmed that non-executive directors are entitled to rely upon management to bring to their attention any problems or irregularities as to operational issues, “unless there is reason to believe that management is not honest, trustworthy or competent”. Ultimately, the materials provided to the non-executive directors were not sufficient to have triggered enquiry and/or intervention in relation to Star’s risks in failing to comply with certain casino obligations.

Context matters – inaction is less likely to be reasonable in a high-risk environment

The Court emphasised that Star’s casino operates in an industry inherently exposed to money laundering, organised crime and regulatory risk, and subject to intense statutory oversight. As such, the foreseeable risks of inaction in such an environment – including regulatory investigation, licence jeopardy, civil penalties and reputational harm – were particularly serious and formed part of the relevant context to the Court’s assessment of the reasonableness of the directors’ conduct.

In other words, the context or industry in which a director or officer operates is a critical input into how the scope of their duty will be assessed. In Star’s case, the red flags arose in a high-risk environment. As a result, it was less reasonable for the executives who were on notice of those risks to fail to escalate them.

Some contextual factors a Court may take into account when assessing whether a director or officer has exercised reasonable care and diligence include: the size and nature of the business, the competence of management, the status of the company as a listed or unlisted entity, any breach or potential breach of law by the company, responsibilities the director or officer may have within the company, regardless of how those responsibilities may be imposed, and the nature and magnitude of the risk of harm and the degree of probability of its occurrence against potential benefits that could accrue, including the difficulty and inconvenience of taking alleviating action.

Wearing multiple hats is not a defence, and does not dilute responsibility

Ms Martin asserted that there was a distinction between her duties and responsibilities undertaken in the capacity of Company Secretary and Group General Counsel. For example, she asserted that her responsibilities as Company Secretary were only of an administrative nature, and as Group General Counsel, she did not have a direct reporting line to the Board on matters unrelated to her role as Company Secretary. The Court rejected the suggestion that her responsibilities could be divided neatly between her role as Group General Counsel on the one hand and Company Secretary on the other, or that the latter role could be treated as purely advisory or administrative.

Rather, the Court reaffirmed (citing High Court authority) that there should not be a division of duties and responsibilities between the two positions because there was overlap in the responsibilities, and, for the purposes of s 180(1), the distinction was irrelevant because Ms Martin (as an officer) was assessed against the standard of a reasonable person performing all of her duties and responsibilities, rather than by reference to a specific or delineated role. The Court found, clearly, that Ms Martin owed her statutory duties in all capacities to Star, the company, and in failing to escalate material risks to the board (amongst other things) she breached s 180(1).

In practical terms, holding dual roles may therefore increase, rather than dilute, the scope of responsibility. Where responsibilities overlap in substance, knowledge acquired in one capacity cannot be ignored in another, and the statutory duty under s 180(1) is assessed by reference to all responsibilities undertaken.

A chairperson’s primary function is to exercise procedural control

Although ASIC failed to establish a breach by the Chairman (one of the non-executive directors sued) the judgment provides a useful reminder about the role. The Court reaffirmed that a chairperson has “no power or authority to manage the corporation” and that their “primary function is to preside at board meetings and accordingly to exercise procedural control”. It also reaffirmed that a chairperson has the same legal authority as an ordinary director, but from a governance perspective, may carry greater practical responsibilities for matters such managing board process and performance, facilitating effective and harmonious relations between directors and management and ensuring that the board is properly equipped to set and implement an appropriate corporate governance framework.

Information flow, volume of board packs and AI

One of the tenets of the non-executive directors’ defences was that certain information was “buried” within voluminous board packs. Although the Court recognised the reality of “Brobdingnagian” electronic document dumps masquerading as board packs, it rejected the proposition that the sheer volume of information provided to directors could excuse a lack of engagement. Boards are expected to control the information they receive, and directors must be furnished with information in a form that is both comprehensive and capable of proper digestion. Directors are required to read, engage with and interrogate the material provided to them. Information overload, of itself, will not lower the standard of care or displace the obligation to exercise judgment.

By way of obiter, and in the specific context of managing the common problem of information overload, the Court acknowledged that AI tools may be used to assist directors in dealing with large volumes of material and referred to a current article published by the Australian Institute of Company Directors on the topic.¹ However, while AI may assist, it was made clear that it does not substitute careful reading, interrogation and exercise of human judgement and does not displace the personal responsibility by directors and officers to discharge their duties. The Court’s comments about the use of AI were cautionary, not promotional.

But – s180(1) does not demand omniscience or impose a standard of perfection

Ultimately, however, the Court was careful to emphasise that the case was not a “freewheeling inquiry” into Star board’s discharge of its duties and rather, that ASIC bore a heavy persuasive onus of proof to properly articulate, and meet, its case.

The Court also emphasised that the issues in the case did not turn upon any novelty in legal principle, and rather, on well settled principles. Put simply, directors are required to take reasonable steps to place themselves in a position to guide and monitor the management of the company and take a diligent and intelligent interest in the information available to them. In this context, the Court affirmed that s 180(1) does not impose a standard of perfection, and making a mistake does not in itself demonstrate a lack of due care and diligence.

Bottom line

For directors and officers, the case functions less as a source of new legal principle and more as a case study in the application of well‑established duties – and a cautionary illustration of how seriously matters can unravel when those duties are not met. That said, the Court’s observations on information overload and the use of AI, together with its emphasis on recognising when the risk environment may elevate how the standard of care is applied, place s 180(1) in a distinctly modern and practical context, and warrant careful attention.

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