The Federal Court's landmark ASIC v Bekier decision puts executives on notice: ignorance is no defence when red flags are in plain sight
A 500-page Federal Court judgment handed down has sent a sharp reminder to boardrooms across Australia: senior executives who sit on material risk rather than escalate it do so at their legal peril.
In March, Justice Lee of the Federal Court delivered the decision in ASIC v Bekier & Ors – a landmark case brought by ASIC alleging breach of duty by the CEO, General Counsel, CFO, chief casino officer, the chair of the board, and all non-executive directors of Star Entertainment Group Limited.
The Court found that former CEO Matthias Bekier and former Chief Legal and Risk Officer Paula Martin contravened section 180 of the Corporations Act 2001 by breaching their duties to Star. ASIC's case against the seven former non-executive directors was dismissed.
For Holding Redlich partner Jessica Tilbury and special counsel Daniel Fullerton, the decision is significant not because it breaks new legal ground, but because of what it demonstrates in practice.
The pair noted that while the case did not alter the existing legal standard, it powerfully illustrated how that standard applies to directors of companies operating in high-risk industries.
At the heart of the judgment is an unambiguous finding about the obligations of executive directors. As the most senior member of executive management, Bekier had a...
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