The former group general counsel of Australia’s Star Entertainment Group has appealed Federal Court findings that she breached the Corporations Act by failing to properly address money laundering risks linked to the casino operator’s former junket partner, Suncity.
Paula Martin, who served as Star’s group general counsel, company secretary and chief legal and risk officer, is seeking to overturn findings made by Justice Michael Lee that she failed to adequately inform the company’s board about money laundering risks associated with Suncity, as well as issues surrounding the misuse of China UnionPay (CUP) bank cards for gambling transactions. Justice Lee in June imposed a seven-year ban preventing Martin from managing corporations and ordered her to pay a civil penalty of AU$400,000 ($283,000).
In his judgment, Justice Lee said Martin could not separate her responsibilities as group general counsel from those of company secretary, noting that she reported directly to the board, attended most board meetings and was responsible for providing legal advice to ensure the company’s operations complied with applicable laws and regulations.
The court found that, given her position, a reasonable officer would have informed Star’s board about the money laundering concerns surrounding Suncity and the issues involving the use of CUP cards, which were prohibited for gambling transactions.
According to appeal documents filed with the Federal Court, Martin argues Justice Lee erred in concluding that she had a legal duty to raise those matters directly with the board. She is seeking to have the proceedings dismissed and has also requested that the Australian Securities and Investments Commission (ASIC) be ordered to pay the legal costs of both the original proceedings and the appeal.
Alternatively, Martin has asked the court to set aside some of the declarations made against her and reconsider both the financial penalty and the length of her management disqualification.
During the original proceedings, ASIC had sought a civil penalty of AU$700,000 ($495,000), although Justice Lee ultimately imposed the lower AU$400,000 ($283,000) penalty.
Former Star managing director and CEO Mathias Bekier has also appealed the Federal Court’s findings against him. Bekier’s appeal includes 11 grounds, arguing that Justice Lee wrongly rejected parts of his evidence regarding the steps he took to address money laundering risks.
He also disputes findings that he should have requested copies of all communications between Star and National Australia Bank concerning CUP transactions following a warning letter received in 2020.
If the liability findings are upheld, Bekier has also challenged the penalties imposed, arguing the court failed to properly consider penalties handed to other former Star executives when determining his sanction.
The appeals represent the latest legal proceedings stemming from regulatory action against Star following multiple inquiries into the casino operator’s anti-money laundering controls, governance failures and relationships with high-risk international junket operators, including Suncity.
In March, Justice Lee found Martin and Bekier had breached their duties under the Corporations Act by failing to adequately respond to known money laundering risks associated with Suncity and CUP transactions.
In June, the court imposed a six-year disqualification and AU$700,000 ($495,000) civil penalty on Bekier, while Martin received a seven-year disqualification and AU$400,000 ($283,000) penalty.
