This recent Federal Court decision provides timely guidance on the growing role of artificial intelligence (AI) in boardrooms and the limitations of using technology to satisfy directors’ governance obligations. While AI can enhance decision-making by assisting with information analysis and review, directors remain personally accountable for applying independent judgment and ensuring appropriate oversight of risk. This article considers the key findings of the decision and outlines practical considerations for directors adopting AI tools within their governance frameworks.
Case Study
Early in March 2026, the Federal Court of Australia handed down a decision that every company director should be across in Australian Securities and Investments Commission v Bekier (Liability Judgment) [2026] FCA 196 (ASIC v Bekier & Ors). This landmark case was brought by the Australian Securities and Investments Commission (ASIC) against the CEO, General Counsel, CFO, Chief Casino Officer, Chair and non-executive directors of Star Entertainment Group Limited (Star), alleging breaches of their statutory duty of care and diligence. Star is an ASX-listed casino and entertainment company that operates gaming and hospitality venues across Australia, including The Star Sydney.
Summary of the Court’s key findings
Justice Lee found that several senior officers of Star Entertainment Group had breached their statutory duty of care and diligence under section 180(1) of the Corporations Act 2001 (Cth).
CEO
The CEO was found to have contravened section 180(1) on four occasions by:
- failing to inform the Board of significant issues, including serious deficiencies in Star’s processes for assessing the integrity of junket[1] operators and evidence of suspected money laundering at The Star Sydney; and
- failing to adequately investigate misleading correspondence sent by Star to its principal banker, National Australia Bank (NAB).
General Counsel
The General Counsel was found to have contravened section 180(1) on three occasions by failing to inform the CEO and the Board of:
- suspected money laundering activities occurring within The Star Sydney;
- the potential criminal associations of certain junket operators; and
- misleading correspondence sent to NAB.
CFO and Chief Casino Officer
Before the matter proceeded to judgment, ASIC settled its claims against the CFO and Chief Casino Officer. The Chief Casino Officer was ordered to pay a civil penalty of $180,000 and was disqualified from managing corporations for 18 months. The CFO was ordered to pay a civil penalty of $60,000 and was disqualified for 9 months.
Non-Executive Directors
The Court did not find that the non-executive directors had breached their duties under section 180(1). However, Justice Lee was critical of aspects of the Board’s governance and oversight, particularly its approach to questioning management and supervising key risks.
Key Lessons
Boards must control the information they receive
Justice Lee emphasised that directors must take an active role in ensuring they receive the information necessary to discharge their oversight responsibilities. Boards must “control the information they receive” and take reasonable steps to position themselves to effectively guide and monitor management. Directors cannot simply act as passive recipients of board papers; they are expected to approach information with an “enquiring mind” and critically assess matters brought before them.
Directors must engage with issues and information provided
Justice Lee reiterated that directors cannot discharge their duties through passive reliance on management information. Directors are compensated for their governance role and are expected to engage meaningfully with the information available to them by taking a “diligent and intelligent interest” in the company’s affairs.
While the Court confirmed that boards are responsible for oversight, not operational management, the ability to rely on management does not amount to an ability to disengage. Directors must remain alert to potential risks and, where warning signs arise, ask appropriate questions, seek further information and challenge assumptions where necessary.
The challenge of information overload
Justice Lee also considered a significant feature of contemporary corporate governance: the increasing volume and complexity of board materials. Over recent decades, board packs have expanded considerably, with directors often receiving hundreds of pages of material in preparation for each meeting.
The Court recognised that, in practical terms, no director could reasonably be expected to absorb and critically analyse every page within the time available. Directors must inevitably prioritise their attention, focusing on matters that appear significant and relying on governance systems to ensure that material risks and concerns are appropriately identified and escalated.
The challenge, however, is not merely the quantity of information provided. Board materials often become unnecessarily lengthy because preparers seek to capture every potentially relevant issue, creating a document that may protect the author but does not necessarily support effective decision-making. Excessive information can obscure rather than illuminate the issues requiring board attention.
Effective governance requires board reporting that facilitates understanding and judgment, not simply the transfer of information. Board papers should provide meaningful analysis, context and prioritisation, enabling directors to identify key issues, assess risks and make informed decisions.
AI may assist, but director judgment remains critical
Justice Lee also considered the growing role of technology in supporting board decision-making. Artificial intelligence and other digital tools may assist directors by improving the efficiency of reviewing, analysing and summarising large volumes of information. However, the Court emphasised that technology cannot replace the independent judgment and oversight responsibilities of directors.
Directors remain responsible for understanding the information provided to them, assessing its significance and applying their own judgment to matters affecting the organisation. While technology may enhance the way information is processed and presented, it does not transfer or diminish a director’s obligation to engage meaningfully with that information and make informed decisions.
What does this mean for boards and senior officers
This decision highlights the important responsibilities of senior executives, company officers and directors:
- CEOs must ensure the Board is appropriately informed of material risks. CEOs are expected to provide timely and accurate reporting to the Board and should not allow their own assessment of an issue to displace the need for Board oversight.
- CEOs must understand and have confidence in the systems and processes underpinning decision-making and that they are being correctly followed.
- CEOs must exercise appropriate judgment in prioritising risks. While competing demands are inevitable, CEOs must identify, assess and escalate matters requiring urgent attention and ensure significant risks are not overlooked.
- General Counsels who also act as Company Secretaries must recognise the broader responsibilities attached to their role as a corporate officer. Their obligations extend beyond their legal advisory function and apply across all aspects of their responsibilities within the company.
- The professional obligations of a General Counsel as a solicitor must be aware of their duties as an officer of the company. This includes ensuring material risks are appropriately disclosed and that the Board receives independent legal advice where necessary. A General Counsel is not merely an employee subject to management direction; they retain professional obligations to the company as their client and to the proper administration of justice.
- Non-executive directors should actively scrutinise management information by questioning inconsistencies, challenging assumptions and investigating warning signs, particularly where there are concerns about the completeness or reliability of management reporting.
- Boards must actively shape the information available to them. Effective oversight requires boards to establish reporting structures and governance processes that ensure directors receive relevant, timely and accurate information to enable them to apply an enquiring mind.
[1] A junket is an arrangement where a casino works with a third-party operator to organise gambling trips for groups of players, typically high-value or VIP customers.
Deborah Edo
Associate