In a major ruling on Thursday, the Federal Court declared former Star chief executive Matthias Bekier failed to pass on details of suspicious conduct committed by Chinese junket operator staff in 2018 and 2019.
That included money being delivered to the service desk in blue cooler bags and junket staff hiding under blankets to stay out of the view of CCTV cameras.
Mr Bekier should have suggested that Suncity's contract be terminated but he did not, Justice Michael Lee wrote in a 501-page decision published on Thursday.
"The warning signals were flashing, the alarm bells were ringing," the judge wrote.
"Mr Bekier ought to have ensured that the board was apprised of all the matters relating to Suncity."
The then-boss also "well knew" Star had provided false or misleading answers to lender National Australia Bank in 2020 about concerns gamblers were using their China UnionPay cards for gambling, which was prohibited by the foreign card scheme.
A Star email to NAB and China UnionPay falsely claimed the cards were being used for "non-gambling purposes" only.
"The 'culture' that prevailed (at Star) was so dysfunctional and unethical that senior management was tardy in preventing junket operators from behaving inappropriately and lied to its bankers to secure an ongoing commercial advantage," Justice Lee said.
Both Mr Bekier and Star's former company secretary and general counsel Paula Martin breached corporation law by failing to disclose the Suncity and China UnionPay risks to the board, the judge found.
The decision marks a partial win for the Australian Securities and Investments Commission, which brought the lawsuit against Mr Bekier, Ms Martin and nine other executive and non-executive directors in 2022.
Former chief casino officer Greg Hawkins settled the case in February 2025, agreeing that he failed to pass on information about Suncity's conduct.
He paid $180,000 in penalties, $65,000 in ASIC's legal costs and was banned from managing corporations for 18 months.
At the same time, former chief financial officer Harry Theodore agreed to pay a penalty of $60,000 and was banned from managing corporations for nine months.
He did not prevent the casino from falsely emailing NAB and CUP about the use of its credit cards by Chinese gamblers.
On Thursday, Justice Lee dismissed ASIC's case against ex-Star board members John O'Neill, Wallace Sheppard, Kathleen Lahey, Gerard Bradley, Sally Pitkin, Benjamin Heap and Zlatko Todorcevski.
The law did not require board members to have omniscience in knowing everything management was doing, the judge said.
A hearing on penalties and banning orders for Mr Bekier and Ms Martin will occur on a later date.
A spokesperson for Star declined to comment.
