Lawsuit Targets Former SkyCity Executives Over AUSTRAC Penalty
Legal Action Against Former SkyCity Executives
A shareholder has initiated a lawsuit against eight former senior executives of SkyCity Entertainment Group. The legal action aims to recover the AU$67 million penalty imposed on the casino company for failing to meet anti-money laundering obligations.
Details of the Shareholder Lawsuit
Stephen Wright, the shareholder behind the lawsuit, has filed an application with the New South Wales Supreme Court to proceed with a statutory derivative action against the ex-executives and board members of SkyCity. If the court approves the case, any compensation awarded would be returned to SkyCity after deducting legal costs. The claim alleges that these individuals breached their duties by failing to act with care, diligence, and good faith in the company’s best interest during the period from December 7, 2016, to December 14, 2022. The penalty was issued following a Federal Court ruling that SkyCity violated anti-money laundering and counter-terrorism financing laws, with the fine being handed down by AUSTRAC, Australia’s financial crime regulator.
Executives Named in the Litigation
The lawsuit identifies several former top executives, including ex-CEOs Graeme Stephens and Michael Ahearne, former deputy chair Bruce Carter, and other key leaders responsible for legal, compliance, and regulatory affairs within the company. The claim ties the AU$67 million fine to compliance breaches that occurred under their leadership.
Bruce Carter, who previously chaired the board’s audit and risk committee and has also served as a director at Crown Resorts, currently leads Australia’s national submarine manufacturer, ASC. Other defendants reportedly include former general counsel Peter Treacy, ex-company secretary Joanna Wong, former regulatory affairs manager Phillip O’Connell, ex-head of legal and compliance Juliet Fletcher, as well as non-executive director Jennifer Owen, who once led the audit and risk committee.
Background of the Compliance Breach
The hefty fine resulted from persistent anti-money laundering deficiencies specifically at SkyCity’s Adelaide casino. AUSTRAC found that the company failed to uphold consistent and adequate customer due diligence procedures. An independent review of operations in Adelaide was paused pending court decisions on the penalty but is expected to conclude by May this year.
Funding and Implications of the Case
The litigation is financially backed by Litigation Capital Management (LCM) and overseen by the law firm King & Wood Mallesons. LCM highlighted that the funding structure ensures SkyCity does not bear any costs. However, the funding model, where financiers take a share of any settlement, faces criticism for potentially reducing total recoveries. This shareholder-driven lawsuit exemplifies a growing trend of increased accountability and regulatory enforcement in the gaming and financial industries, with stakeholders using legal avenues to hold executives and directors responsible for past compliance shortcomings.