Former SkyCity executives face investor legal action over AUSTRAC breaches
Shareholder seeks compensation for AU$67m (US$44.89m) penalty in director lawsuit.
Key points:
– Eight former SkyCity leaders face legal action linked to compliance failures
– Investor Stephen Wright files court application for derivative claim
– Case follows AU$67m fine imposed by AUSTRAC over money laundering breaches
A group of eight former directors and senior officers at SkyCity Entertainment are being targeted in a legal action filed by a shareholder seeking to recover the AU$67m penalty the casino operator paid for failing anti-money laundering obligations. As reported by Australian Financial Review, the case centres on compliance breaches revealed during AUSTRAC’s investigation into SkyCity’s Adelaide operations.
Investor Stephen Wright has lodged an application in the NSW Supreme Court for approval to pursue a statutory derivative action on behalf of the company, claiming that the former executives failed in their duty of care, diligence and good faith during their tenure from December 2016 to December 2022.
Good to know: The lawsuit is structured so any awarded compensation, after legal fees, would go directly to SkyCity rather than the shareholder
The defendants include former CEOs Graeme Stephens and Michael Ahearne, ex-Deputy Chair Bruce Carter, and several former legal and compliance heads. The legal submission argues these individuals either oversaw or contributed to regulatory failings that resulted in the record fine issued last year.
The action comes amid increasing investor scrutiny of corporate governance in the gambling sector, following similar enforcement actions against Crown and Star Entertainment. Both companies have faced major penalties over similar breaches, while Star has warned that another large fine could threaten its financial viability.
King & Wood Mallesons is representing Wright, with the case funded by Litigation Capital Management. Although SkyCity is not responsible for legal costs, litigation funders have attracted attention for the share of court proceeds they typically claim. Wright’s case is still in its preliminary stage, and no defence has yet been filed.
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