The Federal Court’s liability judgment in ASIC v Bekier has prompted more direct questions from governance practitioners and board members than any case I can recall in recent years. The question I have heard most consistently is not about the legal implications — good governance lawyers are across those. It is a more uncomfortable question.
We read the judgment. We recognised the patterns. What do we actually do with that?
This article answers that question directly. The Osmic Governance Architecture™ provides the organising framework for each of the five points that follow — not as a checklist, but as a diagnostic lens for identifying where the real governance risk in your organisation actually lives. Not with another framework diagram or a list of policy recommendations — there are enough of those. With five concrete actions a board can take in the next 90 days that address the behavioural governance failures the Star case exposed.
First — Understand What Type of Failure You Are Actually Looking For
The instinct after a judgment like this is to review policies. Update the escalation framework. Refresh the risk appetite statement. Brief the audit committee.
These are not wrong responses. But they address the wrong layer of the problem.
The Star failure was not a policy failure. Star had escalation policies. It had compliance frameworks. It had committee structures that would satisfy any governance checklist. What it did not have — or what progressively eroded — was the behavioural capacity to make those structures function under pressure.
The Osmic Governance Architecture™ identifies three drivers that determine whether governance actually holds: Leadership Character, Strategic Judgment, and Governance Architecture. The Star case is a forensic illustration of all three failing simultaneously. Bekier and Martin had inadequate character and judgment. The architecture — the escalation pathway — failed because the people responsible for operating it chose not to.
Before your board does anything else, it needs to be honest about which of these three drivers is the actual risk in your organisation. Because the intervention that addresses a character problem looks very different from the intervention that addresses an architecture problem.
Second — Test Your Escalation Pathway in Practice, Not in Theory
Every board has an escalation framework. Almost no board has tested whether it actually works.
Testing does not mean reading the policy. It means asking the people who would be required to use it whether they would.
The most revealing question you can put to your senior leadership team is not “do you know the escalation threshold?” It is “what would it cost you professionally to escalate a concern about a commercially significant relationship?”
If the honest answer involves hesitation — if there is friction, political risk, or cultural pressure attached to escalation — then your escalation architecture is theoretical. The pathway exists on paper. It does not function in practice.
The Court in ASIC v Bekier was explicit: executives should not wait for perfect information or formal board requests before escalating emerging risks. Early escalation allows the board to engage and exercise judgment in real time. That standard requires an environment in which escalation is genuinely welcomed — not one in which it requires courage to navigate.
Ask your Company Secretary — or an external consultant if that feels more comfortable — to conduct brief, confidential conversations with three to five senior leaders about their experience of escalation in the last twelve months. A conversation. What they tell you will be more instructive than any policy document.
Third — Examine the Last Six Months of Risk Reporting for What Is Absent
The most important governance information is often not in what your board receives. It is in what does not reach the board at all.
The Star board was cleared precisely because management ensured the board never received information that would have activated its oversight obligations. The governance failure was not in how the board handled what it knew. It was in the systematic management of what the board was allowed to know.
Take the last six months of board risk reports and ask three questions about them.
What significant operational or regulatory developments occurred in this organisation during this period that are not reflected anywhere in these reports? Who made the decision that those developments did not meet the escalation threshold? And what criteria were applied to that decision? If your board cannot name that person with confidence, the threshold decision is effectively invisible to governance oversight.
You are not looking for bad faith. Most information management is not deliberate suppression — it is the accumulated effect of threshold calibration, management judgement about what the board needs, and the institutional pressure not to bring problems upward without solutions attached. The effect on board oversight is the same regardless of intent.
If your board cannot answer the first question — if directors do not have enough direct access to the organisation to know what is not reaching them — that is itself a governance finding.
Fourth — Have an Honest Conversation About What Your Culture Actually Rewards
The Bell Reviews (“the Bell Reviews into Star’s suitability as a casino licensee”) found that Star had developed what was described as a shadow value system — an informal culture that sat underneath the stated values and operated in the opposite direction. The stated values said integrity and compliance. The shadow values said protect the commercial relationship, manage the regulator, do not bring problems to the surface.
This gap — between what an organisation says it values and what it actually rewards — is what the Osmic Governance Architecture™ identifies as purpose-integrity misalignment. It is one of the most reliable predictors of governance failure, and one of the hardest things for a board to see from the inside.
The reason it is hard to see is that shadow values do not appear in board papers. They appear in decisions. In what gets approved without scrutiny. In who gets promoted. In which concerns get raised and which get quietly managed away. In whether the person who surfaces an uncomfortable finding is thanked or marginalised.
Your board cannot assess this from the boardroom. It requires direct, unmediated exposure to how decisions actually get made at the levels of the organisation where the real governance risk lives. That means structured conversations with people below the executive team. It means understanding what happened to the last person who raised something uncomfortable. It means being willing to hear an answer you might not want to hear.
Fifth — Assess Your Board’s Behavioural Governance Capacity Directly
Everything above assumes that the board itself has the behavioural capacity to act on what it finds. That assumption is worth examining.
The judgment was explicit on this point. Non-executive directors are not passive recipients of information. They are required to actively interrogate, probe, and where necessary challenge materials presented to them. Reliance on management is permissible — but only where there is no reason to doubt management’s honesty, trustworthiness, or competence. The moment that doubt exists, the board’s obligation to enquire is activated.
That obligation requires specific behavioural capacities. The courage to raise a concern when the room has moved. The judgement to recognise when commercial framing is obscuring a governance risk. The awareness to notice when the information being presented is incomplete. The discipline to hold management accountable across meetings, not just in the moment.
These capacities are not evenly distributed across boards. They are not guaranteed by experience, seniority, or professional background. And until recently, there has been no systematic way to assess them.
The Governance Architecture Diagnostic™ was developed specifically to address this gap — to assess the behavioural governance capacity of individual directors and boards across the seven dimensions that research and case evidence consistently associate with governance quality. If your board is asking the question the Star judgment has raised — do we actually have what it takes to govern when it matters? — the GAD™ provides a structured, evidence-based answer.
Closing
The Star Entertainment case took five years to reach a judgment. The failure it examined was years in the making before that. At every stage, the governance structures existed. What was absent was the behavioural capacity to make them function.
That is the finding that should stay with every board that has read this judgment. Not “could this happen to us?” — most boards have better structures than Star did. The harder question is whether the people operating those structures have the character, judgment, and internalised accountability to govern under the conditions that actually test governance. Structures do not govern. People do.
The GAD™ was developed to answer that question with evidence rather than assumption. But the assessment only matters if boards are willing to be honest about what it might find.
Sanela Osmic GAICD is the Founder of Ethical Governance and the developer of the Osmic Governance Architecture™ and the Governance Architecture Diagnostic™. The GAD™ is available for individual director assessments and full board engagements. Contact us for more details.
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