Observations by the Chairman of MABC
Bekier is not a direct legal test for section 17A, but it is a useful benchmark for what
an inadequate board compliance culture looks like.
The recent Australian Federal Court decision in ASIC v Bekier & Ors [2026] FCA 196
handed down on 5th March 2026, has quickly become one of the clearest modern
statements of what courts expect from directors and senior executives where serious
compliance risks exist in company operations. The case arose out of governance
failures at Star Entertainment, where concerns around anti-money laundering,
criminal exposure, junket relationships and other impropriety put the boardroom
under regulatory scrutiny.
The court ultimately found that Star’s former chief executive officer and former chief
legal and risk officer had breached their duties, while the claims against the non executive directors failed on the particular facts. That split outcome also makes the
case important under company law. It did not simply punish an entire board because
misconduct happened on its watch but showed how director’s responsibility depends
on role, knowledge, expertise, reliance, risks associated with a business and the
handling of warning signs.
At its core, Bekier is a case about escalation failure. The court found that senior
executives failed in their duty when they did not properly act on or elevate serious risk
information to the board. The Court’s message: when red flags point to legal,
regulatory or reputational danger, directors and officers cannot treat them as
background noise. They must identify them, test them, manage them and, where
necessary, ensure the board confronts them directly.
Its Relevance to Malaysian Boards
The Bekier dicta gives its judgment significance far beyond Australia. In Malaysia, the
legal architecture is different, but the underlying governance logic is strikingly familiar.
Under section 213 of the Companies Act 2016, directors must exercise their powers
for a proper purpose and in good faith in the best interest of the company, and must
also exercise reasonable care, skill and diligence. The statutory standard is both
objective and personal: it asks what can reasonably be expected from a director in that
role, and also what may be expected from that particular director in light of his/her
actual knowledge, skill and experience. Section 214 then adds a business judgment
rule, but only where the director is properly informed, acts in good faith, has no material personal interest, and rationally believes the decision is in the company’s best interests.
Malaysian law already expects directors to be active fiduciaries, not decorative
appointees. What Bekier adds is a vivid judicial description of what active oversight
actually looks like when a business enters a zone of heightened compliance risk. The
case says, in effect, that directors cannot be content with systems that appear
respectable on paper if the flow of information is weak, the reporting lines are
compromised, or the board is insulated from the true seriousness of the problem.
Executive Directors and NEDs
One of the most important lessons from the case concerns the difference between
executive and non-executive roles. The court did not hold that every director is equally
blameworthy whenever something goes wrong. Instead, it paid close attention to
function. Senior executives with day-to-day knowledge of risks, especially those
responsible for legal and risk management, were expected to do more because they
knew more and were positioned to act. That reasoning is highly relevant in Malaysia,
where section 213 expressly calibrates the standard of care by reference to both
responsibility and actual expertise.
The failure of ASIC’s claim against the non-executive directors shows that Australian
courts still care about the realities of decision-making by taking into account, what red
flags were visible, how clearly they were presented, whether management
downplayed them, and what a reasonable director in that position could have been
expected to infer. That does not mean passive boards are safe. In fact, the court
stressed that boards cannot merely accept management papers without question,
particularly where management inundate boards with information without
highlighting criticalities. Non-executive directors must still challenge information, spot
inconsistencies and control the volume and usefulness of what they are given. The
lesson is not that non-executive directors are off the hook, but that liability mirrors
circumstance and the factual matrix.
Lessons for Section 17A Observers
This is where Bekier becomes particularly relevant to the Malaysian anti-corruption
landscape under section 17A of the Malaysian Anti-Corruption Commission Act 2009.
Section 17A creates corporate liability for a commercial organisation where a person
associated with it commits corruption for its benefit, with directors assuming parallel
criminal liability. The statutory escape route is the “adequate procedures” defence,
and the government’s guidance frames those procedures through the five T.R.U.S.T.
principles: Top-Level Commitment, Risk Assessment, Undertake Control Measures,
Systematic Review, Monitoring and Enforcement, and Training and Communication.
The Malaysian guidance expects boards and senior management to set the tone from
the top, establish clear policies and create proper reporting channels. Bekier stresses
that the tone from the top is not measured by mission statements. It is measured by
whether leadership takes difficult risk information seriously, insists on candour and
acts when uncomfortable truths emerge. A board that approves an anti-bribery policy
but never probes how it is working would look vulnerable under both Bekier-style
reasoning and the section 17A framework.
The T.R.U.S.T. guidance expects periodic assessment of corruption risks, tailored to the
business and updated as circumstances change. In Bekier, the problem was not the
absence of any risk indicators. It was the failure to respond adequately once serious
indicators appeared. That is exactly the kind of failure that could undermine a
Malaysian company’s adequate-procedures defence. A risk register that identifies
third-party agents, government-facing intermediaries or high-risk jurisdictions is not
much use if the assessment does not trigger closer scrutiny, revised controls or
escalation to the board when warning signs intensify.
Both Australian Malaysian approaches are remarkably similar to the UK position under
the Bribery Act 2010. In the landmark SFO v. Standard Bank (a deferred prosecution
case), the court endorsed the requirement that Board-level policies cannot merely
exist on paper. Boards must ensure compliance measures are actively monitored,
properly audited, and translate into an ingrained anti-bribery culture on the ground.
Conclusion
For Malaysian directors, the broader implication is clear. Whether the issue is general
fiduciary responsibility under the Companies Act or anti-corruption exposure under
section 17A, courts are likely to focus less on slogans and more on behaviour. Did the
board receive the right information? Did management obscure or sanitize it? Did
specialists use their expertise? Did warning signs change decisions? Those are the
questions that animated Bekier, and they are the same questions that increasingly
define good governance in Malaysia.
LOONG CAESAR, Chairman MABC
[We welcome your feedback. Please contact the secretariat at mabc@mabc.org.my]