Business and Corporation Law - Commonwealth Bank of Australia

Running Head: BUSINESS AND CORPORATION LAW
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Business Ethics
2/8/2020
Student’s Name

Business Ethics
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Introduction
Ethics are important aspects of each business that outlines the manner in which an entity
should behave. The primary motive of each organization is to earn profit but in doing so,
businesses cannot forget their responsibility towards the society and other stakeholders. In recent
years, many of the organizations have reported in the media that they have breached their
business ethics as well as ignored corporate social responsibility. These businesses are also
facing the consequences of these conducts in the form of monetary penalties as well as the loss
of goodwill. We have been given a task to gain an understanding of such unethical issues and to
find a solution for the same. The organization selected by my group is the commonwealth bank
of Australia, which is an Australian multinational bank. In the presented report we would provide
a summary of the organization along with the ethical issues that the same has faced in the past.
Further, the group will also focus on details related to business ethics such as its approach to
CSR and steps taken to improve the situation. Lastly, we would present a conclusion containing
key findings of the report
Company Background and history
As mentioned above, we have selected the commonwealth bank of Australia, which is a
leading provider of integrated financial services in Australia. It is a multi-national organization
hence the operations of the same are extended in many counties such as Asia, New Zealand, the
United Kingdom, and the United States (Commbank.com.au, 2020a). To discuss the history of
the company this is to state that the same was founded in 1911 and stared working in 1912. The
main activity of the bank was to conduct a general banking business. Currently, the company is
working well in terms of its financial performance having nearly 800000 shareholders and 52000

Business Ethics
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employees (Commbank.com.au, 2020b). Nevertheless, in terms of ethics and social
responsibility, the bank is continuously being criticized for the past 5 years. Many of the illegal
and unethical practices and policies have been pursued by the bank over the period. In 2015, it
was found that the bank continuously denied justice to the victims of its financial planning
scandal (Ferrier, 2015). In 2016, CommInsure, the life insurance arm of the bank found engaged
in the ethical scandal where the same misrepresented the scope of policies while selling the
same. The bank denied many of the claims related to heart attack interpreting the law
inappropriately. The next year i.e. 2017 also proven a very significant year in the history of
commonwealth banks. The leading regulator AUSTRAC has initiated a claim against bank
marking its involvement in the money laundering scandal. It was held that the bank has breached
terrorism financing laws as well as anti-money laundering laws (Knaus, 2017). The bank failed
to disclose and report material transactions to stock exchanges as were required to do under these
act as they were likely to have an impression on share prices. As we have researched over the
related topics and gone through news and media articles, we have found that this action of the
bank has marked as one of the huge ethical scandals of Australia. It was an illegal act as the bank
has breached the legal duties. The bank has faced crucial implications of this scandal as
shareholders initiated class actions against the same. The bank holds liable to pay millions of
dollars as a penalty. In 2018, the bank became agree to pay $700 million as a penalty along with
the legal cost (Gopalan, 2018). This has been considered as biggest fine in the history of
Australian corporate. Bank failed to monitor 778,370 account transactions in consideration of
anti-money laundering law. Apart from this too, the bank has spent millions of dollars in
settlement of disputes and complaints. In 2018, the bank proposed to appoint Mr. Comyn, as
CEO of the company, whereas he was already found a part of CBA's scandal last year (Thomson,