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Running head: BUSINESS ETHICS
Business Ethics
Name of the Student:
Name of the University:
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Business Ethics
Name of the Student:
Name of the University:
Author Note:
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1BUSINESS ETHICS
Article 1
AMP could face criminal charges for misleading ASIC, banking royal commission told
Overview
In the article, AMP could face criminal charges for misleading ASIC, banking royal
commission told, the business ethics issues faced by the company in terms of breach of corporate
regulations is brought to light. The AMP is one of the largest financial advising companies in
Australia that has been penalized of late for codes of misconduct especially with the advent of
tougher laws and rules framed and imposed by the government for financial and banking
executives that have been of adverse effect and impact on the customers especially. The article
focuses on the fact that how the organization is now exposed to the possibility of facing criminal
charges and for misleading the Australian Securities and Investments Commission for charging
its customers for no reason, that is without even providing any kind of financial aid or advices or
any other such services (abc.net.au. 2018). The article essentially asserts that there are evidences
of the manipulations and inaccuracy found in the reports submitted by AMP to ASIC, and
causing the institution to charge customers for no service. Further the article also posits that other
organizations like the National Australian Bank, Westpac and the Commonwealth Bank are also
exposed to the risk and in all probability will have to make rounds in the court for breaches of
the Corporate Act in many different ways and more than once. These different organizations
have committed the misconduct of law in different ways which are also stated in details in this
particular article. In fact, with proper investigation it has been found that most of the government
banks and financial organizations in Australia failed to keep a check and control the activities of
the regulators working in association with them. The Australian Securities and Investments
Article 1
AMP could face criminal charges for misleading ASIC, banking royal commission told
Overview
In the article, AMP could face criminal charges for misleading ASIC, banking royal
commission told, the business ethics issues faced by the company in terms of breach of corporate
regulations is brought to light. The AMP is one of the largest financial advising companies in
Australia that has been penalized of late for codes of misconduct especially with the advent of
tougher laws and rules framed and imposed by the government for financial and banking
executives that have been of adverse effect and impact on the customers especially. The article
focuses on the fact that how the organization is now exposed to the possibility of facing criminal
charges and for misleading the Australian Securities and Investments Commission for charging
its customers for no reason, that is without even providing any kind of financial aid or advices or
any other such services (abc.net.au. 2018). The article essentially asserts that there are evidences
of the manipulations and inaccuracy found in the reports submitted by AMP to ASIC, and
causing the institution to charge customers for no service. Further the article also posits that other
organizations like the National Australian Bank, Westpac and the Commonwealth Bank are also
exposed to the risk and in all probability will have to make rounds in the court for breaches of
the Corporate Act in many different ways and more than once. These different organizations
have committed the misconduct of law in different ways which are also stated in details in this
particular article. In fact, with proper investigation it has been found that most of the government
banks and financial organizations in Australia failed to keep a check and control the activities of
the regulators working in association with them. The Australian Securities and Investments
2BUSINESS ETHICS
Commission has reported that it has for the most part believed in negotiating with the financial
institutions for breach of any code of conduct rather than prosecuting them. This is so because it
generally takes a lot of years to really execute the proceedings in case of prosecutions. The report
claims that in the past ten years, the Australian Securities and Investments Commission has only
imposed one civil penalty order and is deciding to take up criminal action against people rather
than the company as a whole. This is so because the criminal charges against the company would
essentially take a total of around three years to proceed unlike individual prosecutions. Also, if
the span of three years is taken into consideration, the public would be exposed to this harm for a
longer period of time.
Ethical issues:
The ethical issue involved within the working and framework of the company as
highlighted by the article lies in the field of financial misconduct where the firm has imposed
charges and generated revenues without even providing any kind of service and also forwarded
inaccurate reports without checking properly to the regulators.
The article also essentially brings to light the risks of penalties that other financial
institutions on Australia like the National Australian Bank, Westpac and the Commonwealth
Bank are faced with. The National Australian Bank is exposed to the risks of scrutiny of the
various investment documents it withholds with falsified and forged signatures of clients or other
stakeholders. Westpac is faced with issues related to providing customers with shocking and
completely wrong advisory. The Commonwealth Bank is also faced with charges similar to those
that the AMP is facing.
Commission has reported that it has for the most part believed in negotiating with the financial
institutions for breach of any code of conduct rather than prosecuting them. This is so because it
generally takes a lot of years to really execute the proceedings in case of prosecutions. The report
claims that in the past ten years, the Australian Securities and Investments Commission has only
imposed one civil penalty order and is deciding to take up criminal action against people rather
than the company as a whole. This is so because the criminal charges against the company would
essentially take a total of around three years to proceed unlike individual prosecutions. Also, if
the span of three years is taken into consideration, the public would be exposed to this harm for a
longer period of time.
Ethical issues:
The ethical issue involved within the working and framework of the company as
highlighted by the article lies in the field of financial misconduct where the firm has imposed
charges and generated revenues without even providing any kind of service and also forwarded
inaccurate reports without checking properly to the regulators.
The article also essentially brings to light the risks of penalties that other financial
institutions on Australia like the National Australian Bank, Westpac and the Commonwealth
Bank are faced with. The National Australian Bank is exposed to the risks of scrutiny of the
various investment documents it withholds with falsified and forged signatures of clients or other
stakeholders. Westpac is faced with issues related to providing customers with shocking and
completely wrong advisory. The Commonwealth Bank is also faced with charges similar to those
that the AMP is facing.
3BUSINESS ETHICS
If all these issues of ethics are essentially and critically evaluated and analyzed, it is
found that there has been a lot of regulatory and compliance issues to the Corporations Act put in
effect in 2001 by the Australian Securities and Investments Commission. Corporate Governance
in terms of business ethics is the way in which compliance to the regulatory laws and division of
power is maintained in between the various governing and authoritative bodies of the firm
(Pearson 2017). In this case, this aspect of business ethics and corporate social responsibility of
the firm or firms has been violated and exploited. Corporate Social Responsibility is the path to
ensuring that the firm along with providing the best of services and carrying out revenue
generation and activities and initiatives of expansion, also caters towards the needs of the
community and the society where they exist and operate (Suliman et al. 2016). This aspect of
corporate has completely been breached by the firms. Also, Corporate Social responsibility also
ensures that the workers and employees of the present generation are not benefitted at the cost of
the future employees and workers. In this case, again there has been a breach of this aspect of
Corporate Social Responsibility (Chell et al. 2016).
While addressing the context of ethics, it is also important to mention the aspect of Ethics
and Governance wherein the financial executives and the accountants are expected to know and
adhere to the different regulations and compliance issues and also the governance mechanisms in
order to ensure lawful and efficient and effective behavior in terms of corporate functioning and
operations.
In this case, the major or the central pillar of criminal reporting for misleading the
customer has been on the terms of the fact that the AMP has been reported to alter and influence
the report that was to be framed and researched on independently by the lawyers from Clayton
Utz. Instead AMP reported that letting the lawyers of Clayton Utz in making the entire report
If all these issues of ethics are essentially and critically evaluated and analyzed, it is
found that there has been a lot of regulatory and compliance issues to the Corporations Act put in
effect in 2001 by the Australian Securities and Investments Commission. Corporate Governance
in terms of business ethics is the way in which compliance to the regulatory laws and division of
power is maintained in between the various governing and authoritative bodies of the firm
(Pearson 2017). In this case, this aspect of business ethics and corporate social responsibility of
the firm or firms has been violated and exploited. Corporate Social Responsibility is the path to
ensuring that the firm along with providing the best of services and carrying out revenue
generation and activities and initiatives of expansion, also caters towards the needs of the
community and the society where they exist and operate (Suliman et al. 2016). This aspect of
corporate has completely been breached by the firms. Also, Corporate Social responsibility also
ensures that the workers and employees of the present generation are not benefitted at the cost of
the future employees and workers. In this case, again there has been a breach of this aspect of
Corporate Social Responsibility (Chell et al. 2016).
While addressing the context of ethics, it is also important to mention the aspect of Ethics
and Governance wherein the financial executives and the accountants are expected to know and
adhere to the different regulations and compliance issues and also the governance mechanisms in
order to ensure lawful and efficient and effective behavior in terms of corporate functioning and
operations.
In this case, the major or the central pillar of criminal reporting for misleading the
customer has been on the terms of the fact that the AMP has been reported to alter and influence
the report that was to be framed and researched on independently by the lawyers from Clayton
Utz. Instead AMP reported that letting the lawyers of Clayton Utz in making the entire report
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4BUSINESS ETHICS
would cause the results of the report to be incorrect or misleading if not completely inaccurate.
"The board of AMP may have approved the changes to the Clayton Utz report before it was
submitted to ASIC," said Ms Rowena Orr, the counsel assisting the inquiry.
As for CBA, the break and breach of ethical conduct revolved and encompassed the fact
that the bank was providing a series and array of advice that was of detrimental quality and
inevitably harmful to the clients on the one hand and was beneficial for the bank on the other
hand. It had also been reported to charge the dead clients and provide them no advice.
Resolutions:
In an attempt to solve the matter and resolve the issue the Australian Securities and
Investments Commission has decided to negotiate the issue as it has done in the past except once
in the last ten years. This is so because the institution has rightly stated that the matter and
process of prosecution of the company as a whole will take a matter and period of almost three
years which will only cause a wastage of both time and resources and in this span of time the
public and the people exposed to the risk of being charged for no financial service or advisory.
However, it will in all probability take a lot of years to completely ban the activities of the entire
advisory firm. Besides there exists an insufficiency in the resources and also proper laws that can
fasten up the process to allow for the ban of the institution involved with breach of ethics
immediately. In fact, prosecuting instead of negotiating can cause a lot of adverse and
unanticipated outcomes both the regulator and also for the consumers of the institution. The
article clearly asserts that the Australian Securities and Investments Commission has in fact in
the last ten years prosecuted only one company or adviser and that it usually does not prosecute
the guilty licensee even in the presence of high evidence standards which in this are the existing
would cause the results of the report to be incorrect or misleading if not completely inaccurate.
"The board of AMP may have approved the changes to the Clayton Utz report before it was
submitted to ASIC," said Ms Rowena Orr, the counsel assisting the inquiry.
As for CBA, the break and breach of ethical conduct revolved and encompassed the fact
that the bank was providing a series and array of advice that was of detrimental quality and
inevitably harmful to the clients on the one hand and was beneficial for the bank on the other
hand. It had also been reported to charge the dead clients and provide them no advice.
Resolutions:
In an attempt to solve the matter and resolve the issue the Australian Securities and
Investments Commission has decided to negotiate the issue as it has done in the past except once
in the last ten years. This is so because the institution has rightly stated that the matter and
process of prosecution of the company as a whole will take a matter and period of almost three
years which will only cause a wastage of both time and resources and in this span of time the
public and the people exposed to the risk of being charged for no financial service or advisory.
However, it will in all probability take a lot of years to completely ban the activities of the entire
advisory firm. Besides there exists an insufficiency in the resources and also proper laws that can
fasten up the process to allow for the ban of the institution involved with breach of ethics
immediately. In fact, prosecuting instead of negotiating can cause a lot of adverse and
unanticipated outcomes both the regulator and also for the consumers of the institution. The
article clearly asserts that the Australian Securities and Investments Commission has in fact in
the last ten years prosecuted only one company or adviser and that it usually does not prosecute
the guilty licensee even in the presence of high evidence standards which in this are the existing
5BUSINESS ETHICS
reports that were altered by AMP. The Australian Securities and Investments Commission has
asked for more time so that they can investigate the matter in further detail and then take the
necessary decision. As a matter of fact, the institution has been able to only successfully get two
license suspensions and two cancellations since the year 2013. Also, out of the 228 bans that it
has imposed since the year 2008, 46% have been permanent. This itself reflects the ambiguity
and the complex situation that exists in the regulation and monitoring of business ethics
especially in Australia. It has also been reported that since 2013, the Australian Securities and
Investments Commission has also imposed a few penalties with the advent of the new legislation
but those were only after a lot of investigation and analysis of the impacts of the bans.
In this particular case the Commission has decided to penalize the individuals involved
with the breach of conduct instead of the entire firm. The Chief Executive Officer of AMP, Craig
Meller has immediately been made to resign from his post and step down. The Chairman of the
company, Catherine Brenner has also resigned from her position after having confirmed and
admitting that the firm was in fact involved with charging customers more than the average rate
and also misleading the regulators and breaking the financial codes of conduct. The acting chief
executive has taken over looking after and monitoring the operations of AMP until the positions
of the Chairman and the Chief Executive Officer are replaced again. This has been done as an
attempt to restore the trust of both the regulators and the customers and improve the position of
the firm in the market as a whole.
Stakeholders:
On reading the article carefully, one can easily note that there are lot of stakeholders who
have been adversely affected and the long run relationship of AMP with these stakeholders has
reports that were altered by AMP. The Australian Securities and Investments Commission has
asked for more time so that they can investigate the matter in further detail and then take the
necessary decision. As a matter of fact, the institution has been able to only successfully get two
license suspensions and two cancellations since the year 2013. Also, out of the 228 bans that it
has imposed since the year 2008, 46% have been permanent. This itself reflects the ambiguity
and the complex situation that exists in the regulation and monitoring of business ethics
especially in Australia. It has also been reported that since 2013, the Australian Securities and
Investments Commission has also imposed a few penalties with the advent of the new legislation
but those were only after a lot of investigation and analysis of the impacts of the bans.
In this particular case the Commission has decided to penalize the individuals involved
with the breach of conduct instead of the entire firm. The Chief Executive Officer of AMP, Craig
Meller has immediately been made to resign from his post and step down. The Chairman of the
company, Catherine Brenner has also resigned from her position after having confirmed and
admitting that the firm was in fact involved with charging customers more than the average rate
and also misleading the regulators and breaking the financial codes of conduct. The acting chief
executive has taken over looking after and monitoring the operations of AMP until the positions
of the Chairman and the Chief Executive Officer are replaced again. This has been done as an
attempt to restore the trust of both the regulators and the customers and improve the position of
the firm in the market as a whole.
Stakeholders:
On reading the article carefully, one can easily note that there are lot of stakeholders who
have been adversely affected and the long run relationship of AMP with these stakeholders has
6BUSINESS ETHICS
been ruined and affected miserably. These include all the other financial institutions that have
been investigated and penalized on more or less the same grounds which are the National
Australian Bank, Westpac and the Commonwealth Bank. All these financial institutions have
been found reported to have been involved with misleading business ethics and so they might be
charged of criminal offense. This has led to the damage of relationship of AMP with these
financial institutions. The relation of AMP with Australian Securities and Investments
Commission has also inevitably been adversely affected as the Commission now has to take up
steps so that the issue is negotiated instead of prosecuting AMP as it lacks the resources and rigid
laws to do so and this might cause the Commission to take a number of years to completely ban
the organization. The other stakeholders most definitively include the customers that received
financial services from these institutions. The faith and trust of these people on the organization
has been impacted adversely resulting in the loss of customer base for the firms. However, the
stakeholder that forms the central pillar of the issue and has been impacted the most is the law
firm Clayton Utz, which was responsible for independently evaluating and building reports for
the regulatory bodies but was prevented by AMP from doing so. The reports were mostly altered
by AMP and now the companies are in a rivalry.
Conclusion:
The financial crisis surrounding the breach of codes of conduct by the advisory firm
AMP is one of the most discussed examples of breach of business ethics this year. Business
ethics and Corporate Social Responsibility together aim at bettering the livelihood of the
community and society in which they operate and this has been adversely affected and not taken
care of by the firm. The firm has been charged for criminal records of not providing any service
and charging the customers. The firm has also been reported to alter the reports published by
been ruined and affected miserably. These include all the other financial institutions that have
been investigated and penalized on more or less the same grounds which are the National
Australian Bank, Westpac and the Commonwealth Bank. All these financial institutions have
been found reported to have been involved with misleading business ethics and so they might be
charged of criminal offense. This has led to the damage of relationship of AMP with these
financial institutions. The relation of AMP with Australian Securities and Investments
Commission has also inevitably been adversely affected as the Commission now has to take up
steps so that the issue is negotiated instead of prosecuting AMP as it lacks the resources and rigid
laws to do so and this might cause the Commission to take a number of years to completely ban
the organization. The other stakeholders most definitively include the customers that received
financial services from these institutions. The faith and trust of these people on the organization
has been impacted adversely resulting in the loss of customer base for the firms. However, the
stakeholder that forms the central pillar of the issue and has been impacted the most is the law
firm Clayton Utz, which was responsible for independently evaluating and building reports for
the regulatory bodies but was prevented by AMP from doing so. The reports were mostly altered
by AMP and now the companies are in a rivalry.
Conclusion:
The financial crisis surrounding the breach of codes of conduct by the advisory firm
AMP is one of the most discussed examples of breach of business ethics this year. Business
ethics and Corporate Social Responsibility together aim at bettering the livelihood of the
community and society in which they operate and this has been adversely affected and not taken
care of by the firm. The firm has been charged for criminal records of not providing any service
and charging the customers. The firm has also been reported to alter the reports published by
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7BUSINESS ETHICS
Clayton Utz, which were forwarded to the regulator, Australian Securities and Investments
Commission. However, the Commission has decided to negotiate the matter with the firm instead
of prosecuting the agency as the proceedings and a final and complete ban on the entire system
would take a matter of few years. Instead, the Commission has rightfully decided to charge
individuals with further look into the matter and proper investigation. With respect to the current
situation , the Chief executive Officer (Craig Meller) and the Chairman (Catherine Brenner )of
AMP have resigned and will soon be replaced by other executives. This has been done in order
to take hold of the current situation and not let furher degradation of the system happen.
Article 2:
Fair Work Ombudsman report on Caltex is a shocker
Overview:
In the article “Fair Work Ombudsman report on Caltex is a shocker” the ethical issue
related to a fraud wage structure and breach of workplace laws has been highlighted. The non
compliance rate across the business of Caltex has been around 76% according to external audits
by and Fair Work Ombudsman and it has been investigating this issue for over a period of
eighteen months after the Fairfax Media exposed this issue in late 2016 (afr.com. 2018). It has
been reported that this series of investigation had in fact started in 2016. The authorities of
Caltex had also been taking internal audits that showed a non-compliance rate of around 80% in
the first round and around 60% in the second round and hence they were completely aware of the
consequences when the external audit was taken up by the Fair Work Ombudsman in the first
place.
Clayton Utz, which were forwarded to the regulator, Australian Securities and Investments
Commission. However, the Commission has decided to negotiate the matter with the firm instead
of prosecuting the agency as the proceedings and a final and complete ban on the entire system
would take a matter of few years. Instead, the Commission has rightfully decided to charge
individuals with further look into the matter and proper investigation. With respect to the current
situation , the Chief executive Officer (Craig Meller) and the Chairman (Catherine Brenner )of
AMP have resigned and will soon be replaced by other executives. This has been done in order
to take hold of the current situation and not let furher degradation of the system happen.
Article 2:
Fair Work Ombudsman report on Caltex is a shocker
Overview:
In the article “Fair Work Ombudsman report on Caltex is a shocker” the ethical issue
related to a fraud wage structure and breach of workplace laws has been highlighted. The non
compliance rate across the business of Caltex has been around 76% according to external audits
by and Fair Work Ombudsman and it has been investigating this issue for over a period of
eighteen months after the Fairfax Media exposed this issue in late 2016 (afr.com. 2018). It has
been reported that this series of investigation had in fact started in 2016. The authorities of
Caltex had also been taking internal audits that showed a non-compliance rate of around 80% in
the first round and around 60% in the second round and hence they were completely aware of the
consequences when the external audit was taken up by the Fair Work Ombudsman in the first
place.
8BUSINESS ETHICS
In the existing face of the situation, Caltex has decided to exit the existing franchisee
structure by 2020 and instead of admitting that this decision is only because of the existing
scandal, the firm is in fact asserting that this is an old strategy that was to be implemented by the
firm anyway. The article also highlights the situation of the workers being exposed to the risk of
violence on opening up or being identified for reporting against the system. In most cases the
workers were paid lesser than the average award rate and the workers being immigrants were
paid for their children’s education or their VISA was sponsored so that they could stay in the
country and work without any expectations or even enough compensation.
The reporters have claimed that the entire model of business and franchisees being used
by Caltex was vague, inefficient and completely breaching all codes of compliance related to
wages especially. Further, it was found that most of the franchisees were purposely manipulating
their records of time, wage and pay and other benefits and the accuracy of records maintained
across most departments and stores including timesheets, payrolls and rosters were also not up to
the mark.
The decision of Caltex to quit the decision of planning in the market game of franchisees
on the 27th of February itself suggested that the firm was in fact guilty of the accusations.
However, the firm insisted that it was just a strategy that it was implementing and it had no
relation with the charges it was pressed with. The firm has further stated that it was reviewing its
business models of operations and franchisee from long before the scandal broke out. According
to the reports of Caltex, out of the 292 sites audited, 193 franchise agreements have already been
terminated and 29 sites are being further investigated and the regulations and breach of the
compliance are still under the process of dispute resolution.
In the existing face of the situation, Caltex has decided to exit the existing franchisee
structure by 2020 and instead of admitting that this decision is only because of the existing
scandal, the firm is in fact asserting that this is an old strategy that was to be implemented by the
firm anyway. The article also highlights the situation of the workers being exposed to the risk of
violence on opening up or being identified for reporting against the system. In most cases the
workers were paid lesser than the average award rate and the workers being immigrants were
paid for their children’s education or their VISA was sponsored so that they could stay in the
country and work without any expectations or even enough compensation.
The reporters have claimed that the entire model of business and franchisees being used
by Caltex was vague, inefficient and completely breaching all codes of compliance related to
wages especially. Further, it was found that most of the franchisees were purposely manipulating
their records of time, wage and pay and other benefits and the accuracy of records maintained
across most departments and stores including timesheets, payrolls and rosters were also not up to
the mark.
The decision of Caltex to quit the decision of planning in the market game of franchisees
on the 27th of February itself suggested that the firm was in fact guilty of the accusations.
However, the firm insisted that it was just a strategy that it was implementing and it had no
relation with the charges it was pressed with. The firm has further stated that it was reviewing its
business models of operations and franchisee from long before the scandal broke out. According
to the reports of Caltex, out of the 292 sites audited, 193 franchise agreements have already been
terminated and 29 sites are being further investigated and the regulations and breach of the
compliance are still under the process of dispute resolution.
9BUSINESS ETHICS
The article also states that Caltex undertook a $20 million compensations scheme for the
workers so that the underpaid workers are properly paid and compensated.
Ethical Issues:
The major ethical issue brought to light in this article and this case is the fact of breach of
working norms and policies by Caltex where workers were not paid sufficiently. The company
has been accused of a fraud wage model and also the use of a very questionable and unreliable
business model. The area of business ethics where it is important to take complete care of the
safety and well being and livelihood of the workers and employees has been completely violated
and with that the firm has also been blamed for not adhering to the norms that call for Corporate
Social Responsibility.
The article highlights how the wage fraud model has become common in the food and
retail sector in Australia of late with Seven Eleven starting the game and firms like Dominos,
Caltex and Retail Food Group following it. All these firms were accused of following a business
model that included huge array of franchisees that did not pay wags sufficient to the workers and
employers working under them. Most of the employers were students of immigrated from abroad
and were made to work overtime and also sometimes on weekends without getting paid and also
continuously being under the threat of violence on opening up to the concerned authorities about
the same.
As a matter of fact, Caltex has not even clearly admitted the mistake and the breach of
regulations that it has conducted. It has only agreed to compensate the underpaid workers for the
last two years, when actually, the underpayment scheme has been going on for a period way
longer than that span of time.
The article also states that Caltex undertook a $20 million compensations scheme for the
workers so that the underpaid workers are properly paid and compensated.
Ethical Issues:
The major ethical issue brought to light in this article and this case is the fact of breach of
working norms and policies by Caltex where workers were not paid sufficiently. The company
has been accused of a fraud wage model and also the use of a very questionable and unreliable
business model. The area of business ethics where it is important to take complete care of the
safety and well being and livelihood of the workers and employees has been completely violated
and with that the firm has also been blamed for not adhering to the norms that call for Corporate
Social Responsibility.
The article highlights how the wage fraud model has become common in the food and
retail sector in Australia of late with Seven Eleven starting the game and firms like Dominos,
Caltex and Retail Food Group following it. All these firms were accused of following a business
model that included huge array of franchisees that did not pay wags sufficient to the workers and
employers working under them. Most of the employers were students of immigrated from abroad
and were made to work overtime and also sometimes on weekends without getting paid and also
continuously being under the threat of violence on opening up to the concerned authorities about
the same.
As a matter of fact, Caltex has not even clearly admitted the mistake and the breach of
regulations that it has conducted. It has only agreed to compensate the underpaid workers for the
last two years, when actually, the underpayment scheme has been going on for a period way
longer than that span of time.
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10BUSINESS ETHICS
The other ethical issue related to this situation is the absence of properly maintained
records and documents so that the underpayment to workers can be justified with the help of
purposeful manipulations. This in turn made it quite difficult and in fact impossible to find out
the total amount of money that was to be paid to the employees who worked like slaves
overtime. The workers were exploited to the extent that they were in a situation little better than
slaves.
The company has also decided to carry out termination of all the franchisees working
under them and this is also not the best ethical decision that the headquarters could take
regarding the scandal that took place under their authority and surveillance. This shows that the
company breached Corporate Social responsibility for a second time without taking into
consideration the situation that the franchisees had to face (Bhattacharya et al. 2013). They only
considered the benefits of the company and for once did not consider the detrimental effects and
adverse impacts it posed on the people that they were responsible for. All these decisions caused
Caltex as a firm to lose the faith that people had built on it for so many years. Not only were the
consumers affected but also the long run relationships with the stakeholders that resulted in the
loss of millions for the firm and was inevitable and obvious. The impact on the different
stakeholders is discussed in detail in the later parts of the essay.
Resolutions:
In terms of the resolutions undertaken by the team that was working under the Julian
Segal, the Australian Boss of Caltex, the company would if course take measures to ensure that
the employees who were not paid enough and were mistreated and threatened are provided the
means by which they can regain both their compensation and values now. However, as suggested
The other ethical issue related to this situation is the absence of properly maintained
records and documents so that the underpayment to workers can be justified with the help of
purposeful manipulations. This in turn made it quite difficult and in fact impossible to find out
the total amount of money that was to be paid to the employees who worked like slaves
overtime. The workers were exploited to the extent that they were in a situation little better than
slaves.
The company has also decided to carry out termination of all the franchisees working
under them and this is also not the best ethical decision that the headquarters could take
regarding the scandal that took place under their authority and surveillance. This shows that the
company breached Corporate Social responsibility for a second time without taking into
consideration the situation that the franchisees had to face (Bhattacharya et al. 2013). They only
considered the benefits of the company and for once did not consider the detrimental effects and
adverse impacts it posed on the people that they were responsible for. All these decisions caused
Caltex as a firm to lose the faith that people had built on it for so many years. Not only were the
consumers affected but also the long run relationships with the stakeholders that resulted in the
loss of millions for the firm and was inevitable and obvious. The impact on the different
stakeholders is discussed in detail in the later parts of the essay.
Resolutions:
In terms of the resolutions undertaken by the team that was working under the Julian
Segal, the Australian Boss of Caltex, the company would if course take measures to ensure that
the employees who were not paid enough and were mistreated and threatened are provided the
means by which they can regain both their compensation and values now. However, as suggested
11BUSINESS ETHICS
by the workers of the firm and the authorities that are supposed to take actions for these workers,
they will ensure and make sure that the workers get back the amount that they did not receive
during the last two years. This is completely unacceptable. This is so because it has been found
out according to the investigations undertaken that the firm was breaking the wage laws and not
adhering to the codes of compliance based on those laws, since a lot of years and not just two
years. Paying the workers for the last two years was not justified as for the remaining years also
they were exposed to the same violence and underpaid wages.
Further, the firm as a whole decided to recheck and investigate as well as analyze the
existing business models and franchisee models in order to now understand where the problem
was and enforce regulations so that the wages and times of the different employees and workers
at the different stores which have not been audited or penalized are well recorded and monitored.
In fact, for all the franchisee stores that have been reported to have any high no-compliance rates,
the contracts with those stores have been terminated. The firm has been reported to terminate and
seize the functioning of hundreds of stores across all its different locations of operations. The
firm has also announced by 2020 it will go completely out of the franchisee business and not
make use of the franchisee model. However, Clatex has also remained ardent and strong on its
stand that this decision to reframe the business model and go out of the franchisee model and
business is not because of the situation that has cropped up but it is in fact a strategy that was
planned by the firm long back and will be now implemented as a part of the different efforts
taken by the firm to transform the business and the business network associated.
The firm is also reported to take measures that will help in confirming that the non-
compliance rates reduce and that the firm operates under the supervision of proper regulatory
audits and authority. It is aiming to rebuild its entire framework of job design and structure the
by the workers of the firm and the authorities that are supposed to take actions for these workers,
they will ensure and make sure that the workers get back the amount that they did not receive
during the last two years. This is completely unacceptable. This is so because it has been found
out according to the investigations undertaken that the firm was breaking the wage laws and not
adhering to the codes of compliance based on those laws, since a lot of years and not just two
years. Paying the workers for the last two years was not justified as for the remaining years also
they were exposed to the same violence and underpaid wages.
Further, the firm as a whole decided to recheck and investigate as well as analyze the
existing business models and franchisee models in order to now understand where the problem
was and enforce regulations so that the wages and times of the different employees and workers
at the different stores which have not been audited or penalized are well recorded and monitored.
In fact, for all the franchisee stores that have been reported to have any high no-compliance rates,
the contracts with those stores have been terminated. The firm has been reported to terminate and
seize the functioning of hundreds of stores across all its different locations of operations. The
firm has also announced by 2020 it will go completely out of the franchisee business and not
make use of the franchisee model. However, Clatex has also remained ardent and strong on its
stand that this decision to reframe the business model and go out of the franchisee model and
business is not because of the situation that has cropped up but it is in fact a strategy that was
planned by the firm long back and will be now implemented as a part of the different efforts
taken by the firm to transform the business and the business network associated.
The firm is also reported to take measures that will help in confirming that the non-
compliance rates reduce and that the firm operates under the supervision of proper regulatory
audits and authority. It is aiming to rebuild its entire framework of job design and structure the
12BUSINESS ETHICS
entire existing system. In the face of the existing situation some of the franchisees that have
carried out non-compliance and are at the risk of being terminated and hence facing a lot of
financial crisis and issues are willing and trying to instead compensate for the loss and
negotiating with the headquarters of Caltex themselves.
Stakeholders:
Like any other business, Caltex was also associated with a lot of stakeholders and this
ethical issue and scandal has only brought about a degradation and downfall in the different
stakeholder relations it held with different companies and consumers all over its entire network.
The scandal has quite obviously caused the firm to terminate most of its relations with different
franchisees and hence with all the stakeholders involved with investing and operating the
workings of these franchisees. The entire network that Caltex had created with different suppliers
has also been adversely and detrimentally affected and also terminated in certain cases. Caltex
has also been reported to have been abandoned by Woolworths because of this scandal, the firm
that had been its partner for long now.
Besides a breakdown of network because of termination of the franchisees and loss of
partnership with Woolsworth who have also decided to sell off their shares and stores to other
stakeholders and companies, Caltex has also lost trust of its entire base of workers and
consumers as the entire consumer base has been exposed to the problems of the workers and the
employees. The other stakeholders in the picture who have been adversely impacted include a
long list of investors, shareholders, regulators, financers, equity holders, superannuation funds
and even the suppliers. Needless to mention is the fact that this list of stakeholders is going on
increasing over time as the scandal is taking form and unveiling the non-compliance rates of
entire existing system. In the face of the existing situation some of the franchisees that have
carried out non-compliance and are at the risk of being terminated and hence facing a lot of
financial crisis and issues are willing and trying to instead compensate for the loss and
negotiating with the headquarters of Caltex themselves.
Stakeholders:
Like any other business, Caltex was also associated with a lot of stakeholders and this
ethical issue and scandal has only brought about a degradation and downfall in the different
stakeholder relations it held with different companies and consumers all over its entire network.
The scandal has quite obviously caused the firm to terminate most of its relations with different
franchisees and hence with all the stakeholders involved with investing and operating the
workings of these franchisees. The entire network that Caltex had created with different suppliers
has also been adversely and detrimentally affected and also terminated in certain cases. Caltex
has also been reported to have been abandoned by Woolworths because of this scandal, the firm
that had been its partner for long now.
Besides a breakdown of network because of termination of the franchisees and loss of
partnership with Woolsworth who have also decided to sell off their shares and stores to other
stakeholders and companies, Caltex has also lost trust of its entire base of workers and
consumers as the entire consumer base has been exposed to the problems of the workers and the
employees. The other stakeholders in the picture who have been adversely impacted include a
long list of investors, shareholders, regulators, financers, equity holders, superannuation funds
and even the suppliers. Needless to mention is the fact that this list of stakeholders is going on
increasing over time as the scandal is taking form and unveiling the non-compliance rates of
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13BUSINESS ETHICS
different stores of Caltex and also of other such stores such as Dominoes, Seven Eleven and
many other such stores that run with the help of franchisees. The break of trust with the
consumer base is causing an increase in the disruption of investor relations especially as public
demand is the central pillar to investment decisions and intensity.
The primary reason for the long list of stakeholders being adversely affected and the list
increasing in his case is the lack of a transparency in the resolutions taken and also the lack of
effective and sufficient measure to reimburse the loss suffered by the workers who were treated
like slaves and underpaid throughout. The company would have to undergo less loss in terms of
financial aspect and also in terms of stakeholder relations if it would firstly confess and
acknowledge the non-compliance and also make clear the business decisions it is now thinking
of undertaking. Instead the firm has attempted to white wash the vision of the stakeholders by
pronouncing that it will leave the franchisee business and start with some other new business
model and this strategy was long thought of in advance and not taken because of the current
ongoing scenario. Also, the firm should have at least, made public the steps it is taking to make
sure that the workers are not threatened now and that their identity will not be made public or
harmed if they claim to not have been paid well for the time that they served in the firm. The
firm is also not willing to pay the workers for the loss for more than a period of the last two
years, whereas it has been working with low payment of wages for over many years now. This
has in turn resulted in a lot of ambiguity and confusion that has made the stakeholders move
away from investing or reconsidering to sort their relations and equations out with the firm.
Conclusion:
different stores of Caltex and also of other such stores such as Dominoes, Seven Eleven and
many other such stores that run with the help of franchisees. The break of trust with the
consumer base is causing an increase in the disruption of investor relations especially as public
demand is the central pillar to investment decisions and intensity.
The primary reason for the long list of stakeholders being adversely affected and the list
increasing in his case is the lack of a transparency in the resolutions taken and also the lack of
effective and sufficient measure to reimburse the loss suffered by the workers who were treated
like slaves and underpaid throughout. The company would have to undergo less loss in terms of
financial aspect and also in terms of stakeholder relations if it would firstly confess and
acknowledge the non-compliance and also make clear the business decisions it is now thinking
of undertaking. Instead the firm has attempted to white wash the vision of the stakeholders by
pronouncing that it will leave the franchisee business and start with some other new business
model and this strategy was long thought of in advance and not taken because of the current
ongoing scenario. Also, the firm should have at least, made public the steps it is taking to make
sure that the workers are not threatened now and that their identity will not be made public or
harmed if they claim to not have been paid well for the time that they served in the firm. The
firm is also not willing to pay the workers for the loss for more than a period of the last two
years, whereas it has been working with low payment of wages for over many years now. This
has in turn resulted in a lot of ambiguity and confusion that has made the stakeholders move
away from investing or reconsidering to sort their relations and equations out with the firm.
Conclusion:
14BUSINESS ETHICS
The Caltex scandal is provided in detail in this article which brings to light the various
detrimental and harmful activities of non-compliance carried out by the franchisee stores on the
employees across the different branches of the firm. Ethical issues of not paying sufficient wages
have long been a problem across many retail stores in Australia and Caltex is the owner of one
such series of franchisees and stores. By not paying at the ongoing average rate and also
threatening the workers the firm has failed to meet its Corporate Social responsibility in terms of
catering to the needs and safety of the workers and ensuring the well being and livelihood of the
society in which they operate. The firm has instead throughout its period of functioning only
cared about revenue generation and profit generation. In fact, even now the firm has only agreed
to compensate and reimburse the underpaid workers for the last two years and tereminate the
franchisee model of business.
The Caltex scandal is provided in detail in this article which brings to light the various
detrimental and harmful activities of non-compliance carried out by the franchisee stores on the
employees across the different branches of the firm. Ethical issues of not paying sufficient wages
have long been a problem across many retail stores in Australia and Caltex is the owner of one
such series of franchisees and stores. By not paying at the ongoing average rate and also
threatening the workers the firm has failed to meet its Corporate Social responsibility in terms of
catering to the needs and safety of the workers and ensuring the well being and livelihood of the
society in which they operate. The firm has instead throughout its period of functioning only
cared about revenue generation and profit generation. In fact, even now the firm has only agreed
to compensate and reimburse the underpaid workers for the last two years and tereminate the
franchisee model of business.
15BUSINESS ETHICS
References:
abc.net.au. 2018. Available online at: http://www.abc.net.au/news/2018-04-27/asic-fronts-hayne-
royal-commission/9702662
afr.com. 2018. Available online at: http://www.afr.com/business/fair-work-ombudsman-report-
on-caltex-is-a-shocker-20180304-h0wyn3
Bhattacharya, C.B., Korschun, D., Sen, S. and Routledge, H., 2017. Corporate social
responsibility. Journal of International Law, 26(2).
Chell, E., Spence, L.J., Perrini, F. and Harris, J.D., 2016. Social entrepreneurship and business
ethics: Does social equal ethical?. Journal of business ethics, 133(4), pp.619-625.
Pearson, R., 2017. Business ethics as communication ethics: Public relations practice and the
idea of dialogue. In Public relations theory (pp. 111-131). Routledge.
Suliman, A.M., Al-Khatib, H.T. and Thomas, S.E., 2016. Corporate Social
Responsibility. Corporate Social Performance: Reflecting on the Past and Investing in the
Future, p.15.
References:
abc.net.au. 2018. Available online at: http://www.abc.net.au/news/2018-04-27/asic-fronts-hayne-
royal-commission/9702662
afr.com. 2018. Available online at: http://www.afr.com/business/fair-work-ombudsman-report-
on-caltex-is-a-shocker-20180304-h0wyn3
Bhattacharya, C.B., Korschun, D., Sen, S. and Routledge, H., 2017. Corporate social
responsibility. Journal of International Law, 26(2).
Chell, E., Spence, L.J., Perrini, F. and Harris, J.D., 2016. Social entrepreneurship and business
ethics: Does social equal ethical?. Journal of business ethics, 133(4), pp.619-625.
Pearson, R., 2017. Business ethics as communication ethics: Public relations practice and the
idea of dialogue. In Public relations theory (pp. 111-131). Routledge.
Suliman, A.M., Al-Khatib, H.T. and Thomas, S.E., 2016. Corporate Social
Responsibility. Corporate Social Performance: Reflecting on the Past and Investing in the
Future, p.15.
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