The corporate responsibility and governance

corporate responsibility and governance
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EDITORIAL (COMMUNITY PERSPECTIVE)
Corporate responsibility and leadership go hand in hand and form one of the prime
duties of the directors of the companies worldwide including that of Australia. The principles
of the corporate social responsibility state that an organisation’s management must be
considerate of the interests of the various stakeholders including the society at large. The
following editorial would highlight the failure of the Westpac of the corporate responsibility
governance principles.
The organisation was in news for the breach of the financial and money laundering
laws, followed by a suit filed by the financial regulator AUSTRAC. It has been alleged in the
report submitted by the AUSTRAC that the entity has indulged into law violations 23 million
times which included the international financial transfers, the money of which was used in
the child exploitation activities in Philippines (Yeates, 2019). It is important to be noted that
AUSTRAC had already pointed out the short comings in the digital payment systems of the
bank in the year 2016 and the same were not addressed by the organisation on the timely
basis (Toh, 2019). Had the organisation fixed the issues of care and diligence in the processed
and the systems of the bank. In addition, it is to be noted that as the CEO of the entity has
decided to step down, he would be remunerated for the notice period served that is of the 12
months. This also highlights the major fault in the corporate environment that the CEOs and
the other senior executives are heavily remunerated, irrespective of the fulfilment of their
legal responsibilities, and corporate governance duties. Further, the immoral attitude of
executive is further evident by the fact that before resigning from the post, Hartzer
commented on the issue, as not to worry about and termed it as not serious enough as
corporate failures (The Business Times, 2019).
The issue is grave and has brought down the attention of the Prime Minister of the
country as well. In the words of Scott Morrison, it is the duty of the organisations itself to
determine the responsibility towards the society and abide by the same (Reuters, 2019). The
market sentiments have been negative as well, as evident from the slash of the share values of
AUD $ 7.5 billion immediately after the filing of the civil suit by the prudential regulator
(Cadman, 2019). It is a case of sheer negligence of the company executives, indirectly
contributing to the international and domestic crimes.
The discussions conducted above enable to conclude that the in spite of the regulators
highlighting the issue of the corporate social responsibility on the part of the leaders, the

same do not pay adequate attention to the same. As highlighted above, the payment of high
remuneration in spite of the civil suit filed is a serious case of ethical and moral failure and
needs stringent laws and voluntary efforts to address the situation.

References
Cadman, E. (2019). Westpac CEO Hartzer Resigns Amid Money-Laundering Scandal.
Retrieved from: https://www.bloomberg.com/news/articles/2019-11-25/westpac-ceo-
hartzer-resigns-amid-money-laundering-scandal
Reuters (2019). Factbox: Westpac's money-laundering scandal in quotes. Retrieved from:
https://www.reuters.com/article/us-westpac-regulator-factbox/factbox-westpacs-
money-laundering-scandal-in-quotes-idUSKBN1Y00F9
The Business Times (2019) Westpac CEO resigns amid money-laundering scandal.
Retrieved from: https://www.businesstimes.com.sg/banking-finance/westpac-ceo-
resigns-amid-money-laundering-scandal
Yeates, C. (2019). Westpac chief Brian Hartzer to step down in wake of scandal. Retrieved
from: https://www.smh.com.au/business/banking-and-finance/westpac-chief-brian-
hartzer-to-step-down-20191126-p53e2l.html

EDITORIAL (BUSINESS PERSPECTIVE)
In the midst of the failure of the organisation Westpac to comply with the money
laundering and the financial laws, the CEO Mr Brian Hartzer has resigned following the
voting of the shareholders mandate. The following editorial would highlight the perspective
of the company over the mentioned issue.
It is to be noted that the allegations have been filed by the AUSTRAC and the verdict
has not been reached. Peter King would resume the duties of the said office. In the words of
the company executives, the decision of the stepping down was taken as a response to the
voting of the shareholders and the other stakeholders, and considering that this would be the
best step in the present scenario (Letts & Doran, 2019). Some of the immediate key steps that
have been taken by the organisation in response to the mounting pressure from the ministers,
regulators and other critics are in the form of the forfeiture of the short-term bonus of the
CEO and the performance share rights. This highlights the fact that the company has taken
the mandate of the shareholders seriously and the senior executives too have acknowledged
the failure of the community expectations. Further, in response to the Chairman of the entity
is also set to retire along with an another long standing director (Market Watch, 2019). The
Chairman Maxsted has also given due credits to the CEO on the competitive advantage
gained in the last few years under the leadership of Hartzer, including a strong financial
position (Frost & Eyers, 2019). The technical responses have also been duly adopted by the
company in midst of the concerns raised by the politicians, pension funds and other critics.
This included the conduct of the meetings with the community groups to take the steps to
fight the issue of the child exploitation and taking the assistance of the independent experts to
enhance the counter-terrorism financing laws compliances (Vercoe, 2019). Chairman Lindsay
Maxsted has also expressed his apologies towards the said shortfalls of governance and
assured the stakeholders that the organisation would come back stronger.
It can be finally concluded that the efficient steps have been taken by the organisation
Westpac to respond to the mentioned issues in the light of the corporate responsibility
abidance. The steps range from the acknowledgement of the issue, fixation of the technical
short comings, forfeiture of the payments to senior executives, as well as the planning for
better risk management framework.

References
Frost, J. & Eyers, J. (2019). Westpac CEO, chairman to step down. Retrieved from:
https://www.afr.com/companies/financial-services/scandal-claims-westpac-ceo-
chairman-20191126-p53e2k
Letts, S. & Doran, M. (2019). Westpac chief executive Brian Hartzer quits amid pressure
over money laundering scandal. Retrieved from: https://www.abc.net.au/news/2019-
11-26/westpac-ceo-brian-hartzer-quits-money-laundering-scandal/11737864
Market Watch (2019). CEO of Australia’s Westpac Bank resigns over money-laundering
scandal. Retrieved from: https://www.marketwatch.com/story/ceo-of-australias-
westpac-bank-resigns-over-money-laundering-scandal-2019-11-25
Vercoe, P. (2019). Australia’s Westpac Bank Apologizes for Money Laundering, Links to
Child Abuse Funds. Retrieved from:
https://www.insurancejournal.com/news/international/2019/11/22/549280.htm