Corporation Law

This article discusses the rise of corrupt practices by Australian companies and the consequences they face for violating company ethics. It explores the fiduciary duties of directors and the obligation to act in the best interest of the company. The article also highlights a recent case of a former chief of staff who was held accountable for fraud and causing tremendous loss to the National Australian Bank.

Running head: CORPORATION LAW
Corporation Law
Name of the Student
Name of the University
Author Note

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In Australia, there is a rise in corrupt practices by the Australian companies and therefore,
they are deemed to face the consequences of getting embroiled in conduct in violation of the
company ethics. The former chief of staff was held to be accountable for fraud and causing
tremendous loss to the National Australian Bank. The chief was accused of fraud amounting to
tens of millions of dollars. The police investigation and detectives raided the property to find out
that the Chief had taken commissions and had charged in excess of what they should have in the
normal course of their business. it was also noted that the chief had served in the Bank for 20
years and his loyalty was unquestioned but this news has shocked everyone. The corrupt
practices have taken huge proportion and are violations of the contracts that the Bank had
entered with other international agencies. The whistle blowing by the Chief is a blot of the
Bank’s reputation and wellknownness.
The observed principle in light of the current newspaper article is that directors have an
obligation to act in the best interest of the company and the employees of the company. The
Sydney Morning Herald in its article talks about the directors were involved in bribery to gain
unfair profit by illegal means (Bottomley, 2016). This is against the principle of fiduciary
relation that the director owes to the company. Therefore the fiduciary duty of the director entails
that he has to act in good faith and also in the best interest of the company. The director has
many powers under the Act but he needs to use that power for a proper purpose and in this case,
there has been a breach of that power to act responsibly and in the interest of the company
(Ecksntein & Parchomovsky, 2018). A director has a duty to act with reasonable care and
diligence and therefore has to make sure that he has exercised proper care in taking decisions and
has not indulged in nay unlawful activity. In the news reported by the Sydney Morning Herald, it
is clear that there has been a violation of the director’s fiduciary duties. The director is in charge

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of the employees and has to work towards ensuring that the best interests of the members of the
company are upheld. By indulging in bribery, the director has only acted in furtherance of
personal gain and has not kept in mind the growth of the company (Huggins, Simnett &
Hargovan, 2015). Therefore, the director can be said to have indulged in unfair practice and
corrupt conduct. The Chief owes a duty of care to the place he works and therefore by indulging
in commission for contracts and charging in excess of his permitted amount is a violation of the
contract. Even though no charges have been laid as of now, the chief shall be held liable for
breach his fiduciary duties. Having worked for the bank for two decades, there was a trust levied
on him and which he has broken by indulging in corrupt commissioning.

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Bibliography
Cormack, Lucy, Three Sydney Properties Raided Over Alleged Multimillion-Dollar Corporate
Fraud (2018) The Sydney Morning Herald
<https://www.smh.com.au/national/nsw/three-sydney-properties-raided-over-alleged-
multimillion-dollar-corporate-fraud-20180410-p4z8ra.html>Bottomley, S. (2016). The
constitutional corporation: Rethinking corporate governance. Routledge.
Huggins, A., Simnett, R., & Hargovan, A. (2015). Integrated reporting and directors’ concerns
about personal liability exposure: Law reform options. Company and Securities Law
Journal, 33, 176-195.
Eckstein, A., & Parchomovsky, G. (2018). Toward a Horizontal Fiduciary Duty in Corporate
Law.