logo

Ethical Issues in Businesses

   

Added on  2021-06-16

12 Pages2757 Words43 Views
Running head: ETHICAL ISSUES IN BUSINESSETHICAL ISSUES IN BUSINESSName of the StudentName of the UniversityAuthor note

1ETHICAL ISSUES IN BUSINESSEthical issues concerning business have been a major focus for experts across the globeand no matter how stern the measures taken are these issues surface most frequently in the media(Soltani and Maupetit 2015). Very recent news published in The Guardian, the leading Englishdaily described similar incident concerning a renowned organization (Theguardian.com 2018).The news article mentioned Commonwealth Bank’s recent money-laundering scandal that tookthe Australian business community by storm. It must e noted that the Commonwealth Bank is thetop bank in Australia and one of the top in the world. The news article focused on the failure ofcorporate governance on the part of the bank and the consequences it had to face. In this essay, the news article shall be further analyzed and the answers to certainquestions will be given. These include the key ethical issues the article raised, whether ithighlighted the most appropriate issue, whether it had the seven moral philosophies or notamongst others. The news article mentioned the fall in the profit of Commonwealth Bank after it wasbooked for money laundering. The bank is under the vigilance of AUSTRAC, Australia’sfinancial intelligence after it was revealed that the bank had 53, 700 breaches of Counter-Terrorism and Anti-Money laundering laws(Ft.com 2018). According to AUSTRAC, the bankpermitted four syndicates involved in money laundering to use its smart deposit machines. Threeamong the four syndicates had links to the network of drug importation and distribution. One of the key issues highlighted by the article was that of corporate governance. Whiledelineating the causes of the bank’s failure to register profit amidst controversies, the articlementioned that the bank had too little an amount saved for penalties imposed by the court. As apart of corporate governance, every company is bound to follow certain rules and standards by

2ETHICAL ISSUES IN BUSINESSwhich the interests of the stakeholders and shareholders are balanced. Corporate governancecomes under the ethical code of conduct followed by the organization (Allen 2017). Corporategovernance involves Commonwealth Bank claims to commit to high standards of corporategovernance where shareholders and stakeholders are informed regarding the bank is polices andfunctioning through effective and timely communication (Commbank.com.au 2018). However,in the news article it can be found that the organization was involved severe breach of corporategovernance ethics (Pearson 2017). The bank, as already mentioned has been alleged byAUSTRAC that it had failed to act on the suspicious activity of on its intelligent depositmachines. It is still uncertain whether any bank official had the knowledge of such activities orwhether it was just a case of negligence of the bank. The article also raised issue of corporategovernance stating that the bank failed to realize the seriousness of the negligence. In the article, it was mentioned that the Chief Executive officer, Ian Narev would stepdown as the CEO in order to avoid the spotlight. It must be noted that the scandal had hit CBA in2017 and roughly a year after; the CEO decides to step down after heavy scrutiny from topAustralian financial regulatory bodies (Heraldsun.com.au 2018). The ethicality of Narev’sresignation comes under question as he is allowed to get full year remuneration of 5.5 millionAustralian dollars although it was down from the previous year when he took 12.3 milliondollars. The former CEO also took a pay cut of 55% in the last fiscal year. Narev’s role as theCEO is also questioned because it was not the first case when the bank was accused of fraudulentactivities. Previously, CBA came under scrutiny when some whistle-blowers exposed thefinancial planning fraud that the bank was involved in. The executive board headed by Narevmade little efforts to reply to its stakeholders. The recent scandal not only scarred the image ofthe bank, it also put the interest of its shareholders and stakeholders at stake. The bank had

3ETHICAL ISSUES IN BUSINESSbreached its corporation laws that require it to oblige by the disclosures especially to itsshareholders. In a rather shocking move, the bank announced the appointment of Matt Comyn as thenext CEO after Ian Narev stepped down. Matt Comyn is a chief suspect in the money launderingcase and his appointment as the CEO raises serious ethical issues (Dailymail.co.uk 2018). Thebank executive board made the decision internally to appoint Comyn as the next CEO withoutconsulting with the shareholders. Comyn was involved in the money laundering scandal wherehis role in rolling out the defaulted intelligent deposit machines in the infamous case. Theappointment questions the intentions of the bank, as it is obvious for any organization not toappoint any controversial member into the head of its operations. Rather the bank should haveheld a meeting with its shareholders and appointed a cleaner and deserving candidate for thepost. As per the standard corporate governance ethics, the bank should have firstly paid heed tothe warnings by the regulatory bodies of suspicious transaction activities in its branches. Further,the bank must have informed its shareholders and stakeholders about the issue through its onlineportal or by conducting an emergency meeting. The news article stated that the bank is most likely to pay a penalty of close to one billiondollars as demanded by AUSTRAC since it breached more than 53,000 laws of anti-moneylaundering and terrorism funding rules (ABC News 2018). Each breach is likely to cost 21million dollars to the bank. Looking at the history of AUSTRAC’s investigation, the bank islikely to succeed with a settlement of not more than half a billion dollars. The article includedthe views of Helen Bird, an expert in corporate governance who mentioned that the bank failed

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
Behavioral Factors Leading to Gross Negligence in Commonwealth Bank of Australia
|13
|2346
|243

Financial Ethics: Case Study on Commonwealth Bank
|13
|709
|50

Commonwealth Bank of Australia's Anti-Money Laundering Breach
|7
|1869
|168

Commonwealth Bank Data Breach: Risk Management Failure
|6
|2277
|446

Law of Financial Institution and Security: Assignment
|11
|2786
|127

Corporate Governance Failure: An Analysis of Commonwealth Bank of Australia's Money Laundering Scandal
|11
|2820
|391