Corporate Governance Principles: Lessons from Hastie Group Collapse

This assignment discusses the collapse of Hastie Group and its failure to comply with eight major principles of corporate governance. It identifies key issues such as poor management of international operations, breach of duties by directors, risk governance and internal control, reporting with integrity, audit, and relationship with shareholders and other stakeholders. The analysis provides lessons learned from the collapse, emphasizing the importance of effective corporate governance in preventing similar failures.

Running head: MONITOR CORPORATE GOVERNANCE ACTIVITIES
Monitor Corporate Governance Activities
Name of the Student
Name of the University
Author’s Note

1MONITOR CORPORATE GOVERNANCE ACTIVITIES
The collapse of Hastie Group is considered as one of the major collapse due to the drastic
failure in corporate governance. The collapse of Hastie Group left many workers without job
while made the creditors unsecured. It needs to be mentioned that the company did not follow
eight major principles of corporate governance. They are discussed below:
Principle 1: Governance Structure: According to this principle, there must be an effective
board in every business organization; and the responsibilities and accountabilities of them will be
clearly identified (nccg.mu, 2018). However, in case of Hastie Group, the chief operating officer
of the company was involved in the conspiracy to falsify accounts (asic.gov.au, 2018). It showed
that the company did not follow this principle.
Principle 2: The Structure of the Board and Its Committees: This principle states that the
company should have independent mindset directors (nccg.mu, 2018). However, in case of
Hastie Group, ASIC indicates towards the involvement of the directors of this company in fraud
and illegal activities that indicates towards the non-following of this principle by the company
(directorsaustralia.com, 2018).
Principle 3: Directors Appointment Procedure: As per this principle, companies are required
to implement formal, rigorous and transparent process for the opponent of the directors
(nccg.mu, 2018). Some of the main reasons for the failure of Hastie Group are poor management
of international operations and the breach of duties by the directors. All these aspects show the
non-following of this Principe by the company (directorsaustralia.com, 2018).
Principle 4: Director’s Duties, Remuneration and Performance: This principle states that the
directors of the companies need to be complied with their legal duties (nccg.mu, 2018). The
directors of Hastie Group fail to perform their duties in large acquisition process. Moreover, they

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were involved in various fraudulent activities to falsify the business accounts. Thus, these actions
together violated this particular principle of corporate governance (directorsaustralia.com, 2018).
Principle 5: Risk Governance and Internal Control: It is the responsibility of the board to
govern business risks (nccg.mu, 2018). It needs to be mentioned that the risk committee of
Hastie Group was largely inactive, as the board did not have any inquiring mind to enquire the
fraud activities. This shows that the company did not comply with this principle
(directorsaustralia.com, 2018).
Principle 6: Reporting with Integrity: The board need to present the fair, balanced and
understandable assessment of the financial aspects (nccg.mu, 2018). In case of Hastie Group, the
financial statements of the company were presented in a falsified manned that indicates the
breach of this principle (smh.com.au, 2018).
Principle 7: Audit: The audit procedure of the companies needs to be conducted in the honest
and independent manner (nccg.mu, 2018). In case of Hastie Group, it can be seen that the auditor
of the company failed to comply with the principle of Australian Auditing Standard that leads to
the violation of this corporate governance principles (smh.com.au, 2018).
Principle 8: Relationship with Shareholders and Other Key Stakeholders: The companies
are required to maintain a cordial relationship with all of their stakeholders (nccg.mu, 2018). The
collapse of Hastie Group contributed to the loss of jobs of almost 2700 employees and the
creditors become unsure about the realization of their money. Moreover, the share prices were
also affected. This shows the violation of this principle.

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References
17-384MR Former Managing Director and former Chief Operating Officer of Hastie Services
charged with conspiracy to falsify accounts | ASIC - Australian Securities and
Investments Commission. (2018). Asic.gov.au. Retrieved 22 March 2018, from
http://asic.gov.au/about-asic/media-centre/find-a-media-release/2017-releases/17-384mr-
former-managing-director-and-former-chief-operating-officer-of-hastie-services-charged-
with-conspiracy-to-falsify-accounts/
Battersby, G. (2013). Hastie directors 'may have breached duties'. The Sydney Morning Herald.
Retrieved 22 March 2018, from https://www.smh.com.au/business/hastie-directors-may-
have-breached-duties-20130121-2d322.html
Lessons from the Collapse of The Hastie Group. (2013). Directorsaustralia.com. Retrieved 22
March 2018, from https://www.directorsaustralia.com/blog/110-lessons-from-the-
collapse-of-the-hastie-group
The 8 Corporate Governance Principles | NCCG. (2018). Nccg.mu. Retrieved 22 March 2018,
from http://www.nccg.mu/8-corporate-governance-principles

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