Corporate Governance and Social Responsibilities of National Australia Bank

Running head: CORPORATE GOVERNANCE AND SOCIAL RESPONSIBILITIES
Corporate Governance And Social Responsibilities

CORPORATE GOVERNANCE AND SOCIAL RESPONSIBILITIES 1
Contents
Introduction................................................................................................................................2
National Australia Bank Conduct..............................................................................................2
Stakeholder Theory....................................................................................................................3
Corporate Governance Theories................................................................................................3
Agency Theory.......................................................................................................................4
Stewardship Theory...............................................................................................................4
Corporate Social Responsibility (CSR).....................................................................................5
Ethical Theories.........................................................................................................................5
Deontology Theory................................................................................................................5
Utilitarianism Theory.............................................................................................................6
Justice Theory........................................................................................................................6
Corporate Governance Discussion based on ASX 2010 Principles and Recommendation.......7
Recommendations......................................................................................................................8
Conclusion..................................................................................................................................8
References..................................................................................................................................9

CORPORATE GOVERNANCE AND SOCIAL RESPONSIBILITIES 2
Introduction
In this report, the corporate governance and social responsibilities of the National Australia
Bank (NAB) will be discussed. The National Australia Bank (NAB) is among the top
financial institutions of Australia. NAB is also the listed company of the Australia Stock
Exchange (ASX). Recently in the report of the Banking Royal Commission the conduct of
the bank has been in question (ABC News, 2018). Banking Royal Commission is a body that
conducts inquiry, set up by the Crown on the recommendation of the government. The
importance of stakeholders for a company will be elaborated in this report. The Corporate
governance of the NAB will be analysed from the corporate governance theories, theories of
the Corporate Social Responsibility and theories of Creating Shared Value. The discussion on
the Corporate Governance of the National Australia Bank is based on ASX 2010 Principles
and recommendations. The Directors conduct will be analysed by the ethical theories as well
as the theories of justice and economic distribution.
National Australia Bank Conduct
The Banking Royal Commission had submitted his report in that various conducts of the
employees of the National Bank of Australia had been coming into the Banking Royal
Commission misconduct. The Staff of the NAB had been found to be in the bribery in the
banking Royal Commission inquiry. They are found to be charging unnecessary fees from the
clients for the services they had not provided. They had also found charging fees from the
clients who are already died (Hurchens, 2018). The NAB was criticized for hiding the
information from the Australian Securities and Investments Commission (ASIC) for the scale
of fees for no service. The major misconduct was between from the year 2009 to 2015 where
the staff of the bank had been found to be in the inappropriate planning. Many of the financial
advisors of the company had breached their duties and their license had been terminated by
the ASIC (Bartholomeusz, 2018). The commission has been given to the gym trainers and the
non-financial experts in the introducer program for referring the clients to the National
Australia Bank (NAB). Major breached like forged documents for settling down the loans. It
was also revealed in an article of the newspaper that there is volatile and a toxic culture in the
bank. It can be concluded from the report that there been an issue in the corporate governance
and in the ethics of the directors of the National Australia Bank (Hurchens, 2018). However it
is not proved that the bank has conducted these things but due to the series of scandals that

CORPORATE GOVERNANCE AND SOCIAL RESPONSIBILITIES 3
had been comingthere is poor corporate governance and the ethical culture in the organisation
(Bartholomeusz, 2018).
Stakeholder Theory
The Stakeholder theory is being recognised as the well-known theory of the corporate
governance. As the name suggests the Stakeholder Theory is about the stakeholders of the
company. The Stakeholders states that the shareholders are just one of the stakeholders of the
company. The stakeholder theory is a bigger term as it includes customers, investors,
government, people, employees and the others. The stakeholders should be a first priority for
the company as the success of the company depends on its stakeholders. The company is
required to take care of the interests of the stakeholders to run in a long way. Therefore it is
required that companies must consider the priorities of the stakeholder in making plan and
policies. It becomes necessary that the companies not only took the interest of the shareholder
to be in the priority but also the interest of the stakeholders should also require to be
considered. The National Australian Bank has not taken the interest of the stakeholder in the
priority as the clients had been cheated by the bank employees. They had charged
unnecessary fees from the clients for no services. The Company had cheated their clients and
has done unethical practices and they had made forged documents for settling down the
loans. The director of the companies has the duty towards their customers who are the part of
the stakeholder theory but they had failed to give priority and its results they had faced a lot
of criticism in the country for their Misconduct. The company has faced a legal, social,
economic and the political implication due to the non-implication of the Stakeholder Theory.
Thus from these types of breaches it can be said that the bank has failed to apply this theory
in their organisation. This theory main motive is to suggest that the companies not only
consider or work in the shareholders but they are also required to work for the interest of the
Stakeholders. It can be said from the conduct of the NAB and its impact that the stakeholders
are the main part of the organisation (Heath, 2018).
Corporate Governance Theories
The theories of corporate governance will guide the companies to how to make a good
governance environment in the company.