ANZ Cartel Scandal: Analyzing Ethical Behavior through Organizational Learning Theories

This report analyzes the ANZ Cartel Scandal of 2015 through the use of organizational learning theory. It identifies obstacles to organizational learning and recommends ethical practices for ANZ Bank to regain its reputation.

Running Head: THE LEARNING ORGANIZATION
The Learning Organization
Name of the Student
Name of the University
Author Note

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Table of Contents
1. Introduction.........................................................................................................................2
2. The ANZ Cartel Scandal – An Overview...........................................................................2
3. Analyzing the Ethical Scandal of ANZ Through the Use of Organizational Learning
Theories......................................................................................................................................4
4. Recommendations for Ethical Behavior for ANZ Bank.....................................................5
Conclusion..................................................................................................................................6
References..................................................................................................................................7

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1. Introduction
The ANZ Group, or the Australia and New Zealand Group is one of the foremost
banks in the country of Australia, enjoying a prominent position by virtue of its market
capitalization. It is the third most well known banking group in Australia after the
Commonwealth Bank and the Westpac Banking Corporation. Operations in Australia form a
major part of the business of ANZ, with both commercial and retail banking dominating such
operations. Even though ANZ is a bank that has been enjoying a good reputation worldwide,
and in Australasia for quite some time now, it recently ended up tarnishing its reputation
quite a bit by becoming involved in an infamous scandal that came to be known as the ANZ
Cartel Scandal of 2015 (Heller and Phillips 2017). In this report, an in-depth analysis is
carried out of the notorious Cartel Scandal that ANZ got involved in, by making use of
organizational learning theory for this purpose. The report identifies all the obstacles that
stand in the way of the process of organizational learning with emphasis on the ANZ Bank
and concludes with different and crucial recommendations on the type of ethical practices
and ethical standards that ANZ bank can adopt to once again regain its reputation and good
name in the world market.
2. The ANZ Cartel Scandal – An Overview
The ANZ Bank in the year of 2015 was faced with the mammoth responsibility of
raising as much as three billion dollars, the aim of doing so being to increase the bank’s
capital reserves by leaps and bounds. The ANZ Bank decided that this is something that it
was going to achieve by issuing new shares (Jose et al. 2018). Three renowned investment
banks in Australia were roped in by the ANZ Bank for this purpose, namely the Deutsch
Bank, Citi Group and JP Morgan. The intention behind this large scale collaboration was to

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try and raise at least an amount close to 2.5. billion dollars out of the 3 billion dollars which
was needed by the ANZ Bank. This the collaborators intended to do, by searching out top
notch investors, that is institutional investors, who would have the capital as well as the
inclination to make a bulk purchase of shares. The residue amount, that is the additional five
hundred million dollars that would be needed by the ANZ Bank would be raised or arranged
for by making some interesting offers to existing shareholders at the ANZ Bank, who would
be invited to purchase around fifteen thousand dollars against each of the extra or additional
shares (Wishart and Wardrop 2018). A decision was arrived at, that, what the three banks
would do would be to engage in the task of underwriting all of the shares, implying that in
return for a large sum of money, the buyers needed for purchasing the shares would be
located by the investment banks. If it so happened, that there were no buyers who were
interested in purchasing the shares, then the whole cash load is what would then be procured
by these investment banks. Yet it needs to be remembered that all the three investment banks
were not able to sell all of the shares. They were only able to raise 1.7 billion dollars of the
two and a half billion dollars which they had been looking to raise by taking part in the
underwriting of shares. The shortfall at the end of it all ended up amounting to as much as $
800 million. This would be followed by the buying and selling off, of shares by the banks, but
on a different date. The cartel had been formed therefore, an alleged cartel in which all three
investment banks would take a decision as to how the shortfall that was arising in the bargain,
was going to be handled, that is, the subject of how the remaining or residue shares were
going to be sold, especially if it proved to be difficult for the banks to get the shares sold at
the price at which they wanted to sell these shares. If everything had worked as per plan, then
the ANZ Bank share price would be one that would remain very artificially high with no
losses being incurred by the other banks in the whole bargain either. The whistle on the cartel
was however blown by JP Morgan, and once all the scheming had been discovered by the

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investigating agencies, JP Morgan was spared from the possibility of otherwise being very
severely prosecuted (Sahut et al. 2018).
3. Analyzing the Ethical Scandal of ANZ Through the Use of
Organizational Learning Theories
If organizational learning theories are anything to go by, then the term learning
organization alludes to an organization concerns itself wholeheartedly with the learning
process, to the development process, as well as the skills and attitudes that need to be
made use of extensively in any competitive business environment. The learning process is
associated with the development of organizational intellectual capital, which is the
competitive and sustainable strength of a learning organization (McShane et al. 2019).
Since the cartel was formed on the part of the ANZ Bank in collaboration with the
Deutsche Bank and JP Morgan on entirely unethical grounds, it is a collaboration that
would have ended up rooting out competition, resulting customers getting ripped off in
the process. Customers are known to benefit the most when banks compete heavily
against one another, and if there is no competition in the first place, it would result in the
long term as well as the short term customers of the ANZ Bank and the other banks,
getting ripped off completely (Fichter 2018). All customers of the banks would have been
harmed considerably and potentially if they were not in a position to take advantage of
the prices that could have been there for them to take advantage of, had the cartel not
been formed and the competition not totally killed. Choice and innovation, two very
important concepts which are associated with the organizational learning process, would
have been undermined by a considerable extent, had the cartel ended up being successful
in its operations (Baselga-Pascual et al. 2018).

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The absence of good leadership, and the habit of focusing on self interest rather than
the interests of the organization are two of the most crucial obstacles to the process of
organizational learning as witnessed at a bank like the ANZ Bank. This is something that
was revealed very clearly once the ANZ Cartel failed to be successful in its operations.
Those who were working at the top levels of the ANZ Bank’s management were not
interested in any way in taking the bank in forward direction. Instead what they wished to
do was to accumulate as much profit as possible for themselves. The more the profit they
could amass, the better it would be for them. Also, the fact that the ANZ Bank is one that
got itself involved in un-ethical activities shows that the communication between the top
level management at the bank and the employees working at the bank was very poor. If
the employees at the ANZ Bank had got wind of what was going on, they would have
dissuaded the top level management at the bank from taking part in such unethical
activities in the first place (Kvalnes and Nordal 2018).
4. Recommendations for Ethical Behavior for ANZ Bank
 Transparent and prudent funds monitoring is something that the ANZ Bank
definitely needs to engage in, it wants to avoid unethical behavior on the part
of its employees and top level management in the long run. The bank
administrators need to be aware of how the bank’s resources are being put to
use and if there are specific people who are responsible crucial work at the
bank, then their behavior and activities should be monitored so they are not in
a position to swindle the bank’s resources in any way (Lassoued et al. 2018).
 Loans that are sanctioned by the ANZ Bank are those that need to be granted
to customers using an ethical and social perspective. The loans given should

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help those who need money for good causes rather than those who are going to
use it to make porn films or oppress the poor (Saxena 2018).
 Every effort needs to be made on the part of the ANZ Bank from not using its
power to abuse and to oppress the poor. The bank’s activities are those that
need to be directed towards social welfare rather than hurting people who are
financially not well positioned. Oppressive clauses for instance should be
those that are left out of mortgage agreements by the ANZ Bank (Banks et al.
2018).
 Moral sensitivity and social imagination need to be deployed by the ANZ
Bank for conducting its operations (Saxena 2018).
 Corporate or business citizenship is the element that must guide ANZ Bank in
whatever it does. ANZ bank must do everything in its power in order to make
sure that its operations are conducted in the most socially responsible way
possible. The bank needs to focus less on the accumulation of profit and more
on social welfare (Saxena 2018).
 Self regulation and integrity both need to be emphasized if the ANZ Bank is to
refrain from corruption and unethical practices in the future (Banks et al.
2018).
Conclusion
The involvement of a prominent and well reputed bank like the ANZ Bank in
unethical practices like the ANZ Cartel Scandal of 2015 is something that remains quite
unacceptable and shocking. This is one of the best known banks in the country of Australia
and the fact that it could get involved in an ethical scandal is very hard to believe and to
accept. Every effort needs to be made on the part of the ANZ Bank to carry out operations in

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as ethical a manner as possible, with the top level management of the bank focusing more
improving communication with employees and fostering competition and innovation rather
than focusing on self accumulation for profit.

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