Theayne royal commission: Banks confess to forgery, bullying, sexual harassment

2019
Comparative Business Ethics and Social Responsibility

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Compliance with ethical principles is crucial for corporations while managing their
operations in the contemporary business environment to ensure that they fulfil their social
responsibilities. This essay will evaluate the article posted by Financial Review titled ‘Hayne
royal commission: Banks confess to forgery, bullying, sexual harassment’ to understand how
the major banks in Australia have failed to comply with their social responsibilities (Frost,
2018). This article was written by James Frost, and it was published on 7th November 2018.
This article provided that Hayne royal commission has issued a decade worth of misconduct
by four major banks in Australia. The royal commission issued 215 documents from financial
institutions which involve major issues such as sexual harassment, forging signature, non-
payment of employee entitlements and fraud (Frost, 2018). This essay will evaluate the
content of this article to understand the key arguments. The ethical concerns which arise in
the article due to the violation of corporate governance, corporate citizenship, and
leadership principles will be analysed in this essay. This essay will evaluate what actions are
taken against the ethical dilemma which is highlighted in this article and whether those
actions are ethical or not. Two relevant ethical philosophies will be applied in this article to
determine whether the actions of the parties involved in this case were ethical or not. This
essay will also use an ethical decision making process to find ethical solutions to the
problem.
In this article, the documents issued by the banking royal commission against the four major
banks in Australia are highlighted which shows the unethical practices of these banks. For
example, it was revealed that a brand of ANZ bank was found guilty of falsifying more than
100 loan application which was made by its customers. The corporation also accepted the
application of 47 fraudulent loans and a mobile banker also submitted false documents
(Frost, 2018). The employees of the company were also found guilty of forging signatures on
the loan documents of the company. Moreover, it was found in these documents that
Commonwealth Bank was guilty of misconduct as well. There are multiple reports in relation
to sexual harassment in the workplace. In a particular case, an employee reported
‘inappropriate comments and use of sexual language’ in the workplace, and the report
made against this behaviour was dismissed by the company (Danckert, Yeates and Collett,
2018). NAB was also found guilty for failure to maintain appropriate standards to avoid data
breaches. The corporation failed to comply with the Privacy Act since it listed credit card

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information of 16,228 customers whose privacy was breached (Macrobusiness, 2018).
Furthermore, the personal details of 60,463 customers were sent by the company to a string
of adult websites (Frost, 2017). Lastly, many alarming incidents were highlighted against
Westpac which include manipulation of internal systems in order to trigger bonuses and
falsification of records in order to meet the key performance indicators.
This article raised many ethical concerns due to the failure of the corporations to comply
with their social responsibilities. The four banking corporations engaged in unethical
practices by failing to comply with their social responsibilities. These corporations have
implemented a code of conduct which guides them to prioritise their stakeholders’ interest
above generation of profits (Yeate and Danckert, 2018). However, these companies
misconducted with their customers and employees by failing to address their issues. The
corporate governance is defined as a set of rules and practices which guides the operations
of a company by allowing it to maintain a balance between the interests of many
stakeholders (McCahery, Sautner and Starks, 2016). These companies did not take
appropriate actions to ensure that their employees are not sexually harassed in the
workplace. These banks failed to give their employees appropriate entitlements to save
their costs. Breach of privacy of customers is a major issue which NAB has failed to maintain
since it leaked the private data of its customers to third parties. These companies have
prioritised profits above the interest of their customers. As a corporate citizen, the company
has failed to discharge its duties in an ethical manner. The principle of corporate citizenship
provides that organisations have to comply with various social, economic and
environmental responsibilities while conducting their operations to ensure that they protect
the interest of their stakeholders (Binz et al., 2017).
In the case of leading banks in Australia, they are considered as a corporate citizen based on
which they have to comply with their duties. As per these duties, they have to maintain a
social responsibility to ensure that they maintain a balance between the interests of their
stakeholders. These banks have failed to provide a safe working environment to employees
since they took no action to protect them from sexual harassment (Smyth, 2017). Moreover,
they also did not give them entitlements to unfairly take their advantage which shows that
they have failed to act ethically as a corporate citizen. A leader’s duty is to share the ethical
behaviour of others in an organisation to ensure that the company and its members comply