Evaluating Corporate Governance & Ethics Failures at AMP: A Case Study

This case study critically analyzes the corporate governance and ethics issues at AMP, a wealth management firm, and their impact on corporate performance. It identifies deficiencies in AMP's governance and ethical systems, exploring the cultural circumstances that led to these failures. The report evaluates existing mechanisms for whistleblower protection, questioning their effectiveness in safeguarding stakeholders. It also recommends strategies to prevent scandals and details key lessons learned from the AMP case. The analysis covers areas such as excessive focus on non-core issues, ineffective committee structures, flawed remuneration systems, and transparency issues. Furthermore, the study discusses ethical issues like diversity and integrity, and how these affect stakeholder value. Finally, it highlights AMP's commitment to whistleblower protection, emphasizing policies that promote responsible reporting and a supportive working environment.

Running head: Corporate governance and ethics
Corporate governance and ethics

Corporate governance and ethics
Executive summary
The paper provides a brief information about the business operations and actions of AMP which
is one of the largest wealth management firm. Further, it elucidates that how the company is able
to achieve long-term mission and vision after considering corporate governance and ethics. The
deficiencies related to corporate governance and ethics have been evaluated in the task briefly.
These deficiencies may also impact on the practices and operations of AMP in the global market.
Aside this, it outlines innovative strategies and policies that helps in protecting the
whistleblowers largely. Here is the discussion about CSR activities and ethics that also play a
major role in boosting profitability. At the end, some strategies have been implemented to avoid
and detect scandal and issues.
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Corporate governance and ethics
Table of Contents
Introduction.................................................................................................................................................3
Corporate governance and ethics in AMP...................................................................................................4
Deficiency in corporate governance........................................................................................................4
Culture/circumstances which led to the events taking place........................................................................5
Mechanism to protect the whistle blowers...................................................................................................6
Recommend strategies.................................................................................................................................7
Lesson to be learned from this case study....................................................................................................8
Conclusion...................................................................................................................................................9
References...................................................................................................................................................9
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Corporate governance and ethics
Introduction
Corporate governance is considered a base for every company because it helps in
carrying out business activities efficiently. Here is the discussion about the role, significance, and
issues of corporate governance and ethics that are being encountered by AMP company while
exercising business internationally. AMP is a wealth management organization that provides
financial and advisory services to customers in the world. It explains that how the firm manages
and handles the various issues related to corporate governance and ethics. The paper also
outlines innovative strategies and mechanisms that help to protect whistleblowers along with this
it discusses that how strategies and mechanisms provide ample of benefits to the stakeholders in
the competitive market. More detail of this paper has been drawn below.
AMP is a wealth management Corporation that offers services and solutions across
investment management, financial device, banking, retirement income, life insurance, self-
managed superannuation and investing (Linkedin, 2018). The corporation has a long history in
supporting ample of customers managed and handles their finances and attains their goals and
objectives. In today’s modern world, the company is leading independent wealth management
Corporation in New Zealand and Australia helping more than four million customers in the
global market. AMP was incorporated in 1848 having headquartered in Sydney, Australia. Along
with this, the company is listed on in New Zealand and Australia stock exchange. It is reported
that AMP is the biggest shareholder registers with most significant shareholder living in New
Zealand and Australia. The corporation was demerged its UK activities and operations in 2003
and created the Henderson group. It is stated that the company has a partner with around 55,000
organizations to offer good services to the customers across the world. AMP has approx 750,000
shareholders and 100,000 customers in the market (AMP, 2018). AMP also hires and retains the
workers with appropriate attributes and skill set for the employment. Along with this, the
company fosters a good and strong relationship with employees to ensure a high retention rate,
incentives and remuneration packages in the competitive market (AMP, 2018).
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Corporate governance and ethics
Corporate governance and ethics in AMP
Corporate governance is a platform, procedure, and relations by which corporations are
managed and controlled. On the other hand, ethics refers to the principles and rules that govern
an individual behavior, actions or conducting an activity and operation (Benn & Dunphy, 2013).
AMP has committed to excellence in corporate governance, which is a significant part for the
long term sustainability and performance of the firm. AMP Corporation has given a commitment
to ESG and it is the accountable investing amount by launching a new decision making structure
or framework. In ethical consideration, the firm is responsible for the effective and unique
investment management. A new and innovative framework has been incorporated into the
company’s existing environmental, social and governance (ESG) and responsible investment
philosophy that is implemented across the globe. The firm has managed and dealt with various
ethical issues as part of its ESG analysis and by rendering responsible investment choices to the
customers (Benn & Dunphy, 2013). In today’s era, the company is facing ample of issues in the
system of ethics and corporate governance that have been drawn below.
Deficiency in corporate governance
Efficiency of the rules and principles in raising governance standards is questionable: It is
noted that governance arrangements did not manage and operate to protect the firm. Let’s focus
at the financial sector in Australia those rules and principles have not been of the slightest and
effective value at all (AMP, 2017). Excessive focus on non-core management issue is one of the
biggest deficiencies at AMP which may put impact on the shareholder value and worth. It is
stated that principles and rules had led to directors being swamped by hundreds of pages of board
paper and they do not have time to debate significant strategic issues and challenges. It is further
noted that obedience to the rules and principles was ineffective and inadequate in eliminating
governance failures at AMP and other corporations (Edmans, 2012).
Committee structure and framework does not ensure stronger outputs. It is stated
principles and rules had led to directors being flooded by CEO and they do not have adequate
time to debate significant strategic issues or challenges. The obedience to the rules and principles
was inadequate and ineffective in eliminating governance failures at AMP and other
organizations (Minterellison, 2018). It is further shown that remuneration systems and
procedures employed by AMP failed to provide remuneration packages and incentives to the
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Corporate governance and ethics
employees. Performance evaluation of directors is another deficiency at AMP that could affect
directly the performance and efficiency of the workers. Unexpected fall in the share price just
because of the corporate governance issues also impact on the financial position of the firm.
AMP further fails to meet the fundamental tenants of corporate governance. The transparency
issue is being dealt by the company while implementing the business activities internationally.
Transparency refers to the openness which indicates the organization’s relationship with its
workers (Adams, 2017).
Apart from the corporate governance issues, the company also faces various ethical
issues that adversely impact on the productivity and performance of the employees in the global
market. It is analyzed that the code of conduct is a set of rules, regulations, and policies
explaining the social norms, responsibilities, religious and proper practices for an individual and
group. It has been seen that there are a tremendous deficiencies in the ethical system of AMP
thus, the company has to face various issues in the market while functioning. The ethical issues
may also affect the interests and rights of the stakeholders internationally. Diversity is one of the
major concerns hence the company faces various challenges while working (Norwani, Zam &
Chek, 2011).
The company is unable to maintain diversity at the workplace due to lack of training
programs and sessions. Maximizing and enhancing the value of each worker’s contribution is a
key factor in the company’s success and growth. The most significant and fundamental ethical
issue that AMP faces is trust and integrity. Due to trust and ethical issue, the firm failed to
maintain a good and strong relationship with customers while rendering the services to them.
Along with this, it states that the company has failed to make strict rules, policies, and legislation
through which the workers perform tasks and duties in a hassle-free manner. Therefore, it quite
is complex for the top management and board to follow the corporate governance and ethical
policies. The ethical and corporate governance issues further may affect the worth and value of
the stakeholders in the global market (Mutch & Aitken, 2009).
Culture/circumstances which led to the events taking place
It has been noted from the various analysis that AMP does not focus on the culture and
working environment. As a result, it affects the performance and working capacity of the
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Corporate governance and ethics
workers adversely. Chanticleer discovered the bad situation of AMP whistleblower that affected
the growth and targets of the firm in a large extent (Cunningham, 2010). The people who worked
in the company super division between 2014 to 2016 was disturbed to seek the employee openly
and effectively talking about methods and techniques that could be used to get around the rules,
legislation and policies designed to end commissions and general advise and separate personal.
There are various events in which the firm has found unashamedly lying to corporate governance
and ethics. It is investigated that AMP is unable to provide lucrative perks and incentives to the
employees thus; it may affect the growth and progress of the company adversely (Eatough,
Rebellato & Grieg, 2013).
Along with this, the company charges high fees from the customers that highly influence
the brand image of the company in the international market. There are ample of AMP customers
who have never got any advice and suggestion from the company but they have been taken fees
for it. It was one of the biggest brewing financial scandals for AMP which largely affected the
position of the company in the global market. The remediation costs of this scandal are quite
impossible to calculate. The firm has accepted that it has charged around 15,000 customers $4.7
million in adviser fees and further the financial planner then had left the company and not been
replaced later (Ward, 2018). The board of director and management teams do not follow the code
of conducts and ethics, therefore, they could fail to fulfill the needs and demands of the
customers. Due to the lack of proper policies and strategies, the board of director and managers
are unable to act effectively and ethically.
Mechanism to protect the whistleblowers
It is noted that board of director of AMP limited and management team is committed to a
whistleblower program that promotes, supports and protects the responsible reporting of
wrongdoing such as misconduct, fraud, misbehavior, and questionable accounting. The
professionalism, integrity, and honesty are being considered by the company to protect the
whistleblower. In today’s modern world, the company is measuring various standards, policies,
and approaches to eliminate the various issues and challenges while functioning (Simha &
Cullen, 2012). The teams and managers at AMP focus on the collaboration and communication
at the workplace while performing roles and responsibilities effectively. Employee engagement,
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Corporate governance and ethics
employee experience, and employee effectiveness are three pillars of the corporate culture at
AMP. The innovative policies and standards that have been set by AMP help to protect the value
and rights of the stakeholders.
The company takes constructive feedback and reviews from the customers while
rendering the services to them. It is analyzed that culture is a leading and biggest level that any
company has to drive performance and productivity. The employees are empowered to work
effectively and independently and make unique decisions that are exercised by core values and
culture. With effective commitment and collaboration to reporting wrongdoing and misconduct,
the company will continue to develop and enhance a supportive working environment and
culture which aligns various strong and unique values (Reuters, 2018). The commitment further
helps to prevent loss and harm caused by the illegal, unethical and irresponsible act. If the
employees are not feeling comfortable and safe regarding the misconduct and wrongdoing then
they can call and report to the top management and board of director. This call or invitation
would be independent to prompt attention while keeping this information and facts confidential.
It is noted that the whistleblower policy should be uploaded on the organization’s website apart
from this the constitution of the whistleblower (Waples & Culbertson, 2011).
It states that the company is maintaining transparency in the workplace to generate more
revenue and returns. It states that the firm also focuses on the diversity to attract a maximum
number of clients in the market. It will help to protect the company from a whistleblower and
along with this; it is helpful to make a favorable culture and atmosphere at the workplace. Strong
culture further helps in preventing misconduct and wrongful act in the organization. It is noted
that the firm constantly charging high fees from the clients that could affect the financial image
and reputation of AMP in the global market. After the various research, it is analyzed that all
these mechanisms are not sufficient to protect the various stakeholders (Australian Institute of
company directors, 2018).
Recommend strategies
It is noted that AMP Corporation has failed to fulfill the corporate social responsibility and
code of conducts at the workplace. Therefore, various strategies have been implemented to
handle and prevent the above mentioned scandal that are discussed below.
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Corporate governance and ethics
 It is stated that AMP must focus on the CSR and sustainability to stand out over the rivals
and to prevent various issues related to the scandal. Transparency shall also be promoted
by the company to conduct business activities and functions smoothly and successfully.
Effective and unique CSR framework and tool help in resolving and handling the scandal
and issues (Bjørkelo, 2013).
 Training and development sessions and programs shall be held by the company to
promote and motivate the workers for handling the various issues related to misconduct
and misbehavior. Training and development is an essential part of good and strong
corporate structure that help to run the business in a hassle-free manner. Apart from this,
the company should make innovative and unique policies and strategies to prevent issues
related to corporate structure.
 Strong and open communication must be maintained to handle and manage the
grievances and issues of the clients in the international market. The organization further
should take strict actions against the fraud person. Unethical activities shall be prevented
by focusing and protecting the interest and values of the stakeholders (Dasgupta &
Kesharwani, 2010).
 An audit committee shall be appointed by the company to keep an eye on the functions
and performance of the employees. This committee further will help to reduce unethical
activities and operations globally (Vandekerckhove, 2016).
 Top management and managers should listen the concerns and issues of the subordinates
to make happy and motivated them effectively. In this way, AMP can avoid and reduce
the negative impact of the scandal.
 Effective planning must be done to handle and predict the issues, threats, and challenges
related to market and workers as well.
Lesson to be learned from this case study
After analyzing and evaluating the above case study, it is observed that the company like
AMP should not have done the misconduct and misbehavior with employees because it hampers
the image and brand reputation in a large extent. It has been learned from the above-discussed
case study that organization should focus on the corporate social responsibilities, sustainability,
and corporate governance to run the business in an effective manner. This will further help the
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Corporate governance and ethics
firm to cope up and strive with competitors in the international market. It is observed that
scandals are not good for any company because it hampers the profitability and image of the
organization adversely. To be a leader and attain high profitability, the company needs to focus
on corporate governance and whistleblower policies. A knowledge and information about
corporate governance, CSR and ethics have been gathered from the above case study.
Conclusion
It is concluded from the above-mentioned study strong corporate governance and ethics
help in maximizing and boosting the profitability and attracting the ample of clients in the global
market. AMP is one of the leading wealth management companies that provide enormous retail
and financial services to customers around the globe. It is further stated that AMP needs to focus
on training and ethics to improve and enhance the initiatives and activities internationally. The
above-mentioned analysis indicates that the company was not followed a unique and effective
culture and further it was not focused on the corporate governance. As a result, various
consequences and issues were faced by the firm. All these issues and challenges also affect the
progress and profitability of AMP Company in today’s global market. It is further noted that the
firm is making attractive and unique policies to handle and eliminate the issues related whistle
blowers and poor corporate governance issues.
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Corporate governance and ethics
References
Adams, C. (2017). Understanding integrated reporting: the concise guide to integrated thinking
and the future of corporate reporting. Routledge.
AMP.,(2017). AMP capital introduces new ethical framework [Online], Retrieved from
https://corporate.amp.com.au/newsroom/2017/march/amp-capital-introduces-new-
ethical-framework
AMP.,(2018). Corporate governance [Online], Retrieved from
https://www.ampplc.co.uk/investors/corporate-governance/
AMP.,(2018). Who we are and what we do [Online], Retrieved from
https://corporate.amp.com.au/about-amp/what-we-do/what-we-do-key-facts-our-history
Australian institute of company directors.,(2018). Corporate governance failure is not a gender
issue[Online], Retrieved from
https://aicd.companydirectors.com.au/membership/membership-update/corporate-
governance-failure-is-not-a-gender-issue
Benn, S., & Dunphy, D. (2013). Corporate governance and sustainability: Challenges for theory
and practice. Routledge.
Bjørkelo, B. (2013). Workplace bullying after whistleblowing: Future research and
implications. Journal of Managerial Psychology, 28(3), 306-323.
Cunningham, S. (2010). The media and communications in Australia. ReadHowYouWant. com.
Dasgupta, S., & Kesharwani, A. (2010). Whistleblowing: a survey of literature. The IUP Journal
of Corporate Governance, 9(4), 57-70.
Eatough, G., Rebellato, D., & Grieg, D. (2013). The Suspect Culture Book. Oberon Books.
Edmans, A. (2012). The link between job satisfaction and firm value, with implications for
corporate social responsibility. Academy of Management Perspectives, 26(4), 1-19.
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Linkedin.,(2018). About us[Online], Retrieved from https://in.linkedin.com/company/amp
Minterellison.,(2018). Corporate governance stock take: AMP chair David Murray’s comments
have sparked broader debate [Online], Retrieved from
https://www.minterellison.com/articles/amp-chair-david-murray-critiqueasx-corporate-
governance-principles-and-recommendations
Mutch, N., & Aitken, R. (2009). Being fair and being seen to be fair: Corporate reputation and
CSR partnerships. Australasian Marketing Journal (AMJ), 17(2), 92-98.
Norwani, N. M., Zam, Z. M., & Chek, I. T. (2011). Corporate governance failure and its impact
on financial reporting within chosen companies. International Journal of Business and
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Reuters.,(2018). AMP Ltd(AMP.AX)[Online], Retrieved from
https://www.reuters.com/finance/stocks/overview/AMP.AX
Simha, A., & Cullen, J. B. (2012). Ethical climates and their effects on organizational outcomes:
Implications from the past and prophecies for the future. Academy of Management
Perspectives, 26(4), 20-34.
Vandekerckhove, W. (2016). Whistleblowing and organizational social responsibility: A global
assessment. Routledge.
Waples, C. J., & Culbertson, S. S. (2011). Best-Laid Plans: Can Whistleblowing on Project
Problems Be Encouraged?. Academy of Management Perspectives, 25(2), 80-82.
Ward.J.,(2018). AMP was a ‘dictatorship’ declares whistleblower [Online], Retrieved from
https://www.yourlifechoices.com.au/finance/banking-and-investment/amp-a-dictatorship-
whistleblower
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