Business Ethics Report: ANZ Bank's Ethical Dilemma in Cambodia

This report delves into the realm of business ethics, using the ANZ bank as a case study. The report examines the bank's controversial financing of a Cambodian sugar plantation, which has been accused of land grabbing, forced evictions, child labor, and food shortages. It focuses on the ethical responsibilities of ANZ's CEO, Shayne Elliott, in accordance with the virtue ethical theory, analyzing his actions through the lenses of integrity, trust, fairness, and honesty. The report explores the ethical implications of the bank's actions and the various options available to address the situation, including thorough investigations, calling off the deal, returning land, and implementing CSR activities. The analysis highlights the need for ethical conduct and social responsibility in business practices, especially for a globally recognized financial institution. The report concludes with recommendations for ANZ to rectify its association with the unethical plantation, emphasizing the importance of upholding ethical standards and promoting fair practices.

Running head: BUSINESS ETHICS
BUSINESS ETHICS
Name of the Student
Name of the University
Author note

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Executive Summary:
This report deals with the branch of business ethics. Here, in this report, the example
of a reputed banking company ANZ bank has been taken. The example is based on a real life
incident where the bank is accused of providing loans to a plantation in Cambodia, which had
displaced families, grabbed their lands and forced their children o work for sustenance. Here,
the ethical responsibilities and traits of ANZ’s CEO have been discussed in accordance with
the principles of the virtue ethical theory. In addition to this, various recommendations have
been provided which coincides with the moral framework of the virtue ethics.

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Introduction:...............................................................................................................................3
Discussion:.................................................................................................................................3
The primary issue:..................................................................................................................3
The Virtue ethical theory:......................................................................................................5
Intellectual ethics:..................................................................................................................6
Moral Virtues:........................................................................................................................6
Ethical analysis:.....................................................................................................................6
Integrity..............................................................................................................................7
Trust...................................................................................................................................7
Fairness..............................................................................................................................7
Honesty..............................................................................................................................7
The Options available:...........................................................................................................8
 Conduct a thorough investigation of the scenario...........................................................8
 Calling off the deal..........................................................................................................8
 Returning of the land and other amenities......................................................................8
 Performing CSR activities...............................................................................................8
Conclusion:................................................................................................................................9
References:...............................................................................................................................10

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Introduction:
The concerned report deals with the branch of ‘Business Ethics’. In this report, a well
reputed banking institution has been used as the medium of reporting the various aspects of
business ethics. ANZ bank has been used as the relevant bank for this report. It is one of the
top 100 banks in the world. Its service spans across 5 million customers worldwide and
employs more than 28,000 people. Its primary markets include Australia and New Zealand.
In this paper, a real life situation has been stated in connection with the ANZ bank and the
ethical scenario of the situation has been explained with the help of the virtue ethical theory.
The ANZ bank has been under fire for granting loans to controversial Cambodian sugar
plantation. The plantation has been reportedly been involved in child labour, military-backed
grabbing of land, forceful evictions and acute food shortages. The responsibilities of the
agent (ANZ’s CEO) in accordance with the ethical theory of Virtue theory have been done.
The various aspects of the company’s association with this unethical plantation have been
discussed.
Discussion:
The ANZ bank is a bank of high social and international repute. The bank has
entangled itself in a controversial situation by providing loans to a plantation in Cambodia
and this has caused a major uproar in the international media. This revelation has raised
questions over the bank’s compliance with its banking codes of conduct and its overall ethical
conduct. The details of the case have been stated below.
The primary issue:
ANZ has reportedly been financing a Cambodian sugar plantation named Phnom
Penh that has been involved in various unethical activities such as child labour, land grabbing

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by militants, forced evictions and even food shortages. It is owned by Ly Yong Phat, who is
Cambodia’s richest man and a senator of its ruling political party (Baker, 2018). This
association has been disclosed in the confidential audits and it also shows that the plantation
has been linked to a series of social and environmental problems. The various problems are:
 More than 1000 families have been forced from their homes in 2010 to make way for
this plantation (Wilkins, 2018).
 Inadequate compensation have been given in exchange of the lands.(Richard Baker,
2018).
 The resettlements sites were located in infertile lands as a result of which the families
have faced acute food shortages.
 The children who are of the school going age have been seen working on the sugar
cane fields to help their families to earn income for sustenance instead of attending
their classes.
 The audits have also disclosed that Mr. Phnom’s company has failed to provide
proper food and resettlement to the displaced families.
 The company has also not provided proper environmental, health and social
management programs which are compulsorily required in accordance with ANZ’ s
ethical responsibilities.
As a result of these non ethical events, the company has been under fire. The ANZ is
believed to have paid millions of dollars to the Cambodian subsidiary, ANZ Royal
bank. The Royal bank is owned by Cambodian tycoon Kith Meng who is one of the
close associate of Prime Minister Hun Sen. The corrupt nexus has been blatantly
exposed (Roden, 2014). The voices of the displaced families have been drowned in
the politics of greed.

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The Virtue ethical theory:
Virtue ethical theory has a significant bearing on this project. It is a kind of normative
ethical theory. Here the emphasis is laid not on the rules, action, and its consequences but on
the contrary it places its focus on the person who is performing the given task at the moment.
Here the prime focus is laid on the individual or the agent who is in charge of the situation.
His or her responsibilities and ethical bend of mind is important in the arena of virtue ethics.
What is important is that whether or not the person concerned is expressing a good and moral
character with virtues or not. A person’s character traits sum up his or her character. These
character traits can be good, bad admirable or non admirable in nature and it is these traits
which make up a person’s character on the whole (Hartman, DesJardins & MacDonald,
2014). The traits which are good and admirable in nature are known as the virtues and the bad
ones are called vices. Virtues help in fulfilling one’s innate potential, on the contrary vices
destroys a person. Some important features of character traits are mentioned below:
 According to Bright et al., (2014) Character traits are generally a certain kinds of
habits which become a part of a person’s character and sticks to him or her like a
shadow. They are known as secondary nature (as humans are not born with these
traits, they develop it over time). It is therefore said that infants who are born are
neither virtuous nor have vices in them.
 These character traits are not with us. We discover these as a result of selective
actions which we undertake in the course of everyday life. We develop the habit of
lying or telling the truth only because of the habit of constant lying or telling of truth.

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Intellectual ethics:
Intellectual ethics refer to the intelligent bent of mind or rather the intellectualness of
one’s brains. It refers to the ability to understand, judge and perfect reasoning (Ferrell&
Fraedrich, 2015). It is not innate or inbred in nature but on the contrary it is taught.
Moral Virtues:
Moral virtues are an indispensable part of virtue ethics. The various kinds of moral
ethics are an integral form of virtue ethics (Vaughn, 2015). The various forms of moral
virtues which are essential hallmark of the virtue ethical theory are as follows:
o Truthfulness
o Liberality
o Rightful ambition.
o Magnificence
o Magnanimity
o Temperance
o Modesty
o Wittiness
o Rightful indignation.
All these forms of moral virtues are very important and form a major constituent of the
internal framework of virtue ethics.
Ethical analysis:
Shayne Elliott who is the Chief Executive Officer of ANZ bank has been selected as
the agent of this report. All the important deals and financial transactions which require a
substantial amount of money should be conducted with the approval of the CEO of the
company. In this case, where the ethical obligations and the overall reputation of the
company is at stake, the complete approval and permission of the CEO becomes all the more
essential for the company. Although, such an important deal cannot escape the eyes of the
CEO, so it becomes the moral responsibility of the CEO and the board of directors of the
company to ensure that the moral and ethical responsibilities of the companies are fulfilled at

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the earliest. The responsibilities and his ethical obligations in accordance with the values of
the virtue ethical theory have been explained below:
Integrity: Integrity refers to the honesty truthfulness and accuracy of a person’s action.
Shayne Elliot does not show integrity to his company ANZ, where he was a Board of
Director as well as the reigning CEO. Instead he indulged into politics of greed and let Mr.
Penh have his say in the entire deal. It was the CEO’s responsibility to take note of this and
abstain from indulging his as well as the company’s name in this corrupt transaction which
led to unethical operations of such a large scale.
Trust: Mr. Elliot broke the trust of the other Directors on ANZ’s board. He also had broke
the trust of the various stakeholders of the company which includes its loyal customers,
financers, investors, government and the international banking community at large.. His
passiveness towards this entire corrupt operation has seriously affected the relationship with
the banking community.
Fairness: Shayne Elliot’s actions are not fair for two reasons. First, other investors who do
not have any idea or information about this deal are at a significant amount of disadvantage.
Second, he uses the information entrusted to him to help Mr. Penh and his corrupt business
associates who have expanded their business interests at the expense of the poor displaced
people of Cambodia.
Honesty: He was not at all honest with ANZ as well as with his fellow board members. He
never disclosed this deal to the various stakeholders of the company which has significantly
hampered the company’s reputation at large.
The Options available:
The options available to the CEO of the company can be broadly stated below:

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 Conduct a thorough investigation of the scenario: The CEO should initiate a
thorough investigation of this case so as to ensure that the ethical confidence of the
company’s various stakeholders is not diminished. This investigation should be
impartial in its nature and it is one of the important aspects of the virtue ethical
theory.
 Calling off the deal: The Company has suffered tremendous loss of reputation in
the international arena. It is recommended that the CEO call of this deal with Mr.
Penh and his corrupt business associates.
 Returning of the land and other amenities: The affected families have suffered
tremendously due to the corrupt business practices of Mr. Penh and his company. The
loss of land, absence of quality food, and child labour has significantly caused a
serious upset in the lives of these displaced families. The best way to deal with this
issue is to return all the fertile lands to their rightful owners.
 Performing CSR activities: Corporate social Responsibility is an important
management tool which reflects the ethical responsibilities of a company. Mr. Elliot
can initiate the various kinds of CSR activities of the company to help all the affected
families to rehabilitate themselves into their former homes. Setting up of schools,
returning the fertile lands to their owners, providing quality food to these people will
help the company in a long way.
Conclusion:
ANZ is one of the most reputable banking companies in the world. It is considered as
one of the top hundred companies all over the globe. In this kind of a scenario, the company
has engaged in an unethical deal which has significantly affected its reputation in the
international business community. The company had provided loans of considerably high

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amount to Mr. Penh’s company but the company has been accused of displacing families,
grabbing the lands and this has led those families suffer from the lack of food and have
forced their children to undertake work instead of studies to support their families. ANZ
should immediately take stern action against this company and should refrain from providing
loans to companies which do not have any ethical responsibilities and consideration in
performance of their duties.

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References:
Bright, D. S., Winn, B. A., & Kanov, J. (2014). Reconsidering virtue: Differences of
perspective in virtue ethics and the positive social sciences. Journal of Business
Ethics, 119(4), 445-460.
Caldwell, A. (2018). ANZ embroiled in Cambodian sugar land grab. ABC Radio. Retrieved
14 March 2018, from http://www.abc.net.au/radio/programs/pm/anz-embroiled-in-
cambodian-sugar-land-grab/5216194
Ferrell, O. C Fraedrich,., & J. (2015). Business ethics: Ethical decision making & cases.
Nelson Education.
Hartman, L. P., DesJardins, J. R., & MacDonald, C. (2014). Business ethics: Decision making
for personal integrity and social responsibility. New York: McGraw-Hill.
Jayawickreme, E., Meindl, P., Helzer, E. G., Furr, R. M., & Fleeson, W. (2014). Virtuous
states and virtuous traits: How the empirical evidence regarding the existence of broad
traits saves virtue ethics from the situationist critique. School Field, 12(3), 283-308.
Richard Baker, N. (2018). ANZ under fire for loans to controversial Cambodian sugar
plantation. The Sydney Morning Herald. Retrieved 14 March 2018, from
https://www.smh.com.au/national/anz-under-fire-for-loans-to-controversial-
cambodian-sugar-plantation-20140122-3196z.html
Roden, D. (2014). Big banks helping grab land from poor. Green Left Weekly, (1008), 13.
Vaughn, L. (2015). Doing ethics: Moral reasoning and contemporary issues. WW Norton &
Company.

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Wilkins, G. (2018). ANZ faces calls for compensation over Cambodian sugar plantation
deal. The Sydney Morning Herald. Retrieved 14 March 2018, from
https://www.smh.com.au/business/banking-and-finance/anz-faces-calls-for-
compensation-over-cambodian-sugar-plantation-deal-20140806-100w03.html