Case Study: ANZ Bank's Governance and Ethical Issues - MGT3001

This case study examines the ethical conduct and corporate governance practices of Australia and New Zealand Banking Group Limited (ANZ) in light of inquiries by the Royal Banking Commission. It highlights instances where ANZ's actions, particularly concerning agricultural finance and treatment of farmers, violated ethical principles and corporate social responsibility. The analysis applies ethical theories such as utilitarianism, deontology, social contract theory, and virtue theory to assess ANZ's behavior. The case study also references the creation of the Shared Value Framework and provides recommendations for banks like ANZ to adopt customer-centric approaches, enhance employee training on ethical principles, and improve oversight and transparency. It concludes that organizations must prioritize stakeholder needs alongside profit-making objectives and adhere to ethical principles and corporate governance practices with due diligence.

Governance and
business ethics

INTRODUCTION
• The matters of corporate governance and moral ethics govern every
individual and entity.
• The ethical principles are applicable cross various industries and
professions, and therefore are all pervasive (Chell et. al, 2016).
• The case study of Australia and New Zealand Banking Group Limited
was in news when the enquiries were initiated by the Banking Royal
Commission.
• Ethical principles are needed to be applied to various business
practices and functions to address the needs of various stakeholders.

BRIEF HISTORY OF THE ORGANISATION
• The organisation ANZ is one of the chief four banks of Australia and
has its business operations scattered in 34 markets globally (ANZ,
2019).
• The organisation is chiefly engaged in international banking and
financial services and has its headquarters located at Melbourne.
• The organisation was established as The Bank of Australasia under
the Royal charter in the 1830s and began its operations in London
(ANZ, 2019).
• The year 1951 witnessed the Bank of Australasia merging with the
Union Bank of Australia to form the ANZ.

ANZ AND ROYAL BANKING COMMISSION
ENQUIRIES
• A number of enquiries were initiated by the Royal Banking
Commission on the ethical conduct and business practices towards the
chief banks of Australia.
• Among 268 submissions in the area of the agricultural finance, 32
cases were against the organisation ANZ bank, related to Landmark
acquisition in year 2010 (Caldwell, 2018).
• The year 2013 witnessed the ANZ bank regarding 1050 Landmark
accounts approximately to be high risk or impaired.
• The bank was quoted as stating to take the necessary steps to curb
the losses caused by these accounts.

BACKGROUND OF THE INCIDENTS
CHARLIE PHILOTT CASE
• The case of the 87 year old farmer was much in news after being
forced of the central-west Queensland station.
• The incident belongs to the year 2014.
• The incident was recently escalated in the media as part of the Royal
Banking Commission enquiries.
• The decision was unfair and illegitimate for the said status of
customers.
• In addition, there are incidents of ethical principles failures in light
of the overall conduct and behaviour towards the customers.

BACKGROUND OF THE INCIDENTS
ARTHUR AND RHONDA CHEESMAN CASE
• The family used to run a lentil, hay and cereal farm, but ended up
losing home because of the ANZ actions.
• The family was rendered a season facility limit of $650,000.
• In order to repay the debt, the bank had allowed the rest of the season
to the families for the trade.
• However, in the October 2011, the bank forced the families by giving
them just 2 months to clear off the debts by selling the properties.
• The practice is regarded as unethical in light of the human standards
and fair business operations (Yeates and Danckert, 2018).

CORPORATE CONDUCT AND
VIOLATION OF ETHICAL PRINCIPLES
• Corporate governance principles calls for the conduct of the conduct
of the business operations while considering the needs of the
stakeholders of the enterprise (Tricker, 2015).
• These includes the corporate social responsibility practices,
performance and reporting of the business functions (Moon, 2014).
• These are the prime need of the businesses of today and a number of
national and international organisations are engaged for the same
(Zientara, 2017).
• The overall aim is to bring the transparency in business operations and
fulfilment of needs of all the stakeholders.

ETHICAL THEORIES AND
APPROACHES
• According to the ethical theory of utilitarianism, if actions provide
utility and happiness to general population as a whole, the same would
be regarded as ethical (Mill, 2016).
• The act of ANZ is unethical by the virtue of the ethical theory of
utilitarianism, because the famer category of customers, being the
major stakeholders are not happy.
• According to the ethical theory of deontology, moral principles must
be used before putting a consideration into actions (Grant, Arjoon and
McGhee, 2017).
• The actions of ANZ of forcing the farmers off their properties was
unethical as the economic and physical conditions of the farmers is

ETHICAL THEORIES AND
APPROACHES
• The social contract theory of ethics states that the organisations must
equally respond to the communities, because the said society has given
the entity the license to work (Chell et. al, 2016).
• The leaders of the ANZ have failed to take fair decisions to make up
the losses of the entity ANZ.
• The Virtue theory states the application of the moral habits in the
operations, whether or not expressly mentioned.
• Applying the ethical principles it is evident that the organisation ANZ
has failed conduct a morally responsible behaviour.

ETHICAL THEORIES AND
APPROACHES
CREATION OF THE SHARED VALUE FRAMEWORK
• The framework was developed by Porter and Kramer and aids in the
wealth maximisation of the entity (Crane, et. al, 2014).
• According to the said framework, in order to achieve the interest of the
customers and other stakeholders, entities must consider economic
and societal values.
• The corporation ANZ has repeatedly involved in business interests
above the customer interests.
• The leader of the entity Benjamin Steinberg later on apologised for the
acts being not fair and reasonable when the cases were highlighted in
public domain (Carey, 2018).

RECOMMENDATIONS
• The banks like ANZ must adopt the customer centric upgrades in the
complex banking business activities.
• The employees and members must be provided proper training on lines
of the corporate governance framework and ethical principles.
• The periodical survey must be conducted on lines of the employee
behavioural risks.
• The leaders must lay solid foundations of oversight and to act ethically
and responsibly.
• Timely and balanced disclosures must be made by the enterprise.

CONCLUSION
• Thus, the discussion conducted in the previous parts can be
concluded that various ethical principles and theories play a
significant role in business conduct.
• It is the chief requirement for the organisations to consider
the needs of stakeholders apart from the profit making
objective.
• The various facets of ethics were described with the case
study of ANZ which confirms that ANZ was unethical in its
business conduct.
• Ethical principles and corporate governance practices must
be followed with due diligence and care.