Bupa Aged Care Scandal: Ethical and Legal Implications

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Governance Case Study
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Executive summary
This report is prepared to acknowledge the Australian Companies to abide by ethical and moral
practices in conducting business operations. Over the last three decades, there is an increase in
the corporate collapses which is results in breaching the provisions of the Corporations Act,
2001. In this report, the recent scandal of Bupa Aged care is discussed in this assignment. This
report depicts the summary of this scandal along with the persons who are responsible and
penalized behind this scandal. Further, it analyzes the impact of this scandal over the company
and its shareholders along with the proper recommendation to avoid such situation in future.
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Table of Contents
Executive summary.........................................................................................................................2
Introduction......................................................................................................................................4
What occurred and who was responsible.....................................................................................4
Legal, ethical and governance issues occur from the Scandal of Bupa Aged Care.....................5
Analyze inference of the Scandal of Bupa Aged Care for organisational stakeholders and the
company.......................................................................................................................................6
Why and how as a company director could have evade the circumstances.................................7
Conclusion.......................................................................................................................................8
Recommendations............................................................................................................................8
References......................................................................................................................................10
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Introduction
With increasing in the corporate collapses resultant in breaching the Corporate Law for avoiding
wrongdoing that impacts the business operations in an adverse manner. But still, the insiders of
the company involved in the unethical practices by breaching the provision of corporate law.
Bupa Aged Care Holdings Pty Ltd is a private company owned locally where the company
earned its revenue from the provision related to the aged care and retirement services
(Chrysanthos, 2019). This company is not operating in Australia but also in New Zealand with a
group of three main subsidiaries includes Bupa Aged Care Australia Pty Ltd, Bupa Retirement
Villages Limited and Bupa Care Services NZ Limited. In Australia, 70 aged care homes are
operated and owned by the Bupa Aged Care Holdings Ltd and also 60aged care homes, as well
as over 36 retirement villages, operate in New Zealand. Bupa aged care help over 6,700
residents. In this, the scandal of Bupa Aged Care is revealed where the ACCC alleged that the
company charged thousands of residents at 21 aged care for making false and misleading claims
in relation to the services provided.
What occurred and who was responsible
The Australian Competition and Consumer Commission (ACCC) found that the Bupa Aged
Care charged extra with the thousands of the residents at 2 aged care homes in all over the
county of Australia by charging extra fees for the package and provide expensive services which
are not provided to provide partly. In accordance with the ACCC, the fees charged by the
company is from the centers of home care run in Australia for the extra services were amounted
to the thousands of the dollar in each and every year. The alleged implement by the ACCC is that
the Bupa was unable to provide several extra services which are promised by the company in the
residential agreements and still charged without any specifications. In some of the cases, the
company alleged misleading representations which are related to the services provided to the
residents for maintaining their life standards (Kondasani & Panda, 2015). The company
promised to provide services by representing those services in a misleading manner and their
chosen families include the services which are promise by the ACCC to provide and charge for it
but not provide actually includes Smart rooms, all bedrooms are air-conditioned, exercise areas,
sensory walkways, activity spaces, hot breakfast and travel-related services for outside
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appointments. With such incident thousand of the 4,306 residents are affected. With the
misrepresentations in the aged care sector which creates difficulty for the aged residents. After
this, Bupa has not admitted the misconduct in relation to the contravention of the Australian
Consumer Law as well the provision mentioned under Corporations act, 2001. In this scandal,
the ACCC identifies that it becomes to determine how many law is breached in this scandal. The
maximum penalty imposed by the ACCC as per the Australian Competition Law and as per the
provisions of the Corporations Act, 2001 was around $101 million and the maximum penalty
that is implemented over the company is $10 million.
Behind this scandal, the senior management and directors are accountable for such misleading
and illegal practices in the company for charging the extra amount for the services which are not
provided. In this the director’s breaches the Corporation law by breaching the duties mentioned
in this act (Zarei, et. al., 2015). This scandal of Bupa clearly depicts the breach of the duties of
the directors in regards to the corporate governance by charging the extra amount for such that
are never provided to its customers.
Legal, ethical and governance issues occur from the Scandal of Bupa Aged Care
The concept of corporate governance supports the companies to perform their practices in an
ethical manner because these factors are directly related and concern with social welfare. In the
corporate, it includes the employees, directories, and managers that have the responsibility to
perform the act in the company interest (Stojkovic, 2013). It is important that the employees
must engage in fair dealing with the shareholders and investors of the company. Fair dealings
assist in resolving the business in an ethical method. The most and important issues that are
faced by the Bupa is to deal with the business affairs in a misleading way as the commitment
towards the customers to treat them fairly by developing the high level of trust among the
customers for the success of the company (Malinovskii, 2014). Due to such practices, the
relationship among the customers and the Bupa is hampered as the company overcharges for
those services which are never provided to the business.
To conduct the business function in an ethical manner it is important that the businesses must
comply with all the laws of state, environmental or federal laws and other applicable laws of the
civil rights. It is important that the company abides with its commitment towards its customers so
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as to conduct the business functions in accordance with the policies. But in this thus Bupa not
conducted the business function as per the provision of the corporate governance and overcharge
the amount from the customers for such extra charges (Carnegie and O’Connell, 2014). In the
case of Bupa, the commitment of the company towards its compliance for the customer not
fulfilled and makes the company responsible for breaking the trust of the customers.
The other issue which is found in this case is the issue in relation to decision making. Such issues
include identifying the ethical; course of action that supports in making the decision-making
process so that the decision must be fair and just and making sure that it protects the beliefs and
values of the workers and remain protected from the unfair practices (Gay & Simnett, 2012). The
process of making ethical decisions assists in conducting fair practices in the business. In the
Bupa case, the decision must be fair and in the company interest. But the decision and strategies
that are formulated by the management are totally unethical to charge extra amount for the
services which are not provided to the customers. Further, it also impacts the company and its
employee’s trust which is in endanger to such unethical practices. For business growth and
development, it is important that the company complies with all the provision of corporate
governance and assist in making a decision by focusing on the values of the company. In this
case, the company breaks its commitment towards its customers by charging the extra amount
for the services provided to the customers. It is important that the business must consist of the
business in an ethical and transparent manner (Clout, et. al., 2013). Due to this, the company is
unable to choose between the rights and the wrong decision for the company. It is important that
the ethical decision which is not in favor of the society as well as for the company should avoid
by the company. Another issue is of honesty, it is one of the main issues that assist the company
to abide by the company roles and responsibilities and supports the company not indulge in
unethical practices. In this case also, Bupa not perform its business operations in an ethical
manner and also not able to choose between the rights and wrongs’ and ready to indulge in the
unethical practices of the business. This negatively impacts society as well as over the business
image. In this scandal, the nursing reflects on human beings and help the persons at different
stages of the illness (Pozgar, 2019). This assists in maintaining the life of the people by
protecting the patients from harm. This is also one of the ethical issues that breach by the
company by not taking proper action to care for the customers.
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Analyze inference of the Scandal of Bupa Aged Care for organisational stakeholders and
the company
The scandal of the Bupa Aged Care not only impacts the stakeholders of the organisations but
also over the company as well. Investors or employees of the company trust over the companies
who abide with the practices of the corporate governance and abide by its standards in
composing to those companies who are not following such practices. The implications of this
scandal on both the internal and external shareholders negatively impact the business practices.
In this, the company shareholders and its investors are impacted due to the failure in the business
functions of the company (Horn & Parker, 2018). Employees are one of the important persons
that support the company to achieve profitability and productivity. This scandal negatively
impacts the employee’s thoughts and their practices and also involves them in unethical
practices. With such unethical practice, it impacts the performance of the employees and
commencing in taking negative steps towards their job. If the employees think that they are the
part of the illegal practices then they commence leaving the company. This directly impacts the
business operations as well as company brand value.
Further, such unethical and misleading practices negatively impact the investors and creditors of
the company (Wheeler & Bertram, 2019). In the Bupa Aged Care, there are various investors that
invest in the business on the basis of the company image and also the practices that are adopted
by the company. These unethical practices bound the company in facing the penalties of the
courts that directly impact the customer base of the company.
These unethical practices affect the image and goodwill of the Bupa. The investors also prefer to
invest in the company who are abided with ethical practices. With such improper practices, the
functions of the company are affected which leads towards the situation of winding up. By
providing partial or no services provide inconvenience to the consumers and that would
ultimately result in the negative impact over the profitability of the company. It also impacts the
preference of the customer as well as the decision making choice. Such misleading and unethical
practices reduce company growth and development. With this Bupa also lose its competitive
position in the market through which the investors commencing in denying the availability of the
funds to the company.
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Why and how as a company director could have evaded the circumstances
By working as a company director of the company, it is my responsibility to control and manage
the daily business operations and also formulate such strategies that are beneficial or in favor of
public as well for the company. It is important to assist the employees as well as employers to
regulate business practices in an ethical manner. It is the duty of the director to conduct the
functions in ethical so as to sustain the provision of corporate governance. This is the reason that
assists in regulating the corporation practices in an ethical manner as a director of the company.
In addition to this, I will formulate such policies that support in formulating the strategies in
resolving the unacceptable matters. To avoid such a scandal I will take effective steps by
conducting the face to face meeting with the person who is suffered due to this scandal.
Moreover, it is important that Bupa take the situation seriously and improving the standards of
care. To avoid the penalize situation the effective and efficient policy of management is
formulated so as to avoid the weaknesses of the company. It is important to conduct the
operations of the business as per the applicable rules and regulations under the act that needs to
be followed by the company. By making ethical decisions in this context it is important to enact
the committee that is specialized for investigating about the misleading and illegal activities that
are prevailing in the business.
To avoid the unethical situation it is important to avoid illegal and misleading business practices
so as to avoid such situations (Cherry & Jacob, 2018). To prevent the misleading situation it is
important that the employers, as well as the employees of the company, indulge in fair work. It is
crucial to consider the negative and positive impacts of the business policies on both the business
as well on its patients. I also prefer to conduct the market research and taking the decisions on
the results of the research so that Bupa conduct its activities as per the provisions of corporate
governance. Working as a director I focus over the provisions of the Corporations Act, 2001 as
well as Australian consumer law so as to perform my obligations and responsibilities in such
manner so that it positively impacts over the business functions and reducing such misleading
and illegal practices in the business. It is important to ensure that as a director I have to conduct
the business operation with care and due diligence and take enough actions to protect the
company from penalties due to unethical and misleading activities. Further, the next action is to
conduct the internal audit of the company which reveals the trust picture of the finance and the
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services that are not provided to the customers. For dealing with the irregularities it is important
that the auditors assist in maintaining the financial statements of the company which depicts the
true picture of the company that binds the company to give evidence of the money received and
spent on which activities with property proof and evidence of each service and its related charges
that are charged with the customers.
Conclusion
With the above incident, it highlights the matters that are concerned with the matters of public
interest. It includes the matter of public interest in relation to the absence of appropriate
implementation in relation to the internal rules and regulations of the company. The government
failed in meeting the obligations for providing an appropriate recommendation to the company
so as to reduce the involvement of the company in the unethical practices. In this scandal, the
directors of the company are responsible for such misleading activities and penalized for such
actions. It is important that the government strictly enforce the existing laws so as to involve the
company for law compliance in the long duration. To overcome such misleading practices a
company should implement control over the business activities by implementing the appropriate
legislation. Further, it is concluded that the businesses in Australia conduct their business at a
global level. In this regard, the existing regulations in Australia are not effective and efficient
due to its weak enforcement. Such misleading practices impact the business reputation as well as
reduce the customer base of the company as well. These illegal practices not only impact the
investors but also the employees of the company and commencing to leave the company. For the
developed countries it is important that the corporate will improve their transparency so as to
conduct and regulate the business functions in an ethical and sustainable manner so as to govern
the functions of the company for achieving the corporate governance.
Recommendations
In the future, to prevent such type of scandals there are some recommendations are made in this
context. It is significant that the directors and senior executives of the Bupa Aged Care Australia
Pty Ltd need to be alert by exercising their powers in an ethical manner. In addition to this, it is
important that the Bupa Aged Care Australia Pty Ltd and its directors, as well as the senior
managers, must conduct their duties and responsibilities in an ethical manner. In addition to this,
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it is recommended that the directors of the company must exercise their power in good faith so as
to avoid such scandals. It is important that senior executives must analyse the progress of the
company in the field of corporate governance so as to encourage the company to perform ethical
practices. Further, it provides in resolving the matters so as to consider the residents on priority
and implement the strict policies and regulations for controlling over the misleading practices
that are prevailing in the Bupa Aged Care Australia Pty Ltd. It is important that the companies
must follow the ethics and principles code during the implementation of the business functions.
Further, in addition, it is important that the company must abide by the provision of the
consumer as well as corporate law are properly implemented and abide by the management of
the company. For achieving the goals of the company it is important to avoid and prevent
misleading function that hampers the image of the company among the customers as well as the
investors. Moreover, it is recommended that the directors and senior executives of the company
must use their knowledge and experience in such a way that it protects the interest of the
company as well as the public. It is important that both the directors and executives use their
powers in an ethical manner and in the company as well as the public interest. It is
recommended that the directors should implement the policy that supports in managing the
activities of the business like in this scandal if the directors should conduct their activities and
function in a fair manner that such misleading and overcharging for the services from the
customers should be done and this matter will never reach to the ACCC and neither company is
penalized for such unethical practice.
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References
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Management. Elsevier Health Sciences.
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 Zarei, E., Daneshkohan, A., Pouragha, B., Marzban, S., & Arab, M. (2015). An Empirical
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