Ethical Issues in Business Management: Westpac Case Study Analysis

This case study analyzes the ethical issues within Westpac Banking Corporation, focusing on money laundering and child exploitation scandals. The study identifies key ethical issues and uses ethical theories such as Utilitarianism, Kantianism, Hinduism, and moral relativism to analyze the bank's actions and failures to adhere to governmental regulations. The analysis examines the implications of these ethical breaches and provides recommendations for Westpac, including owning responsibilities, collaborating with local and governmental bodies, implementing corporate social responsibility activities, and setting a strict code of business conduct. The study concludes with a summary of the ethical concerns and offers a comprehensive evaluation based on the ethical theories.

Running head: ETHICS IN BUISNESS MANAGEMENT
ETHICS IN BUISNESS MANAGEMENT
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Introduction
In the age of rapid globalization and industrialization, the business environments of
global organizations are changing in order to meet the changing needs of the customers as
well as obtain and maintain a competitive advantage in the market. However, within the
scope of such changing business environments, business organizations are required to follow
certain codes of conduct with respect to its operations. Within the scope of business
organizations, ethics can be referred to as certain values and codes that are observed and
maintained during the decision making processes (De George 2011). These values and codes
in turn determine noit only the attitude and behavior of the various members of the
organization towards each other and the organization but also the other external stakeholders
and their perception towards the organization. Ethics in business management therefore assist
in the provision of certain guidelines that are to be maintained during the strategizing of
important business activities and operations to meet the organizational objectives and targets
(Bowie 2017). The essay will further engage in the analysis of the ethical issues that can be
identified from the case study on the Australian financial service provider and bank, Westpac
Banking Corporation. According to the details of the case study the ethical issues of money
laundering and child exploitation will be evaluated in light of certain essential theories on
ethics.
Discussion
Identification of Ethical Issues
An evaluation of the case study about the Australian bank and providers of financial
services Westpac Banking Corporation it can be observed that the two critical issues to be
considered are money laundering and child exploitation. An investigation by the Australian
Transaction Reports and Analysis Centre or AUSTRAC showed the involvement of the

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former Chief Executive Officer of the organization, Brian Hartzer to have been a part f the
money laundering and child exploitation scandal that the company was accused of. Such
accusations towards the organization directly resulted from their failure to abide by the anti-
money laundering regulations and counter-terror finance laws that are established by the
government of Australia. In this regard, it has also been observed that the organization has
been accused of 23 million breaches of law pertaining to transactions worth over 11 billion
Australian dollars.
The Australian Transaction Reports and Analysis Centre (AUSTRAC) mandates strict
observation on the organizations who are involved in the handling of large amounts of money
such as banks and casinos (Scott 2018). Furthermore, the agency is also involved in the
overlooking if these organizations are adhering to the regulations established by the
government of Australia pertaining to international obligations. In this regard, it had been
observed that the Westpac had failed to adhere to the obligation of “knowing the customer”
before engaging in financial transactions with them. This business activity of the organization
may be attributed to the fulfillment of their organizational objectives using unfair business
practices.
The ethical issue pertaining to the activities of Westpac involves engagement in risky
transactions such as third party transfers and illegal transfers of international funds. Such
international fund transfers facilitated the company to get involved in child abuse and
exploitation scandals in south East Asia and the Philippines.
Analysis of Ethical Issues
The ethical issues of money laundering, involvement in child exploitation and failure
to adhere to governmental regulations can be analyzed from an ethical perspective. As
discussed earlier, ethics in business act as guidelines to indicate the direction in which the

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decision making and strategy implementation processes of the company will be undertaken
(Crane et al. 2019). In this regard, it may be mentioned that the business activities of the
Australian bank Westpac is not only illegal but also unethical as explained through the
theories discussed as follows:
Utilitarianism
The ethical theory of Utilitarianism was first proposed by Jeremy Bentham and later
on popularized through the modifications made by John Stuart Mill (Mill 2016). According to
this theory, an action or behavior by an individual or group of individuals may be considered
as ethical if it serves the interests of the majority of the individuals involved (Barrow 2015).
In other words, the morality of actions or behaviors of individuals can be deduced on the
basis of the amount of utility that is derived by the majority of the individuals involved.
In the case of the money laundering and child exploitation issues at Westpac, it may
be noted that these activities served the interests of the organization itself. In this regard, the
activity did not serve any utility to the majority of the shareholders and stakeholders of the
company. Furthermore, it was opposed to the common public interest and violated
international obligations of the country. Taking into consideration that the activities of the
organization failed to meet the interests of the maximum population of individuals in not only
Australia but also an international front, their activities can be regarded as unethical from a
utilitarian perspective.
Kantianism
The ethical theory of Kantianism was proposed by the German philosopher Immanuel
Kant (Baron 2018). The theory follows a deontological approach of ascribing morality to
activities or behaviors of individuals or groups of individuals on the basis of a legal construct.
The Kantian theory is based on the view that moral law is regarded as the categorical

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imperative that must be followed by all individuals or groups of individuals. These
categorical imperatives are regarded as universal laws according to the Kantian theory of
ethics (Evans 2018). Performance of duty or responsibility is therefore regarded as the
categorical imperative that must be followed.
In the case of Westpac, the categorical imperative that should have been followed by
the organization was to follow the legal obligations and regulations mandated by the
government of Australia. Instead of performing their duty of checking upon the information
of each customer as mandated by the Australian Transaction Reports and analysis Centre (or
AUSTRAC) the company chose to prioritize the interest of the organization and conduct
profitable business operations. However, the failure to abide by the categorical imperative of
performing their duty and follow the regulations established by the government of Australia,
led the organization to be accused of illegal activities and business operations. In this regard,
it may be pointed out that the activities of the organization can be regarded to be unethical
from a Kantian standpoint, due to the failure to abide by mandated regulations.
Hinduism
The ethical perceptions of Hinduism is vast and encompasses within its purview a
variety of factors. These factors concerning the judgment of ethics from the ethical standpoint
of Hinduism involves duty, morality, law, justice, truth and righteousness (Framarin 2014).
The mandates of ‘Dharma’ entail the performance of activities according to what is
considered to be just and righteous. Dharma therefore prioritizes on the value of truth and
justice in order to determine the morality of actions and behaviors of individuals or groups of
individuals (Berger and Herstein 2014). Furthermore, another important aspect of the ethical
codes of Hinduism is recognized to be that of ‘Karma’. The mandates of karma are based on
the casual effect of actions and behaviors (Le 2019). In other words, karma refers to the
universal law of cause and effect and is thus based on the tenet of serving justice. Negative

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actions and behaviors aid the accumulation of negative karma, whereas positive actions and
behaviors aid in the production of positive karma.
The ethical theories of Hinduism in terms of dharma and karma can be applied to the
case of Westpac. The action of the organization in money laundering and engagement in
child exploitation can be regarded as unjust to the society and therefore unethical.
Furthermore, the accusations ad challenges that the organization is having to be faced with
directly arise from the accumulation of negative karma through the operation of unethical
business practices. In this case, the tenet of justice on the basis of which dharma and karma
operate stand opposed to the action and practices of Westpac, thereby deeming them to be
unethical according to ethical theories of Hinduism.
Moral Relativism
The ethical theory of moral relativism involves the lack of any absolute set of moral
principles. The ethical theory of moral relativism allows for a subjective approach of deciding
the ethics of each action or behavior performed by an individual or group of individuals
depending on the situation (Harman 2015). This theory further indicates that there are no set
of objective grounds on which moral and ethical constructs can be built. Each society is
comprised of unique values, beliefs, practices and customs. Thereby, the ethical theory of
moral relativism involves the judgment of morals on the basis of the dominant values and
beliefs of each society (Levy 2014).
Considering the case of Westpac from the perspective of the ethical theory of moral
relativism it may be observed that the actions and practices by the organization can be
deemed to be unethical. The values of the Australian society involve the strict observance of
the governmental rules and regulations as governing factors behind the organizational
behaviors and practices. However, failure to abide by these regulations shows a deviations

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from the normative beliefs and values of the Australian values. Furthermore, the acts of child
exploitation and abuse is observed to be against the values of any society in the world, and
thereby can be regarded as highly unethical. The normative values of the organizations
operating in the financial sector of Australia are to follow the regulations pertaining to their
activities. However, Westpac failed to adhere to these regulations as accused by the
Australian Transaction Reports and analysis Centre (or AUSTRAC).
Recommendations
Certain recommendations can be provided to the organization so as to rectify the
unethical and illegal practices that the organization had been engaged in. These
recommendations have been provided following the mandates of the various ethical theories
as discussed in the earlier sections:
 Owning up for responsibilities – The organization must own the responsibilities of
accepting the harm that has been done due to their unethical business practices. In this
regard, the organization may choose to own up responsibility by agreeing to pay the
settlement. Following the ethical principles of Hinduism, this way the organization
may be able to perform its duties in a just and responsible manner.
 Collaborations with local bodies – The organization may also choose to form
collaborations with local non governmental bodies that are engaged in social work.
Such collaborations in turn would aid the organization to take responsible actions
against the social crimes of child exploitation and abuse.
 Cooperation with the governmental bodies – The organizational must also ensure
complete cooperation with the governmental bodies and agencies involved in the
overlooking of the financial sector. This further involves the following of strict
regulations and directions pertaining to ethical business practices and operations.

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 Corporate social responsibility activities – The organization may also involve in the
performing of adequate corporate social responsibility activities that may aid in the
improvement of their brand identity and image among the local and national
customers. this would further enable the organization to perform its duties towards the
society through campaigns against child exploitation or unethical money laundering.
 Business conduct – The organization may also set a strict code of business conduct
that must be followed by every member of the organization. Such strict codes of
conduct and internal assessment of the activities and performance of the employees
will prevent the organization form getting involved in unethical business practices in
the future.
Conclusion
From the discussion relating to the ethical analysis of the business activities and
operations of Westpac as observed in the case study, it can be deduced that from the ethical
concerns or issues identified pertaining to money laundering, child exploitation and lack of
abiding by governmental regulations and mandates. Furthermore, the ethical issues thus
identified have been analyzed from the perspectives of utilitarianism, Kantianism, Hinduism
and moral relativism and have been considered to be unethical form all these perspectives.
However, the organizational practices and behavior of the company may be rectified
following the recommendations that have been provided.

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