University Report: BMGT3001 Corporate Governance and Ethics Assessment

This report delves into the corporate governance and ethical failings of the Commonwealth Bank of Australia (CBA). It begins with an executive summary, table of contents, and introduction, providing a brief history of the organization. The core of the report discusses the ethical issues, particularly focusing on financial misconduct and unethical financial planning practices exposed by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. The report details specific instances of misconduct, such as fraudulent activities at ATM counters and rogue financial planners misguiding customers, especially the elderly. Arguments are presented regarding the unethical nature of these actions, considering the bank's social responsibility and the impact on customer trust. The report then explores ethical decision-making approaches relevant to the case, emphasizing the importance of ethical behavior and regulatory compliance. The conclusion summarizes the key findings and reinforces the need for ethical conduct in the banking industry. The report utilizes references to support its analysis and arguments.

Running head: CORPORATE GOVERNANCE AND ETHICS
Corporate Governance and Ethics
Name of the Student
Name of the University
Author Note

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Executive summary
The following report will look to address the business ethics standards within the organizations.
The chosen company for this paper is Commonwealth Bank of Australia. The ethical problem in
this context to be focused on is the financial complications and breaching of ethical conducts by
the concerned organization. The reports of the Royal Commission into Misconduct in the
Banking, Superannuation and Financial Services Industry have revealed all the ethical
misconducts made by the company. Arguments have been made to establish this conduct as very
unethical. The ethical theories and approaches have been used in this paper to relate the topic
from the perspectives of customers.

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Table of Contents
Introduction......................................................................................................................................3
Brief history of the organization......................................................................................................3
Discussion of the case......................................................................................................................4
Arguments regarding the case.........................................................................................................6
Ethical decision making approaches................................................................................................8
Conclusion.......................................................................................................................................9
References......................................................................................................................................10

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Introduction
The aim of the following report is to make the case on the ethical behaviors of a chosen
company and discuss upon the reasons and impacts of behavior that they conducted in their
business environment. The company that has been chosen from the Australian index of
companies (ASX) is Commonwealth Bank. This bank has both good and bad reputations for
their operations. It has several branches in different countries but it operates strongly in
Australia. The ethical issue that will be focused in this paper is regarding the unethical financial
planning of the bank. The fraud on the customers and cheating on them is a serious flaw in terms
of business operations. Companies that indulge in this kind of problems are very much unethical
by all sorts. These unethical activities will be discussed later on in the paper and it will be
analyzed from the perspectives of the ethical theories at the workplace.
Brief history of the organization
Commonwealth Bank of Australia is one of the oldest banks of Australia and it has a very
rich tradition. This is a multinational bank and their branches are spread across countries like
United Kingdom, United States and New Zealand. It is regarded as one of the big four banks in
the country. It was established in the year 1911 (Commbank.com.au 2020). The headquarters of
this bank is located at Darling Harbor in Sydney. Commonwealth Bank is also considered as the
largest bank in the Southern hemisphere as well. The bank has more than 1100 branches and
more than 4000 ATM counters all over the world. However, the reports of the Royal
Commission into Misconduct in the Banking, Superannuation and Financial Services Industry
have revealed that Commonwealth Bank has practiced the unethical behaviors in their business.
All these unethical practices are regarding the financial planning and cheating with their

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customers (Commbank.com.au 2020). The reports of the commission have revealed these entire
thing and they have ordered the bank authorities to take strict reactions regarding it.
Discussion of the case
Through the reflections of the reports from the Royal Commission into Misconduct in
the Banking, Superannuation and Financial Services Industry, it has been confirmed that
unethical means in the banking industry by the Commonwealth Bank (Hayne 2018). Financial
frauds at the ATM counters are supposed to be one of the major reasons for the company to be
fined. According to the reports, Commonwealth bank had been fined almost $700 million
because of their unethical practices in the ATM department. The allegations had been put up by
the customers for money laundering (Winter 2019). These fraud cases had been identified by
them through the intelligent deposit machines. Therefore, it is quite important to note that
Commonwealth bank declared in their official statement that they wanted to negotiate with an
agreement with the financial regulating authority named AUSTRAC (Baselga-Pascual et al.
2018).
CBA has been facing this problem for a long time now and it seems they will have to pay
almost double of the amount they were expected to pay. Therefore, this has remained as a black
spot in the operations of the CBA in their history. The bank authorities will have to pay the fine
after the federal court of Australia will approve this (Oates and Dias 2016). It has been suggested
that the banks will have to cooperate with the customers so the customers could meet their
financial objectives properly. Still, some problems and ethical challenges have been found out in
this context since providing financial services might disrupt the operating services of the bank. If
the banks cannot perform their respective roles and duties properly, they will have to suffer (Cull

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and Bowyer 2017). Customers will always aim at these banks for not guiding them to meet their
financial objectives.
In the very recent news, it has been found out that the Commonwealth Bank of Australia
has been indulged in the unethical financial planning and misguiding their customers. It was
revealed through the reports that CBA had been making their rogue planners work for many
years and this caused severe financial damages to their customers (Oates and Dias 2016). When
this news had been revealed, customers were in shock of losing their hard earned money. This
misconduct and unethical behavior should be dealt with strictness since financial future of
millions of customers had been in serious jeopardy (Cull and Bowyer 2017). Actual information
have been exposed and this led the people to be much concerned about this condition. Some of
the unethical behaviors would be discussed in the following points.
1. There are several rogue financial planners associated with the Commonwealth Bank.
They were completely in the convincing the elderly people who have already retired from
their jobs to invest in products (Tricker and Tricker 2015). Ironically, these products are
already at high risk and this could lead to the economic disaster of these elderly people. If
anything bad happened to their savings, they would have to sit on streets and beg for
money. These rogue planners also provided the false documents in support of their claim.
Indeed this act was completely unethical by all sorts. Some information had also been
received that they had forged some documents of the elderly people (Baselga-Pascual et
al. 2018).
2. Another unethical behavior that could be seen in this context was that of encouraging all
the financial planners to carry on with their jobs by providing them monetary
commission. This was the incentive they got instead of penalizing them for such

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unethical activities (Villa 2015). They were even sent to the overseas trips for sales of
these forged products. The rogue financial planners were permitted for abroad trips if
they met their sales target figures. The sales based culture was dominant in CBA and
authorities also threatened these sales people to dismiss them if they were unable to cover
their targets. This kind of culture was completely unethical and harmful for the overall
well being of their customers. In this scenario, it becomes quite clear that the company
was completely engaged in the distressful unethical works (O'Brien 2014).
3. The CBA authorities went on to misconduct with their planners. This was the most
hateful things that could be imagined by the customers. CBA authorities came to know
about all the transgressions that were taking place regarding the financial planning by
their rogue agents. They became desperate to cover up this issue since they did not want
this unethical behavior to get public (Villa 2015). They were quite aware anything of that
kind would lead to the devastation of their reputation. The suspension of the rogue
financial planner Don Nguyen in the year 2008 was an example of dealing with the
unethical manner. In the meantime, he was promoted as the senior financial planner for
the company. All these issue became quite regular in the operations of CBA and these
rogue planners targeted the retired employees.
Arguments regarding the case
In this section, the arguments will be presented related to the case. The things that were
done by the company Commonwealth Bank of Australia are definitely very much unethical and
they must be punished for that in any manner. The aspect of fining the bank is very apt since
their activities have put the futures of the organization in jeopardy. Many critics have also argued

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in favor of these activities since they believed this would develop the economic conditions of the
bank in the age of global inflation.
On the contrary, it should also be said that Commonwealth Bank of Australia is the
largest bank in the southern hemisphere and they also have a social responsibility towards their
customers (Hoffman, Frederick and Schwartz 2014). The overall reputation of the CBA suffered
a huge hammer blow and this decided the overall fate of the bank. Apart from all those above
mentioned scams, CBA was reported to activate the bank accounts of numerous children
(O'Brien 2014). The staffs of the bank had done this thing and they did it to meet their sales
targets. When this news was flashed, this was a major blow to their reputation in the third round
of the Royal Commission.
Arguably, this was one of the worst mistakes ever done by the bank since they
completely ignored the safety and welfare of the customers and focused only on their sales
targets and aggravating their overall performance. The act of faking customer referrals also falls
into the category of unethical behavior by CBA (Cull and Melville 2018). Their intention was
very clear at this juncture. They were completely self oriented and discarded the idea of customer
welfare. All the arguments of the supporters of these activities can be completely shattered by
saying they had completely neglected the trust and faith of customers. The implementation of the
sales culture within the finance service industry should be completely abandoned because the
safety of customers’ savings is interlinked with this (Comerton-Forde et al. 2018).
Evidently, this was a very huge matter of concern and the economic stability of the
customers was at stake. In favoring this argument, the chief executive of the bank Matt Comyn
said that these activities did not harm the deposited money of the customers at all. On the

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contrary, it is very evident that the bank had completely breached the faith of the customers
(Tricker and Tricker 2015). Still. The spokespersons of the bank admitted that they would take
serious and strict actions against all employees who will work to violate the rules of the bank and
act against the faith of customers. It can be argued that rogue planners of the bank took these
steps to ensure better performance of the bank and meeting their annual sales targets.
It is questionable whether the bank can engage in some activities to raise their profits by
endangering the safety of their customers (Comerton-Forde et al. 2018). It is a completely
unethical matter indeed. All the employees should be checked by the concerned authorities and
identify all the guilty people. The federal government of Australia could take stern decisions to
revive the faith of the customers back in the bank authorities too (Armstrong et al. 2015).
Ethical decision making approaches
It must be taken into account that all the organizations in almost all industries must
always maintain the ethical approach to ensure smooth flow of operations. The regulation of the
company must be done properly so legal matters are followed. Otherwise, companies might
suffer from legal complications (Pearson 2016). In this scenario, CBA did not act properly and
cheated with their customers, mainly elderly customers and children. The concept of business
ethics will ensure the fact that the company has not indulged in any kind of economic fraudulent
activities (McCahery et al. 2016).
According to the Kantian principles or ethical approach, it can also be said that
customers view the organizations as the moral community or institution where they have full
trust. The managerial authority of all organizations must look up to the humanistic side of their
organizations instead of raising profits at different times (Hayne et al. 2018). The moral

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relationship between CBA authorities and customers was not respected and it had been violated
again and again. It is also the responsibility of the responsibility of managers to retain their
credibility through establishing this moral relationship.
Conclusion
In the concluding part of the report, it must be said that Commonwealth Bank of
Australia has not been able to retain the trust of customers. Organizations should always respect
the feelings of the customers and build the moral relationship on its basis. The breaching of
ethical standards has been the main issue in case of CBA. Therefore, it would be important to
note CBA’s activities had jeopardized the financial conditions of most of their customers. The
ethical approaches and theories of business have been implemented in this scenario and this
unethical behavior must be stopped by taking any measure. The organizations in the financial
industry, especially banks must conform to the ethical guidelines to serve the customers without
cheating them.

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References
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incentives, and tax avoidance. Journal of Accounting and Economics, 60(1), pp.1-17.
Baselga-Pascual, L., Trujillo-Ponce, A., Vähämaa, E. and Vähämaa, S., 2018. Ethical reputation
of financial institutions: Do board characteristics matter?. Journal of Business Ethics, 148(3),
pp.489-510.
Comerton-Forde, C., Ip, E., Ribar, D., Ross, J., Salamanca, N. and Tsiaplias, S., 2018. Using
survey and banking data to measure financial wellbeing. Commonwealth Bank of Australia and
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