PRS201: Commonwealth Bank Ethical Scandals Analysis and Report

This report delves into the ethical scandals that have plagued the Commonwealth Bank of Australia (CBA), examining the causes of repeated ethical breaches through the lens of public relations theories and practices. It provides a detailed stakeholder analysis, assessing the impact of these scandals on the bank's image and branding. The report further investigates existing barriers within CBA and explores the role of public relations in managing these crises, including a sample press release. Recommendations are provided to enhance CBA's ethical standing and corporate social responsibility. The analysis covers the money laundering scandal involving intelligent deposit machines and the fee-for-no-service scandal, highlighting the consequences of these actions on various stakeholders, including executives, employees, customers, shareholders, and law enforcement. The report also addresses the competitive landscape, regulatory pressures, and the importance of effective public relations in rebuilding trust and managing reputational damage. The report emphasizes the need for a crisis management team, effective use of media and social media, and the implementation of a comprehensive plan to restore the bank's image.

Public relation
Stakeholders Analysis
Name of the Author

Table of Contents
INTRODUCTION.................................................................................................................................1
ANALYSIS OF THE CAUSE OF REPEATED ETHICAL SCANDALS THROUGH THE LENS OF
PR THEORIES & PRACTICES............................................................................................................1
STAKEHOLDER ANALYSIS..............................................................................................................2
IMPACT ON IMAGE/BRANDING.....................................................................................................3
ANALYSIS OF EXISTING BARRIERS AT THE CHOSEN BANK..................................................4
ROLE OF PUBLIC RELATIONS IN MANAGING THESE CRISES.................................................4
PRESS RELEASE.................................................................................................................................5
RECOMMENDATIONS.......................................................................................................................5
CONCLUSION.....................................................................................................................................5
REFERENCES......................................................................................................................................6

INTRODUCTION
With the changes in technologies and economic conditions, each and every
organization needs to take proper public relation to strengthen the branding and ethical
busienss frameworks in long run. The following report deals with the analysis of a series of
ethical scandals that has shattered the image of the Commonwealth Bank of Australia (CBA).
In this report, in order to analysis the public relation, and its ethical scandals impacts on
public, the business functioning of Banks have been taken into consideration. The reasons
behind such scandals are analysed. The stakeholder analysis is made and the impact of the
same on the image and branding of the bank is observed. Apart from the scandals, the
existing barriers at the Commonwealth Bank are also examined. The public relations role to
manage these crises has been observed. Further in the report, a press release for the
shareholders is also prepared. In the end of the report before concluding statement, certain
recommendations are put forward to make the commonwealth bank more ethical and to
enhance the quality of the corporate social responsibility of the organisation.
ANALYSIS OF THE CAUSE OF REPEATED ETHICAL SCANDALS THROUGH
THE LENS OF PR THEORIES & PRACTICES
Commonwealth Bank of Australia has its business spread across New Zealand, Asia,
the United States and the United Kingdom. It is a multinational bank providing a variety of
financial services including, retail, business and institutional banking, fund management,
superannuation, insurance, investment and broking services. As of August 2015, the
Commonwealth bank is the largest Australian listed company on the Australian Stock
Exchange. Even after being such a reputed bank, the commonwealth bank is accused to have
been involved in certain scandals involving, bribery, forgery, breaching money laundering
laws, a failure to provide advertised fee waiver, fees-for-no service scandal, unethical
behaviour to avoid CommInsure insurance payouts (Wæraas, 2018).
The most burning scandal seems to be that of money laundering which has blown off
all the ethical requirements excepted out of the bank’s board. The money laundering acts not
only mitigate the bribery cases and other insider trading acts but also increase the ethical
public relation. The whole case revolves around the intelligent deposit machines, which are
a type of Automated Teller Machines (ATM) that were launched back in 2012. Through these
machines, the customers get a privilege to avail banking services like cash deposition and

transfer, even on the days when banks are closed. The reason put forward as per the research
was the inability of the bank to take adequate steps to “mitigate and manage” risks even on
the hour when it had come to the knowledge of the bank that these intelligent machines were
being used for suspected cases of money laundering. The Australian Transaction Reports and
Analysis Centre (AUSTRAC), Australian government financial agency have
successfully alleged that four money laundering syndicates, including three linked to drug
importation and distribution networks used these machines to deposit and transfer cash. They
made this tricky by keeping the amounts low to eliminate any kind of suspicion. $21 million
was deposited into 11 Common Bank accounts in a period of February 2015 to May 2016,
which was almost through the intelligent machines. This was observed by the money
laundering operation and they further noticed that the bank had the knowledge of the
accounts to be suspicious as promptly as in May 2015 (Alyaqoub, and Rahman, 2018). This
money was believed to be the illegal proceeds of a drug importation scandal. But due to the
failure on the part of the bank to take legitimate steps in alerting the authorities for these
transactions and about the abnormal pattern that was taking place in certain accounts, this
activity was continued. It is analyzed that the public relation works and organization
effectiveness are measured by analysing the how company has been establishing the nexus
between the organizational growth and client’s development at large. This public relation
practice and undertaken work by the organization will be the useful tool in practice of
managing the spread of information among stakeholders and organization. However, banks
have used several marketing tools and followed transparent busienss practice to strengthen
the its pubic relation. There are several scandals in economy which have happened due to the
less effective public relation acts.
Even the back ignored the warnings of Australian federal police regarding the same.
The bank even didn’t close these accounts. The bank even allowed the international transfer
of the funds kept in these accounts. The monitoring of accounts is mandatory and the
commonwealth bank failed to comply with this requirement on 778,370 accounts over a
period of three years. Further there was a failure to provide 53,506 reports which are known
as threshold transaction reports to Austrac. These amounted to around 95% of the overall
threshold transactions between the time span of November 2012 to September 2015. As a
result of all that happened and discussed above, commonwealth bank was sued for some
53,700 breaches of money laundering and counter-terrorism-financing laws (Jo, Childers
Hon, and Brunner, 2015).

Another major unethical practice on part of Commonwealth Bank is their act of charging
money from customers for those services that they never provided to the customers. Bank has
found to have made misstatements to the customers. From a period ranging from July 2007 to
June 2015, the bank’s customers were charged fees in the name of providing them financial
advice even where no services were provided. More than 310,000 financial advice customers
were to be refunded $118.5 million (Steen, McGrath, and Wong, 2016).
STAKEHOLDER ANALYSIS
All this money laundering scandal has a serious impact on certain stakeholders who
were affected by this (Dixon, and Finnane, 2018). These stakeholders include in the list the
following:
 Executives of Commonwealth bank
 Senior members of compliance or general counsel department. These members even had
enough authority to influence to make the bank comply with necessary requirements.
 The employees were affected due to the wrong image of bank being created due to this
scandal.
 The customers who kept their money in the bank for the benefit of themselves and
development purposes (Schmulow, and O’Hara, 2018).
 The shareholders were the most affected as the bad image due to this scandal negatively
affected the stock price and market performance of the bank, leading to minimisation of
shareholders’ wealth
 Law enforcement authorities were also directly affected. This is because due to non-
compliance and non-filing in time by bank, the authorities also faced a delay in catching
those criminal syndicates
 Other financial companies are somehow also the stakeholders, as due to this whole case they
also now have to comply with stringent regulations (Starck, and Kruckeberg, 2014).
 The public of Australia was also affected on an overall basis
IMPACT ON IMAGE/BRANDING
The money laundering scandal that got successful due to certain failure done at the
part of commonwealth bank has led the bank to face severe repercussions. The major one
involves:

 Severe financial penalties
 Increasing regulatory scrutiny
 High business cost for immediate remediation work
 Heavy fall in the share price
 Shareholder class action against the bank
 Irrevocable damage of the image
 Early retirement of bank’s CEO Ian Narev
The damage of reputation has led to more regulatory implications and inquiries has also
initiated for any misconduct (Hallahan, 2007).
ANALYSIS OF EXISTING BARRIERS AT THE CHOSEN BANK
There are certain barriers that the bank is facing currently which are hampering its
growth and development. The bank is facing stiff competition from the new entrants who are
bringing innovation in the way clients are served. Their innovative tactics are allowing them
to serve customers at reduced costs. Apart from the entrants, the bank is facing strong
competition from the existing companies in the banking industry. The bank is thriving to
lower the competitive pressure. Still to beat the competitors, the bank has to continually
reduce its costs which is bringing a halt to company’s profitability. This bank has faced high
completion and has been keeping its cost of services very low which not only lower down the
return on capital employed but also reduce the profitability of the business.
Other than the industry barriers, the bank is facing increasing number of bad debts.
These bad debts have increased the financial leverage of company which might be negative
indicator for the busienss sustainability of organization. Further regulations have set in such
a manner that the banks are required to increase the amount of capital that they hold. Online
competitors are also increasing who are providing unsecured loans to the customers and
snatching certain percentage of borrowers from the bank. The margin of profit has declined
and there is no way out to combat with this situation (Pearson, 2016).
ROLE OF PUBLIC RELATIONS IN MANAGING THESE CRISES
Severe reputational damage is being faced by commonwealth bank due to the money
laundering scandal. It’s in news all over the press. Every detail of the scandal is publicised
causing it worse every day for the company. It’s a big crisis and had badly affected the

company’s branding. The bank must prepare a crisis management team to prepare for the
company’s image strengthening. The media should be used in a manner that shall upgrade the
company’s image. Being a management function, the public relation function of entity should
try to synchronise the relationship between the bank and the public, especially the
stakeholders, to rebuild the faith. The social media should be effectively used by the
company’s public relation (Hussain, et al. 2017). There are several other modes such as
advertisement in TV, using Google image section and social media to connect with the
public. However, strengthen the reporting frameworks is also used by bank to communicate
the required information with the stakeholders. It will not only increase the overall quality but
also keep the business more ethical with the public relation acts (Oates, and Dias, 2016).
Before any public communication, the public relation should carry an internal communication
asking for suggestions and after that taking decisions and engaging the employees. Through
the help of media an external communication should be initiated that shall work on the trust
that public earlier have on the commonwealth bank. For achieving this, the public relation’s
team should go on researching about the reasons that are widely in conversations regarding
negative image of the company. A plan should be laid out on how to fix the negative image
and strategies should be set to achieve it (Qrunig, and Qrunig, 2016.). After a complete
blueprint is made ready, the same should be implemented and the whole internal team should
be communicated about the agenda. Work should be done on one purpose at a time.
Continued monitoring is must to get an awareness regarding the level of goal achievement
and the areas where certain changes are required (Coombs, 2014).
PRESS RELEASE
There are several scandals in economy which have happened due to the less effective public
relation acts. Press release play pivotal role in keeping the business activities more
transparent. A press release can be framed as follows (Grunig, and Grunig, 2008).
AS BURINING FIRE CAN BE STOPPED, SO CAN THE FAILURES BE OVERCAME
This above given statement has reflected that the press resale is one off the major part
which assists bank to communicate with its stakeholders. Being a trustworthy bank since
ages, Commonwealth bank promises to set apart the failures that caused an alarming scandal
by adoption of a standard code of conduct that shall follow all the ethical and reporting
requirements assumed from the entity. This bank has followed strict code of conduct and

international ethical practice to overcome the insider trading chances and strengthen the
possible business outcomes. The requirements laid AUSTRAC regarding the threshold
transactions shall be followed to the core, leaving no space for any misconduct or forgery to
happen (Oates, and Dias, 2016).
Although there had been negligence, yet there stands no intention for the same. The
management is all set to formulate and implement stringent security level for all the services,
especially the ones dealing with the intelligent machines. A whole new team is ready to take
seat in the board to let the work done more professionally without any insider profiteering
(Theaker, 2017).
RECOMMENDATIONS
As far as the money laundering scandal is considered, it is too obvious that the bank
failed in its ethics to carry on business as per the requirements. It is a priority area for bank to
be ethical. There is a need to add more transparency to the operations by opting for timely
reporting of all the transactions that the bank is entering into. The bank should start investing
in public service activities to boost its corporate social responsibility plan. Doing this would
go a long way in helping the bank to generate acceptance among the public again and gain
high support. It’s in bank’s own benefit to look after the accounts that carry suspicious
transactions for a long time duration (Oates, and Dias, 2016). Common wealth bank should
establish the harmonization in its international and domestic reporting frameworks to keep
the busienss more transparent in the best interest of its stakeholders. In addition to this,
ethical busienss communication practice in the public relation will also play a measure role in
setting up strong public relation practice with its stakeholders (Oates, and Dias, 2016). Now
in the end, it could be advised that Common Wealth bank should undertake proper
management program (Coombs, and Holladay, 2015).
CONCLUSION
Banking industry is a pioneer in helping the economy reach new heights. When the
economy faces a threat due to this industry only, the faith and trust is lost. Being ethically
strong is the only fundamental that shall create abundant support and help in an overall
development of the economy and the banking business too. The banks should look for a good
management that believes in openness and not in hiding. Even the competition can be lived
up if the public has accepted the functionality of a bank. After analysing all these details and

business scandals happened in economy, it is analyzed that common wealth bank should
focus on strengthening its reporting frameworks and undertaken new program for the better
and effective public relation with its stakeholders. In addition to this, bank should also hire
some of the employees who could indulge in resolving the public queries and issues
throughout the time. Now In the end, it could be inferred that keeping the business more
transparent is very much required in the best interest of organization.

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