Comparative Business Ethics and Social Responsibilities Essay

This essay examines the ethical issues faced by Commonwealth Bank Australia, focusing on the manipulation of children's accounts by staff to gain bonuses. It explores the legal implications, key ethical issues such as corporate governance, corporate social responsibility, and corporate citizenship. The essay analyzes the ethical decision-making process, supported by literature, and the bank's response to the scandal, including the termination of employees. The analysis applies various moral philosophies, such as utilitarianism, egoism, and virtue ethics, to evaluate the actions of the bank and its staff. It concludes that the decision to terminate employees aligns with ethical business practices, emphasizing the importance of trust, self-control, and moral leadership in business operations. The essay references relevant literature and provides a comparative analysis with similar cases in other companies, highlighting the significance of ethical conduct in maintaining public trust and good corporate governance.

Running head: COMPARATIVE BUSINESS ETHICS AND SOCIAL RESPONSIBILITIES
Comparative business ethics and social responsibilities
Harmanpreet singh (Ary8074)
Name of the University
Author Note

1COMPARATIVE BUSINESS ETHICS AND SOCIAL RESPONSIBILITIES
Ethics is an integral part of every business and it refers to an individual’s moral
judgements related to right or wrong. In business ethical responsibility and corporate social
responsibility holds significant benefits. It helps attract customers, employees and investors and
retain them and increase the business productivity. On the other hand the unethical behaviour in
business damages the reputation of the company and profit reduces as the stakeholders lack
interest (Crane and Matten 2016). The aim of the essay is to investigate the recent ethical issue
related to business within last three months. In regards to the identified issue in the online news
article, related to breach of ethics by Commonwealth Bank Australia, the essay explores if there
was any legal implications. The essay highlights the keys ethical issue/s related to news/article.
The essay then discusses if ethical decision has been made supported with literature evidence.
According to news published in the website abc.net.au, Commonwealth Bank admits to
have manipulated the children’s account. This news posted on 19th of this month has created
havoc in Australia. The news highlighted conformation by the Commonwealth Bank about
fraudulently manipulating the accounts of children by staff of the retail branch. Indulging in such
scam was out of the greed for earning bonuses and meet targets (abc.net.au 2018).
Commonwealth Bank is the multinational bank in Australia, with its branches in UK, USA and
New Zealand. The organisation is popular for provision of variety of services including
institutional banking, funds management, retail business, investment and broking services. It is
the largest company listed on the Australian securities exchange and was fully privatised in 1966
(Gollan 1968).
As the new article unfolds, it was found that Matt Comyn, CBA chief executive officer
confessed about the manipulation done by the staff. He apologised for the breach of trust. He

2COMPARATIVE BUSINESS ETHICS AND SOCIAL RESPONSIBILITIES
further informed that the purpose of the staff behind such unethical behaviour is to illegitimately
activate Youthsaver accounts also known as Dollarmites, based on which the staff can get
incentive compensation. These Youth saver accounts in Australia were opened for young people
to cultivate the saving behaviour since early life. These accounts were created by taking parents’
consent (abc.net.au 2018). The bank’s staff activated accounts those that were left undeposited
by many days by adding small amounts from personal profit such as ten cents. It fetched $2 per
year to the bank staff. It was argued by the Federal Opposition finance spokesman, “Jim
Chalmers” that such action of CBA staff depicts need of culture change as it is troubling to see
meddling with children’s bank accounts. Mr Comyn apologised and asserted that such action did
not harm anyone financially (Knaus 2018). Further, the news article highlighted that CBA
mentioned it new priority to expedite changes undermining the customer’s trust and terminate
employees involved in such unethical behaviour knowingly. Mr Comyn argued that changes
were made to such unethical behaviour when observed in 2013 and asserts to not have noticed
such practice in past five years. However, now he agrees to have put zero-tolerance for such
behaviour, irrespective of any harm to the customer (abc.net.au 2018).
This ethical issue in this scenario as per concerns raised in this article is corporate
governance, corporate social responsibility and corporate citizenship. Corporate governance in
any business is established to prevent any major disaster similar to the popular Enron scandal.
Such governance refers to processes and policies by which the company is directed and
controlled allowing building the stakeholder’s value and confidence (Crane and Matten 2016).
Transparency is one of the key elements of the good governance which seems to have been
breached by the Commonwealth bank staff. The action taken by them for personal profit earning
is not in compliance with the established rules and regulations of the bank. The investors do not

3COMPARATIVE BUSINESS ETHICS AND SOCIAL RESPONSIBILITIES
get the true picture of company’s financial actions and non-financial aspects. The staffs were
deviant with the concept of discipline as they showed behaviour that is not universally
recognised as correct (Crane and Matten 2016).
Another key ethical issue is corporate social responsibility as the staff did not establish
the corporate ethics and behaviour of good corporate ethics. The key ethical issue demonstrated
by the manipulation is the breach of trust. According to Kolk (2016) corporate social
responsibility refers to balancing the needs of the stakeholders and ensuring the social and
environmental well being. Considering the breach of ethics by Commonwealth Bank it can be
said that there was a lack of transparency about human right practices. It can be interpreted that
the staff of the bank do not comply with law and wider social expectations. The staff did not pay
high priority to ethical standard, or was responsible to human rights issues. The staffs do not
demonstrate the social responsibility which is also one of the elements of the corporate
governance (Saeidi et al. 2015). Corporate citizenship refers to ethical treatment of stakeholders
while meeting the economic, legal, ethical and social responsibilities (Dion 2017). Analysing the
act of Commonwealth bank staff, it can be interpreted that they did not demonstrate
ethical/moral leadership by manipulating the children’s accounts, indicating poor strength of
character. It does not appear that ethics is not a clear part of their agenda. There lacks an ethical
culture as the part of their function in organisation.
Legal action against the employee depends on the company’s code of conduct. In case of
Commonwealth Bank the employees did violate the code of conduct and is also confirmed by Mr
Comyn. It involves legal implications and it was right decision announced by him to terminate
the staff involved in this unethical behaviour knowingly. In the documented list of commitments
of the commonwealth bank, it is clearly stated that the bank is committed to honesty. However,

4COMPARATIVE BUSINESS ETHICS AND SOCIAL RESPONSIBILITIES
the staff did not demonstrate ethics in manipulating accounts. Therefore, Mr Comyn’s decision
of termination as per zero tolerance behaviour is justified. If such action is not taken it will
further decline the public’s trust and confidence in the large corporation, who may further fear
corruption due to past scandals like Enron, Volkswagen and others (Ndedi et al. 2015). By taking
the decision to terminate the employees at Commonwealth bank, Mr Comyn demonstrated the
behaviour of accountability and responsiveness through his decision. Both are the key elements
of the corporate governance. Mr Comyn had taken responsibility for ethical issue occurring in
the company. It provides the investors a medium to query and asses the committee and board’s
actions on this. Mr Comyn also demonstrated responsibility by taking corrective action to
penalise the mismanagement of accounts in the Bank. It demonstrates the social responsibility
towards the stakeholders (Saeidi et al. 2015). Such action will set a good example for other
employees who may be set on right path and restrain from ethical lapse in future. This decision
of the company demonstrates the commitment to good governance. There is growing literature
related to firing of CEO of several companies for breach of ethics. More number of firings for
ethical lapses was observed in BRIC countries and in Western Europe. According to Cole
(2017) six employees at KPMG were terminated from job after an internal probe of ethical
breach in 2017. In March 2018, six of the Howard workers were fired for misappropriates using
the university based funds for nine years. The decision was considered justified based on
negligence of duties (Pennamon 2018). In 2067, Wells Fargo fired 5300 workers for creating
fake bank accounts and indulging in unethical sales practice (Egan 2018).
Decision making in business issues is complicated especially due to different notions of
right and wrong action. In the global marketplace considering the competiveness of the business,
applying the moral philosophy is not a simple task. Extension of moral philosophy into practical

5COMPARATIVE BUSINESS ETHICS AND SOCIAL RESPONSIBILITIES
context refers to business ethics (Ferrell, Fraedrich and Ferrell 2015). Different moral
philosophies exist in business world. As per utilitarian philosophy a moral action is the one that
promotes the greater good off the people and maximises the total utility. On the other hand the
philosophy of egoism is the one that defines acceptable or right actions as those maximising the
interest of the particular person as defined by him or her. The deontological theory focuses on
preserving the rights of a person associated and intentions associated with the behaviour rather
than its consequences. Business decisions are also based on the virtue ethics that is focusing in
what is conventional morality as well as what is considered appropriate by the person with good
moral character. In contrast to the above philosophies, the philosophy of teleology defines right
action as anything that is acceptable if produce some desired result such as utility or realisation
of self-interest. Again, the theory of relativist evaluates the ethics of the situation based on the
individual or group experiences. The theory of justice defines ethics based on fairness that are
interactional, procedural and distributive (Ferrell, Fraedrich, and Ferrell 2015).
Applying these philosophies in the present context, it can be said that Mr Comyn’s
decision to terminate employees for manipulating the children’s bank accounts for personal
profit, is justified. It can be concluded that his decision is based on virtue ethics of business. His
decision depicts his willingness to serve the society’s demand and promote public good. It
demonstrates his virtue and integrity. It is true as per Ferrell, Fraedrich, and Ferrell (2015)
because individual excellence and the well being of community goes hand in hand. This is the
inductive application of the problem whereas the philosophy of deontology and teleology. The
behaviour of the staff to manipulate the children accounts for personal greediness can be
considered as approach of egoism where only self interest was given preference. Self control and

6COMPARATIVE BUSINESS ETHICS AND SOCIAL RESPONSIBILITIES
tryst are main virtues of a business but the staff had breached both as they could not control
exploiting accounts for self gain.
It can be concluded from the essay that ethics is vital in business and breach of ethics
leads to ethico-legal consequences as in the case of Commonwealth Bank. The decision making
in business is difficult as ethics is defined in various forms due to different moral philosophies of
an individual. However, as per literature, the key virtues that support business transactions are
trust, self-control, empathy, fairness, truthfulness, learning, gratitude, moral leadership and
civility. In case Commonwealth Bank, the staff breached the ethics by violating public trust and
lack of self control and moral leadership. Their behaviour demonstrated the poor corporate
governance, social responsibility and corporate citizenship. In this regard the decision to
terminate the employees is justified considering the virtues of ethics in business.

7COMPARATIVE BUSINESS ETHICS AND SOCIAL RESPONSIBILITIES
References
abc.net.au 2018. 'Breach of trust': CBA apologises for manipulating children's accounts. [online]
ABC News. Available at: http://www.abc.net.au/news/2018-05-19/commonwealth-bank-staff-
manipulated-childrens-accounts/9779010?section=business [Accessed 20 May 2018].
Cole, C., 2017. KPMG IT Audit Overview and Introduction: A Classroom Exercise.
Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and
sustainability in the age of globalization. Oxford University Press.
Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and
sustainability in the age of globalization. Oxford University Press.
Dion, M., 2017. Corporate citizenship as an ethic of care: corporate values, codes of ethics and
global governance. In Perspectives on corporate citizenship (pp. 118-138). Routledge.
Egan, M. 2018. I called the Wells Fargo ethics line and was fired. [online] CNNMoney.
Available at: http://money.cnn.com/2016/09/21/investing/wells-fargo-fired-workers-retaliation-
fake-accounts/?iid=EL [Accessed 21 May 2018].
Ferrell, O.C., Fraedrich, J. and Ferrell, L., 2015. Business ethics. Ethical decision making and
cases.
Gollan, R., 1968. The Commonwealth Bank of Australia; origins and early history. Canberra,
Australian National University Press.
Knaus, C. 2018. Commonwealth Bank apologises for staff manipulation of children's accounts.
[online] the Guardian. Available at:

8COMPARATIVE BUSINESS ETHICS AND SOCIAL RESPONSIBILITIES
https://www.theguardian.com/australia-news/2018/may/19/commonwealth-bank-apologises-for-
staff-manipulation-of-childrens-accounts [Accessed 20 May 2018].
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Ndedi, A., Kuete, Y.D., Mua, K.K. and Kouwos, M.B., 2015. What Can Companies Learn from
Volkswagen Business Unethical Behaviour?.
Pennamon, T. 2018. Six Howard Workers Fired After Nine-Year Financial Scandal. [online]
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Saeidi, S.P., Sofian, S., Saeidi, P., Saeidi, S.P. and Saaeidi, S.A., 2015. How does corporate
social responsibility contribute to firm financial performance? The mediating role of competitive
advantage, reputation, and customer satisfaction. Journal of Business Research, 68(2), pp.341-
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