Corporate Governance, Ethics, and Fraud: Jho Low Case Study Analysis

This report examines the corporate governance failures and ethical breaches exemplified by the Jho Low case, focusing on the Tanore Finance Corporation scandal. It explores ethical theories such as deontology, utilitarianism, rights theory, and virtue theory, and applies the fraud triangle (motive, rationalization, and opportunity) to understand the underlying causes of the financial fraud. The report analyzes money laundering techniques and white-collar crime, highlighting the roles and responsibilities of key figures like Najib Razak and Shahrol Halmi. It discusses the importance of corporate governance, shareholder theory, and stakeholder theory in preventing financial fraud, emphasizing the role of ethics and internal controls. The conclusion reiterates the significance of strong corporate governance in maintaining operational effectiveness and minimizing financial risks. The report references academic sources and online resources to support its analysis. For students seeking further insights, Desklib provides access to past papers and solved assignments.

CORPORATE GOVERNANCE

Table of Contents
INTRODUCTION................................................................................................................................3
MAIN BODY.......................................................................................................................................3
CONCLUSION....................................................................................................................................5
REFERENCES.....................................................................................................................................7

INTRODUCTION
Corporate governance refers to the system which governs the organisation. It provides
framework for the organisation to perform its various activities. This assignment is based on case
study of Low Taek Jho that is the phantom and manipulator behind Tanore Finance corporation.
This study will include essay which will provide understanding about ethical theory and business
ethics. Moreover, It will include fraud triangle and its implication on the case study. Moreover , it
will discuss about corporate governance and shareholder theory to identify that financial fraud can
be avoided by using ethics and control.
MAIN BODY
Business ethics refers to the polices and practices which are adopted by the organisation
must be made ethically. It includes integrity, honesty, respecting other, no discrimination etc. are
the ethical practices which are adopted by the business. Ethical theories are those which helps the
organisation in following the ethical practices (Armstrong & et.al., 2015). There are different ethical
theories which are classified as deontological, Utilitarianism, Right and virtue. Deontology is the
ethical theory which provide that the people must comply to their obligations and duties when
engaged in decision making process.
Utilitarianism is based on the ability of the person to predict consequences of the action.
There are two types of Utilitarianism that consist of act and rule. Right ethical theory is based on
the rights established by the society. Rights are considered to the ethically correct. The rights theory
is based on the rights which the individual hold must be protected such as right to employment,
right to justice etc. Virtue theory is based on individual character and not on its action. It considers
the reputation of individual and purpose of committing the act.
According to the Allen (2017), Ethical theories helps the organisation in following the rights
practices for performing various activities of the firm. However, implementing the ethical theories
organisation must identify the rights ethical theory for implementing in the organisation to achieve
the organisational objective ethically. According to the case, Jho Low followed Right theory in
which it provides Fat Eric with good care and provided the person with Right to life (Arora &
Sharma, 2016). Fraud triangle refers to the framework which is designed to identify reason which
leads to workplace fraud. The fraud triangle provide three factors on which the fraud is based which
consist of motive, rationalization and opportunity.
Motive of the fraud includes the need to commit the fraud such as need for money etc.
Rationalization refers to the mindset of the fraudsters to make fraud. Opportunity refers to the
situation in which the fraud is occurred. On the basis of case study it can be identified that Jho low

made fraud due to its motive of having money. Low Joe required money and for this motive it
committed the fraud. Money laundering refers to the process through which the illegal transferring
of the money is shown that it is done legally. It refers to act of hiding the illegally obtained money
in order to hide its true source from which the money is obtained. For example, Jho low in order to
transfer fund made fake account in different banks overseas.
It transferred the money in the strictest bank known as Singapore's Development Bank of
Singapore and many other banks and offshore companies. White – collar crime refers to the crime
which is made by the people in the business which is operating for financial gain (Yu & et.al.,
2016). This crime is committed without violence and nobody is able to identify that the crime has
occurred. White – collar crime is done by the people, working in the organisation and have
significant position in that company. Jho low committed the financial fraud using the White – collar
as Fat Eric the owner of Tanore finance corporation have faith in Jho low as it they were close
friends.
The banker at the Development Bank of Singapore was blind-sided by Jho low due to
which the funds was conducted in that bank. The fraud could be prevented if the bank has identified
the information about the real Blackrock which will help in identifying the information about the
source of money. It could also be prevented if the bank has monitored the transaction took place in
the bank. Moreover, the bank before opening an account must get the information correctly about
the person could have helped in preventing the fraud that took place in the development bank of
Singapore. Jho low used the name of Blackrock to justify the transaction and said that the person is
the wholesale jeweller .
The bank could have identified the information about the person in order to know about the
actual information which could have prevented from this fraud which took place through the bank.
Najib Razak the chairman of 1Malaysia Development Berhad which the Malaysian strategic
development company. The chairman has the following roles and responsibilities in the company.
The chairman is responsible for providing leadership to the board. Najib Razak was responsible for
taking the responsibility of the board's composition and development. The chairman is responsible
for establishing effective corporate governance practices. Moreover, This person is responsible for
leading the board in formulating the strategies for achieve the objectives of the organisation.
Also, It is responsible for providing guidance regarding improving their performance. The
role and responsibility of the chairman is to plan and conduct board meeting effectively. It also
ensures that the board is performing the task according to the strategies formulated for achieve the
organisational objective. Shahrol Halmi the CEO at 1Malaysia Development Berhad have various
roles and responsibilities (Tricker & Tricker, 2015). It is the responsibility of CEO is responsible for

creating , communicating and implementing the vision, mission and objectives of the company.
Moreover, it is the responsibility of CEO to evaluate the work of other executive leaders. It is the
duty of CEO to ensure that company maintains high level of social responsibility. It also identifies
the threats which may affect the business operations and various opportunities which will helps the
organisation in growing. The responsibility of CEO is to supervise the work of various department
of the company. The Board of directors must have set standards and policies for working with the
organisation. Moreover, the Board of directors must have chosen the right people for performing
the various function of the organisation.
The Board of directors must have established policies for honesty and fairness. The BOD
must have not used the organisational property for personal use. The Corporate governance refers to
the way through which the organisation is governed. It includes the rules and practices which are
directed to the firm to achieve the objectives of the organisation (McCahery, Sautner & Starks,
2016). Shareholder theory provide that the main responsibility of the organisation is to increase its
profitability. According to this theory , the main purpose of the company is to earn profit for the
interest of shareholders. Shareholders theory provide that the management is responsible for
providing the shareholders with higher profitability.
The stakeholder theory provide framework for protecting the interest of all the stakeholders
of the company which include employees, shareholders, customers, suppliers , creditors.
Stakeholder theory protect the interests of the stakeholders and provide that the main responsibility
of the organisation is work towards providing the stakeholders with maximum benefits ( Kraakman
& Hansmann, 2017). In reference to the case study the Jho Low provide free shares to business
associates to provide satisfaction to them. It provides implication of the shareholder theory which
was followed by Jho low. Ethics and control over the activities can reduce the chances of financial
fraud.
For reducing the financial fraud the organisation must have effective corporate governance
which will helps the organisation is reducing financial fraud. By maintaining internal control
system strong the company is able to reduce the risk of fraud. Ethical practices can helps in
reducing the financial fraud. Moreover, the fraud can be reduced by setting standard and values for
performing activities in the business (Breitbarth & et.al., 2015). Providing a framework for
monitoring compliance for the set values can helps in reducing the risk of financial fraud. Ethics
policy must be developed by company for reducing fraud at the workplace.
CONCLUSION
From the above study it has concluded about corporate governance which helps the

company in performing its operation effectively and efficiently and reduces the chances of financial
problems. This study has provided information about the ethical theories which has provided with
deontological, Utilitarianism, Right and virtue theories. Moreover, It has also provided information
about fraud triangle which has provided that is a framework which provided reasons of committing
the fraud that provided that Jho low committed fraud due to motive for money. Also, It has shown
about the roles and responsibilities of chairman and CEO which has concluded that they are
responsible for maintaining and leading the board.

REFERENCES
Books and Journals
Allen, W. T. (2017). Our schizophrenic conception of the business corporation. In Corporate
Governance (pp. 79-99). Gower.
Armstrong, C. S. & et.al., (2015). Corporate governance, incentives, and tax avoidance. Journal of
Accounting and Economics. 60(1). 1-17.
Arora, A., & Sharma, C. (2016). Corporate governance and firm performance in developing
countries: evidence from India. Corporate governance. 16(2). 420-436.
Breitbarth, T. & et.al., (2015). Corporate social responsibility and governance in sport:“Oh, the
things you can find, if you don’t stay behind!”. Corporate Governance. 15(2). 254-273.
Kraakman, R., & Hansmann, H. (2017). The end of history for corporate law. In Corporate
Governance.(pp. 49-78). Gower.
McCahery, J. A., Sautner, Z., & Starks, L. T. (2016). Behind the scenes: The corporate governance
preferences of institutional investors. The Journal of Finance. 71(6). 2905-2932.
Tricker, R. B., & Tricker, R. I. (2015). Corporate governance: Principles, policies, and practices.
Oxford University Press, USA.
Yu, X. & et.al., (2016). A Configurational Exploration of Family Relationships, Corporate
Governance, and Firm Performance. In Academy of Management Proceedings (Vol. 2016,
No. 1, p. 10063). Briarcliff Manor, NY 10510: Academy of Management.
Online
What is the difference between a shareholder and a stakeholder. 2018.[Online]. Available through :
<https://www.investopedia.com/ask/answers/08/difference-between-a-shareholder-and-a-
stakeholder.asp>