Corporate Social Responsibility and Governance: Westpac Analysis

This report examines the corporate social responsibility and governance failures of Westpac, focusing on the bank's involvement in money laundering and related ethical breaches. The report presents two contrasting editorial perspectives from ABC News and The Daily Telegraph, highlighting the severity of Westpac's actions and the implications for stakeholders. It delves into the breaches of anti-money laundering laws, the resignation of key executives, and the ethical implications of the bank's decisions. The analysis considers the responsibilities of directors, the impact on shareholders, and the overall impact on the financial sector. The report also acknowledges the business perspective, discussing the bank's past performance and its efforts to address the issues. The assignment concludes by evaluating the bank's actions, considering the importance of corporate governance, social responsibility, and business ethics, and offering a comprehensive overview of the situation.

Running Head: BUSINESS AND CORPORATION LAW 0
Corporate Social Responsibility and Governance
2/5/2020
Student’s Name

Corporate Social Responsibility and Governance
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Contents
Editorial: ABC News..........................................................................................................2
Broken Ethics, Can Westpac justify. 2
Editorial: The Daily Telegraph...........................................................................................4
Westpac: The other side of the coin 4
References.........................................................................................................................6
Bibliography.......................................................................................................................6

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Editorial: ABC News
Broken Ethics, Can Westpac justify.
In the world full of completion, corporate governance, business ethics, and social
responsibility are some concepts that have their huge significance. The responsibility
has been more crucial after globalization where stakeholders have a range of choices.
But whether every organization understands the value of these aspects? The world's
second-largest bank, Westpac, Probably does not. Westpac has been found guilty of
hindering criminal money laundering. Not only once or twice but the bank has breached
anti-money laundering law for the whole 23 million times. The incident rocked the
financial sector of not only the country but also the international economy. Out of these
23 million transactions, nearly 19.5 million have done between Westpac and other
correspondent banks to process customer transactions of each other. The issue is not
only limited up to a breach of money laundering law but also attracts guilty of child sex
trafficking. How significant the issue can be understood by the fact that each of the
braches attracts penalty worth A$63,000 and Westpac has committed millions of such
breach. It means Westpac is liable to pay more than A$1 trillion in the form of penalty
(Fargher, 2019).
As per the requirements outlined by The Australian Transaction Reports and
Analysis Centre, Westpac was liable to monitor and report suspicious transactions. The
bank has done clear noncompliance at the board level. Brian Hartzer, the Chief
executive officer of the company also resigned from his post when the Scandal has
reported in the media. Lindsay Maxste, the chairman of the company is also likely to
resign from his post. These actions are a clear reflection of the irresponsible behavior
pursued by these leaders. The management is leaving its position rather than making
the doubt of millions of stakeholders clear. Not only the principles of leadership but also
the principles of business ethics seem to unfollow here. Firstly, directors and executives
of the bank have breached their legal duties by not reporting the transactions, which
were mandatory to. Further, they have not taken responsibility for their actions.

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The unethical and irresponsible conducts of Westpac have not stooped till money
laundering or child sex abuse. Westpac has announced that Brian Hartzer, will continue
has his position on the payroll of the bank and will be entitled to receive a tidy $2.686
million in the coming 12 months (7news.com.au, 2019). It clearly shows that in the
situation of ethical scandal too, the bank is taking the side of leaders who have
misconducted in the past and providing them continue remuneration at the expense of
other stakeholders who have invested their money keeping good faith in the affairs of
the business. The overall situation determines that the bank has forgotten the interest of
other stakeholders by giving remuneration to the CEO at his departure. Lack of
corporate governance, social responsibility, and business ethics has become very
common at Westpac.

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Editorial: The Daily Telegraph
Westpac: The other side of the coin
One of the biggest banks of Australia, Westpac has received allegations and
legal actions from financial intelligence agencies as it breached anti-money laundering
law in 23 million transactions and counter-terrorism finance law in many other
transactions that had worth $11 billion (Butler, 2019). For any community, no scenario
can be worse than this where a company like Westpac forgets to fulfill its ethical theory
considering the financial benefit. Since everyone is looking after only unethical
conducted by the bank, the other side of the coin is also required to have a look upon. If
to consider the situation of Westpac from a business perspective, the directors, as well
as other executives, seem to carry their duty efficiently. The shareholder of the
company has approved many of the transactions and for that only management should
be held liable.
Westpac has created its goodwill over the past many years and earned the trust
of stakeholders. Bank understands its responsibilities well and the board of the same
also made an apology for the money laundering scandal (Kaye and Duran, 2019). It
clearly shows that the scandal was not intentional. Further, after the scandal has been
reported, the bank made it clear that everyone in the management including CEO and
other board members is committed to fix the issues and to take necessary steps to fulfill
the gaps. Lindsay Maxsted, the chairperson of the company also submitted its apology
just after two days when the financial crime agency has sued the bank for breach of
laws. The company has done well before and also promised to appoint independent
experts to review efforts taking by the bank to meet its compliance under laws breached
earlier to say as counter-terrorism as well as anti-money laundering laws.
However, Westpac failed to consider ethics in action, but as a business, it was always
successful. The qualification of management cannot doubt only on the fact that they
have not fulfilled their ethical duties or did not pay attention to compliance. The principle
of the group for doing business, which is available on the official website of the
company, says it loud that the company believes in responding appropriately to stop

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happening of financial crimes to protect community and customers (westpac.com.au,
2020a). Westpac realizing its mistakes done in the past is implementing the
recommendations provided by banking royal commission. Further, the bank states it
understand the expectation of commission as well as community and is committed to
fulfill the same in coming future (westpac.com.au, 2020b).

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References
7news.com.au. (2019). Westpac boss Brian Hartzer quits as criticism mounts over
bank's 'free pass to paedophiles' Chris Hook. Retrieved From:
https://7news.com.au/business/banks/westpac-boss-brian-hartzer-quits-as-
criticism-mounts-over-banks-free-pass-to-pedophiles-c-574897
Butler, B. (2019). Westpac accused of more than 23m breaches of anti-money
laundering laws. Retrieved From:
https://www.theguardian.com/australia-news/2019/nov/20/westpac-accused-of-
more-than-23m-breaches-of-anti-money-laundering-laws
Fargher, I. (2019). How Westpac is alleged to have broken anti-money laundering laws
23 million times. Retrieved From: https://theconversation.com/how-westpac-is-
alleged-to-have-broken-anti-money-laundering-laws-23-million-times-127518
Kaye, B. and Duran, P. (2019) Board of Australia's Westpac 'unreservedly apologizes'
over money-laundering. Retrieved From: https://www.reuters.com/article/us-
westpac-research/board-of-australias-westpac-unreservedly-apologizes-over-
money-laundering-idUSKBN1XV2N0
Westpac.com.au. (2020a). Westpac Group’s Principles for Doing Business. Retrieved
From: https://www.westpac.com.au/content/dam/public/wbc/documents/pdf/aw/
sustainability/Principles_for_doing_business.pdf
westpac.com.au. (2020b). Royal Commission into Misconduct in the Banking,
Superannuation and Financial Services Industry. Retrieved From:
https://www.westpac.com.au/about-westpac/media/royal-commission-response/
Bibliography

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Bbc.com. (2019). Westpac bank chief quits amid money laundering scandal. Retrieved
From: https://www.bbc.com/news/world-australia-50553855
Davies, A. (2019). Westpac in crisis talks with largest investors amid money-laundering
scandal. Retrieved From:
https://www.theguardian.com/australia-news/2019/nov/25/westpac-in-crisis-talks-with-
largest-investors-amid-money-laundering-scandal
Grieve, C. (2019). The Westpac scandal: how did it happen? Retrieved From:
https://www.smh.com.au/business/banking-and-finance/the-westpac-scandal-how-did-it-
happen-20191206-p53ho2.html