Case Study: CBA and Violations of Corporate Social Responsibility

This case study examines the ethical breaches and violations of corporate social responsibility (CSR) principles by the Commonwealth Bank of Australia (CBA). The case focuses on the "Comminsure Insurance policy" and how the bank allegedly violated its contract by employing unfair practices to avoid paying claims to policyholders suffering from terminal illnesses. These practices included manipulating medical records, pressuring doctors, and rejecting claims based on unethical criteria. The analysis highlights the bank's failure to adhere to the core CSR principles of sustainability, accountability, and transparency. Specific instances involving clients like James Kessel and others are cited to illustrate the bank's unethical behavior. The study also discusses the violation of ethical theories such as utilitarianism, ethics of rights, and contractualism, ultimately concluding that CBA's actions undermine its social responsibility and ethical obligations. Desklib offers a platform to explore similar solved assignments and study resources for students.

Running head: PRINCIPLES OF CORPORATE SOCIAL RESPONSIBILITY
Principles of Corporate Social Responsibility
Name of the Student
Name of the University
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Contents
Common wealth bank of Australia V/S the Corporate Social Responsibilities..............................3
Relevance of Sustainability and social responsibility of the CWB.................................................5
The principle Breached by CBA......................................................................................................6
Ethical Violation and their Theories as per CSR.............................................................................7
References........................................................................................................................................9

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Common wealth bank of Australia V/S the Corporate Social Responsibilities
The case study is about the well known bank of Australia which deals in services like life
insurance and other insurance services. However there was an ethical issue which was noticed in
one of its work or transaction which the company has committed with one of its consumer
(Matten and Moon 2014). Some ethical issues were violated in this case and the bank was found
guilty on certain basis after the violation of the rules and regulation that they had promised to
provide to their customer. The case studies dictated the whole scenario that happened and it
related to some special breach of the contract and the corporate social responsibility principles.
The allegation of the illegal activity that the bank was accused of was, the violation of
the contact which was a policy under the banks regular business, which was named as the
“Comminsure Insurance policy” this policy insured the life on the policy taker and provide with
the amount of payment at the time when the policy holder was suffering from terminal illness or
a illness which may cause death of the insured at the end of 12 months or so (Dahlsrud 2018).
The bank had a good reputation in the market and the CEO of the bank continues to talk about
ethics related to the service provided to the policy holder.
The principles that were violated were according to the principals of corporate social
responsibility ethics; the main principal of corporate social responsibility is the sustainability in
terms of resources, Accountability on the basis of all details that are required for the purpose of
betterment of the society and finally Transparency which is required for the understanding of all
the stakeholders of the corporation and providing transparent information (Sathye 2014).

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In this case the company does not precede relevant work which is regarding the first
principal of CSR that is sustainability, however the other two ethical principle of CSR has been
violated, namely, accountability and transparency (Lindgreen and Swaen 2013). The bank has
been practicing unethical ways of earning profit not just for the first time but for several times in
the market. It has already done certain unethical works while providing insurance policy to their
customers, when the customers claim the amount of money at that time the bank started using
certain unfair practices to avoid repayment like:
 No proper medical records were of the client was kept, so that the actual medical
condition of the client cannot be detected in the future after the client has already bought
the claim.
 They deleted medical records whenever the clients claimed the insurance policy as per
the terms and condition.
 They create undue pressure on the doctors of the respective clients to change their
opinion as per the profitability of the bank.
 They manipulate the medical report in such a way that it becomes difficult to show the
actual condition of the client, and the client is unable to further claim the insurance
facility.
 They rejected heart attack cases on the basis of their own scale of severity which was
unethical so as to avoid repayment of the dues that were claimed by the client.
Subsequently, it is seen that the principle of CSR is violated mainly the principle of
accountability and the principle of transparency. This proves the bank guilty of the malpractices and
the involvement in the scams that was convicted on them by certain clients in the year 2014
(Garriga and Melé 2014).

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Relevance of Sustainability and social responsibility of the CWB
After analyzing the scam that happened in Australia which was committed by the
Common wealth bank in Australia, it is seen that the organization has breached the principle of
sustainability (Guthrie and Petty 2012). Sustainability is one of the principles of corporate social
responsibility this involves seeing an organization as a part of the economic and social system. It
is generally assumed that a corporate has certain duties that they need to fulfill as mentioned in
the corporate social responsibility. The bank does unethical works that has a harassing effect on
its customer, along with that they were not bothered about the consequences that may happen to
their clients as well as their organization in the future. The sustainability of use of human
resources is being disturbed by the action of the bank (Hemingway and Maclagan 2014). The
miss uses of resources to earn profit at a high rate in against the rule of sustain ability and in
future this may affect the bank's business transaction. The activities of the bank that proves the
bank to be guilty of not following the principles of sustainability are:
 Use of the system of bribing the medical institution and influencing them to change their
medical reports that they have made on behalf of the customers of the health insurance
policy (Carroll 2016).
 Secondly, Unnecessary use of resources to manipulate the work of media so that they
become incapable to influence the public against the common wealth bank.
As per the media report few clients of the company that were affected by the un- ethical practice
of the Common Wealth bank are namely:
 James Kessel: Hear Attack case
 Nicolas Bishop: Terminal lungs infection

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 Evan Pashalis: Leukemia
 Helen Polydropolos: Multiple sclerosis
 Matthew Attwater: Major Depressive Disorder
The above people are the customer of the “Comminsure Insurance policy” and their
claims were rejected under certain un ethical grounds to avoided huge repayments by the
common wealth bank, this proved the bank to be guilty of using such means in the regular
business activity which is against the Corporate Social Responsibility’ social principles (Garriga
and Melé 2014). The bank is affecting the social structure by the use of such practices of
misinterpreting, creating undue influence, manipulating the evidences and other health reports
and also not paying the ethical amount of the claim that a customer require or is eligible as per
the prewritten terms and conditions that were written in the insurance policy that the customer
availed.
The principle Breached by CBA
Mainly there are 3 main principles of the Corporate Social responsibility:
 Sustainability
 Accountability
 Transparency
The CBA breached all the three principles neither there was sustainability in their work as
they were not bothered to about the outcomes that may happen in the future due to the use of the
resources for profitability in ethical grounds nor did they followed the other two rules of
corporate social responsibility (Tai and Chuang 2014). The companies used the means of bribing

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influencing and so on just with the motive of not paying the amount that the customer of their
insurance policy is eligible for. Secondly, the principle of accountability was also hampered as
the company who is always accountable for its deeds to its shareholders or stakeholder of the
respective company (Sathye 2014). In this case there was manipulation of information,
misinterpretation as well as undue influence which violated the principle of accountability of the
firm. Thirdly the principal of transparency was violated the most as the company did not show
their true documentation and the processing of the insurance claim which was a deed violating
the transparency principle of the corporate social responsibility.
Ethical Violation and their Theories as per CSR
There are major theories regarding the ethical issues of corporate social responsibility. In
the case that is being analyzed the ethical theory are being violated the most vital of them are:
 “Utilitarianism” means that doing as much good of the customer or the client to whom
the service is being provided or preventing any negative effect on the customer. However
in the above discussed case the Common wealth bank has violated the rules of
“Utilitarianism”. The bank cheated on the customers and avoided paying the amount that
the customer is eligible to get. This deliberated to the bad effect on the customer and also
deprived the customer from getting what they should get.
 “Ethics of Rights” means the ethical rights of all humans or the human rights are to be
kept in mind while working with consumers and clients. The same things have been
violated in the above case study. The human rights are also hampered of the above
mentioned clients of the common wealth bank. Freedom of speech; Freedom from

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torture; Right to fair trail, all of these right of humanity were violated by the common
wealth bank when the customers asked for the claimed amount which they deserved.
 “Contractualism” is also violated by the common wealth bank in this case. This ethics of
corporate social responsibility says that the two parties to a contract must fulfill their
terms and conditions and the agreement made as per the promise that they made before
and provide what each other owe. The common wealth bank violated the above principle
and did not act according to the contact that they promised to provide to its customer as
per the terms of the insurance claim.

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References
Carroll, A.B., 2016. Corporate social responsibility: Evolution of a definitional
construct. Business & society, 38(3), pp.268-295.
Dahlsrud, A., 2018. How corporate social responsibility is defined: an analysis of 37
definitions. Corporate social responsibility and environmental management, 15(1), pp.1-13.
Garriga, E. and Melé, D., 2014. Corporate social responsibility theories: Mapping the
territory. Journal of business ethics, 53(1-2), pp.51-71.
Guthrie, J. and Petty, R., 2012. Intellectual capital: Australian annual reporting practices. Journal
of intellectual capital, 1(3), pp.241-251.
Hemingway, C.A. and Maclagan, P.W., 2014. Managers' personal values as drivers of corporate
social responsibility. Journal of Business Ethics, 50(1), pp.33-44.
Lindgreen, A. and Swaen, V., 2013. Corporate social responsibility. International Journal of
Management Reviews, 12(1), pp.1-7.
Matten, D. and Moon, J., 2014. Corporate social responsibility. Journal of business Ethics, 54(4),
pp.323-337.
Sathye, M., 2014. X-efficiency in Australian banking: An empirical investigation. Journal of
Banking & Finance, 25(3), pp.613-630.
Tai, F.M. and Chuang, S.H., 2014. Corporate social responsibility. Ibusiness, 6(03), p.117.