An Analysis of Ethical Issues and Theories in Westpac Bank

This report provides an in-depth analysis of ethical issues faced by Westpac Bank, primarily focusing on cases of money laundering and child exploitation that led to significant reputational damage and regulatory scrutiny. The report outlines the ethical failures, including breaches of the bank's code of conduct and violations of legal regulations, as identified by AUSTRAC. It explores the application of ethical theories such as utilitarianism and virtue ethics to understand the issues and propose solutions. The report recommends improvements in board structure, leadership, customer relations, and corporate governance to address the identified ethical shortcomings. It emphasizes the importance of transparency, rational thinking, and consistent ethical policies to prevent future incidents and maintain a healthy work environment. The conclusion highlights the bank's efforts to address climate change as a major ethical issue impacting its operations and overall prosperity.

Running head: ETHICAL ISSUES IN WESTPAC
ETHICAL ISSUES IN WESTPAC
Name of the Student
Name of the University
Author note

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Executive summary
Ethics are the most important thing that any organization needs to follow and maintain. The
basic ethical behavior is expected from every individual those are working in any particular
organization. The following case gives a brief introduction about how the organization faces
ethical issues and find ways for solving the same. It also discusses about the challenges faced
by the organization in developing ethical theories and then implementing them.

2ETHICAL ISSUES IN WESTPAC
Table of Contents
Introduction................................................................................................................................3
ETHICAL ISSUES:...................................................................................................................3
ETHICAL THEORIES:.............................................................................................................5
THEORY OF UTILITARIANISM:.......................................................................................5
THEORY OF VIRTUE:.........................................................................................................5
RECOMMENDATIONS:..........................................................................................................6
CONCLUSION..........................................................................................................................8
REFERENCES.........................................................................................................................10

3ETHICAL ISSUES IN WESTPAC
Introduction
The early and original name of Westpac is Westpac banking corporation which was
founded in the year 1817 apparently 200 years ago from now. This bank is very well known
for providing many services that includes financial and banking services. There are other
services which this bank also operates in they are also into services like investment banking,
corporate banking, credit card services, mortgages and also the consumer banking is
included. Westpac bank has its headquarter in Westpac place, Sydney and they are at present
operating worldwide across the globe(Westpac, 2020). There have been controversies
associated with the bank and many cases have been observed which has led to the
degradation of the brand value and brand image of the bank. Cases of money laundering and
exploitation of child was observed and the bank was found guilty when the cases were
presented to the regulators of Australia(Westpac, 2020).
This report insight about the cases related to the bank and the ethical issues faced by
the bank and the ways of solving it through several ethical theories and providing
recommendations based on the issues and the theories of ethics.
ETHICAL ISSUES:
The conflict between the decision making and the moral principles of both, the society
as well as the organization can be defined as ethical issues. There are certain principles of
ethics which all the organization be it small, medium or large needs to follow as these are the
standards set by any organization operating on a market. It is very important that there is
confidentiality as well as transparency within the work that comes from top to bottom of the
hierarchy and basic autonomy must be maintained in order to have better stability and
functioning of the organization.

4ETHICAL ISSUES IN WESTPAC
Issues arises when there is a problem in choosing from the alternatives present in front as
there is a confusion and lack of confidence in opting for the same (Jones Felps and Bigley
2017). It is very important to handle these issues of ethics as it helps in giving a better shape
to the organization and helps the organization to grow in the long run. The management,
higher authorities as well as the employees must know what are the issues and then work and
make an action plan accordingly (Zambonand Dumay2016).
There were several ethical issues that were identified by AUSTRAC for Westpac (Echevarria
2014).
1. There have been cases of money laundering and exploitation of child on the part of
Westpac by AUSTRAC (The Australian Transaction Reports and Analysis Centre). It
was later found that both the issues observed and identified were found guilty and this
resulted in the poor brand recognition and brand value of the bank.
2. There was a breach in ‘code of conduct’ of the bank and an allegation was made for
about breaching 23 million legal laws by the bank which was associated in this
scandal.Later, it was found that these transaction made were worth $11 billion.
3. Cases were found regarding the wrong doings of the corporate and the department in
AUSTRAC was finding and expecting the bank to identify the type and pattern of
transactions that are risky.
4. AUSTRAC claimed that there was a failure in the part of Westpac in accessing the
transactions that were appropriate for the countries like South East Asia and these
places have been known as financial indicators related to the potential risk of
exploitation of child.

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ETHICAL THEORIES:
The basic and major role of these theories is to identify and analyze the things that are
good and evil for the bank. These theories help in building a base for the decision making as
these represent the point of view from where the individual starts making decisions (Hassan
2015).
There are practices that are common in business and these include theories of deontology,
utilitarianism and virtue ethics.
THEORY OF UTILITARIANISM:
This theory of ethics determines the things that are right from the negative or wrong
ones just by putting efforts into the consequences. It also states that the actions are right only
if they turn out to be beneficial and useful for the majority number and the greatest happiness
of the greatest numbers should be guiding the principle of conduct (Mill 2016).
From the above case it has been observed that the bank Westpac was unable or it
failed to pass on the information that were related to the origin of transfer of international
funds and records were about to kept when required. The most important and major issue that
was faced by the agency and was encountered was that the agency said that the payment are
consistent with transfers made to those who are involved with child exploitation.
THEORY OF VIRTUE:
This theory states that most of the approach made to ethics focuses on the character of
the individual as the key elements include thinking ethically rather than the rules or the
consequences (Van Hooft 2014). This theory helps in making a normative approach as is
followed as one of the major theory (Broad 2015).
The case on Westpac described about the CEO being guilty in the scandal that was
investigated by AUSTRAC regarding the exploitation of the child and he was the only one

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who was the first casualty regarding the money laundering case too. Besides, the bank
declared that it was accountable for everything that is happening in the bank sooner or later
(Arnold, Beauchamp, and Bowie 2019). Thus, it can be observed that there was a lack in
rational thinking of the CEO and there was no transparency of work which was supposed to
be present only thing everything could be clear and a better solution regarding the case would
have been found.
These associations were made to the ethical issues and the ethical theories to have a better
idea on the scenario presented.
RECOMMENDATIONS:
From the above mentioned case it can be analyzed that there were some loopholes on
the side of the bank and these needed to be corrected for better functioning of the bank.
The most important thing of any organization or bank is the board structure and the members
forming the board. The people or members chosen must be skillful and should have a broad
range of skills that would help the bank to recover with the pace of time (Sandbæk 2014).
There are certain recommendation that could be beneficial for the bank to cope up with the
problems in future.
The leader chosen by the bank must be able to adapt the changes and rule the situation
with his skill and experience. The bank must have chosen leader who poses good negotiation
and analytical skill that would have helped them to deal the situation in a better way. This
recommendation was made based in the utilitarian theory of the ethics followed.
The leader that was chosen in Westpac failed to communicate the information that
was necessary and he also lacked the pre requisite to communicate. The leader was also
unable to increase the morale of the employees and failed to change with the changing

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environment. According to the utilitarian theory the things that are right must be picked and
accordingly follow the consequences.
Leaders must be the one who can be looked at as a source of guidance who is responsible for
developing the morale of the employees in the bank (Davis, Andersen and Curtis 2016.).
Taking feedback from the customers and then enhancing the corporate accordingly will help
Westpac changing the banking requirements.
It has been seen that Westpac has committed to innovation that helps the customers
make a difference. Taking this in mind it is important that the bank understand the type and
quality of service the customers want and then provide accordingly.
The flexibility can be expanded by the bank and make the traders available for more
international currencies. This will also help in accessing the service by the corporates. The
bank can go for providing services like corporate online which would help the administrators
in making flexible audits. Based on the virtue ethics it must be followed up and the key
characteristics must be noticed.
The most important thing that the CEO lacked here was the rational and transparent thinking
which generated conflicts and issues among the stakeholder of the bank.
For resolving the problems in Westpac it is very important that the key problems are
identified and all the relevant facts are present based on the situation going on. Then the
individuals who are affected would have been considered by the bank and the conflicts
between the stakeholders and the bank would have identified and resolved by the bank based
on the utilitarian theory (Beauchamp 2015).
The bank must focus on capitalizing the Australian banking sector that has got its strengths
over the last years. It is also very important to allocate the capital efficiently and define the
facts that are based on the recommendations and variability.

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The bank must also focus on maintaining the commitment that is done to the
customers and the stakeholders. However, in this case the leader chosen by the bank failed to
make the customers and the employees trust the services as there were cases which were not
acceptable and expected at all (Elbeltagi and Agag2016).
However, it was seen that the organization took the corrective measure of pushing the
CEO out of the bank so that the ethicality in the bank remains and there is no breach of the
code of conduct any further in the future. The bank must try and advocate the policies which
will help in stimulating the investment as the bank operates both domestically as well as
globally.
When a business starts or is being started it is important that a loyalty is being built on
the part of the customers and the bank this will help in including ethical behavior in the
business that will also help in avoiding the legal problems ad this will ultimately lead to the
retention of the employees that are talented (Beauchamp,Bowie and Arnold 2014). This will
help in maintaining a healthy environment in the workplace and this is eventually make the
bank realize the capabilities and the type of experience they will have in the long run.
There are challenges that needs to be cope up and understood before it gets too late
for the solutions to come. Maintaining the consistency is important and the major challenge
seen in implementing ethical behavior in the organization (Donaldson and Walsh 2015). In
this case too it has been observed that there have been issues in establishing the consistency
and the policies made was complex. The bank must adhere changes and must try to organize
the things that is required for the bank to perform better.
CONCLUSION
Westpac has found out that the major issue that the bank faces and is recognized is the
problem faced due to the climate change. This issues has made a great impact on the

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prosperity, economy and the way of life the bank has. Consequently, the bank has steps to
overcome this issue of climate change and has implemented an action plan that will help the
customers and the community to make a low transition. This has also helped the bank in
being consistent by limiting the issues faced.
The action plan implemented by the organization helps individual to respond to the
climate change. It was stated by the bank that it will assess the financial implications of
climate-related risks and opportunities in their business, including how their strategies are
likely to perform under various forward-looking scenarios.
Thus, from the above discussion it can be concluded that when business involves and
executes ethical practices, it grows or prospers more. In the above case it was seen that the
bank which was very well known and one of the major bank in the country failed to take
corrective measures and also failed at maintaining the ethical behavior which resulted in the
downfall or the degradation of the reputation of the company. This also effected the brand
image and value of the bank and customers were setback by this. However, the organization
showed its pro- activeness and pushed the guilty out of the organization. This resulted in
having a stable reputation of the organization which was lost earlier. This also shows that the
organization believes in making and taking steps that are ethical and do not entertain
unethical behavior.

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REFERENCES
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