Management Report: Corporate Governance Issues at Credit Suisse

This report provides a comprehensive analysis of the corporate governance issues that plagued Credit Suisse, focusing on the repercussions of a corporate espionage scandal. The report outlines and summarizes the arguments presented in a Reuters article, highlighting the role of the Swiss market supervisor (FINMA) in scrutinizing the bank's oversight of its executives. It explores the importance of media reporting on such issues, emphasizing the need for transparency and accountability in the business environment. Furthermore, the report delves into the corporate governance failures within Credit Suisse, discussing conflicts of interest, accountability issues, and lack of diversity. It examines the importance of effective corporate governance in enhancing performance and ensuring ethical practices. The conclusion synthesizes the key findings, emphasizing the impact of these governance failures on the company's performance and brand image, and the need for corrective measures. The report references various academic sources to support its analysis.

Running head: MANAGEMENT
Management
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Table of Contents
Outlining and Summarizing Arguments in Article..........................................................................2
Analysis of Importance for Media to Report on Arguments...........................................................3
Analysis of the Corporate Governance Issues and Importance.......................................................4
Conclusion on basis of Opinions about Corporate Governance Issues Raised in Article...............6
References and Bibliography...........................................................................................................8

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Article- Reuters.com (2020) Exclusive: Regulator probes board role in Credit Suisse spying
scandal – sources (Online) Retrieved from https://www.reuters.com/article/us-credit-suisse-
spying-exclusive/exclusive-regulator-probes-board-role-in-credit-suisse-spying-scandal-sources-
idUSKBN1ZQ014 [Accessed on 3th April 2020]
Outlining and Summarizing Arguments in Article
In the respective article, the main aspects which have been highlighted are related to the
spying scandal sources of the Credit Suisse. The Switzerland’s market supervisor is mainly
scrutinizing the oversight of the Credit Suisse of the Chief Executive Tidjane Thiam lieutenants
who were the part of the probe in the corporate espionage, wherein two people were in direct
knowledge of the investigation. FINMA has been capable of examining whether the management
control failures have led to the Switzerland’s second largest bank snooping on two other former
executives (Reuters.com, 2020).
In addition, it was being decided that FINMA will be conducting the independent audit
that is not enforcement and it has been effective in understanding the scenario of spying and
from the entire investigation, it was finalized that Credit Suisse Chief Tidjane Thiam ousted after
the spying scandal. From the article, it has been argued that Credit Suisse Chief Executive,
Tidjane Thiam was ousted in wake of saga which involved corporate espionage, alleged car
chase along with personal vendettas which sent shockwaves through the famous Switzerland’s
discreet banking related community. In addition, Credit Suisse admits their spying on the second
executive and he was being blamed for hiring detectives in February for tracking HR head Peter
Goerke (Reuters.com, 2020).

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The article has mainly dealt with the key governance issues which were being faced by
Credit Suisse and it impacted the brand image of the company in the competitive market. The
members of the executive board including CEO of Credit Suisse violated the ethics in managing
the decisions and they created bank within bank concept. It was being reported by FINMA that
no one was aware of the respective fact and it created struggles for the company. Due to the
racial bias faced by Thiam, Thiam announced his resignation as CEO which was being brought
down over spying scandal wherein there was involvement of his neighbor Mr. Khan, former
wealth management head of Bank.
Analysis of Importance for Media to Report on Arguments
The main importance for the media in reporting on the arguments is due to the fact that it
will be making the different companies aware regarding the different consequences of the
unethical practices such as spying and lack of proper governance while operating in the
competitive business environment. It will be allowing for the participation among citizens who
will be playing a vital role in sharing their views and ideas. In case of the Credit Suisse, it has
been noticed that there were spying issues and espionage which impacted the performance of the
company and it led to the resignation of the CEO of the company named (Reuters.com, 2020) .
From such reports of the illegal and unethical business prospects, the media tries to spill
the beans in the worldwide. It makes the complete outbreak of the news regarding such
unethical activities which are taking place to make the audiences aware regarding the facts
and it will be generating more effective and strong attitude towards such problems when it
occurs in the future. There can be instances wherein the companies can be suppressing such
incidents for maintaining their brand image and goodwill. However, in such circumstances, the

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media plays a major role in bringing out the truth in the open forum. Such incidents may be
resulting in huge financial losses to the banks which in turn affect the depositors of the financial
institution or bank. As such, to mitigate such losses, it is incumbent on the banking institutions to
take precautionary actions and act strictly on the different policies and procedures which will be
beneficial for them in handling the different kinds of tasks in a legal manner and maintain their
goodwill in an efficient and proper manner as well in the near future.
Analysis of the Corporate Governance Issues and Importance
As commented by Yermack (2018), the proper corporate governance which is considered
to be the set of practices along with regulations that helps in controlling the company. There are
various reasons due to which there are different organizations find the corporate governance
difficult as it requires managing interests of multiple parties such as shareholders, management,
suppliers along with customers.
In maintaining the corporate governance in the market, there are few major issues with
the corporate governance as it cannot stand alone. The several problems which the business
might struggle are as follows:
Conflicts of Interest- It can be occurring while controlling member of organization has
different other financial interests which will be influencing decision-making or conflict with
objectives of organization (Veldman & Willmott, 2016). It is easily corruptible which can be
leading to the misallocation of the credit which actually worked against competition.
Issues Related to Accountability- There can be accountability issues towards the
different stakeholders which can be creating pressure in protecting data and security. Unless

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proper reforms are being implemented, there are different inefficiencies faced by the different
shareholders in managing efficiency (Lucie et al., 2017).
Diversity- It is one of the main problems of the corporate governance wherein the leaders
of the companies take the entire responsibility of the different decisions which are being made.
The different employees do not have any importance in managing roles and due to this, it
impacts the business performance of the company negatively and it will be making the
company’s focus on protecting their jobs and not making tough decisions to save themselves
(Karamoy & Tulung, 2020).
As commented by Jacoby (2018), the effective corporate governance requires board of
directors for having the substantial oversight on the procedures and practices of the company.
Oversight is the broad term which encompasses executive staff which is reporting to board and
the awareness of board cannot be achieved. In different companies, the violation of the different
ethical practices can be harming the goodwill of the firms and in such scenario, effective
corporate governance is the main element that is needed to be maintained by the different
employers and employees for managing the different practices suitably.
On the other hand, there are different kinds of importance of the corporate governance
which will be helpful for improving the performances of the company are as follows:
With the proper implementation of corporate governance, it will be enhancing the overall
performance of the company as without it, the organization tends to become sluggish and weak
in nature. The better corporate governance will be helping in easily accessing the outside capital
which can be utilized by the business for future projects. In many cases, the corporate
governance is beneficial in many regards as while running the company, it can be beneficial in

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violating rules along with regulations. Putting procedures of corporate governance can be helpful
in complying with the laws which will be mainly focusing on the success of the company
(Kaehler & Grundei, 2019).
Moreover, the corporate governance has to be effective, which will be helping people in
finding the different positions through which people can be utilizing talents in an effective
manner. The CEO and the other management officials are always looking for talented people
who will be having capability in managing their effectiveness (Kaehler & Grundei, 2019). The
corporate governance helps in analyzing proper level of transparency that will be reporting the
profitability and it will be enhancing the decisions on the best interests of the shareholders.
Corporate governance makes the different decisions regarding the business related
operations and it needs to be included with corporate standards that will be making the company
highly efficient in managing the operations in a successful manner.
Conclusion on basis of Opinions about Corporate Governance Issues Raised in Article
In the respective article, after the entire analysis, it can be inferred that there are few
corporate governance issues which can be impacting performance of the company and their
brand image was hampered to a great extent. In the article, the main corporate governance issues
which have been highlighted are as follows:
Accountability Issues is the first and foremost problem and corporate Government Issue
which is faced by Credit Suisse Bank. It has been noticed that the CEO was involved in the
unethical spying aspect along with the wealth manager Mr. Khan due to which it created chaos
and it led to the downturn of the company in front of the entire social media and world.
Moreover, the company or bank was not being aligned with the proper vision and the feedback

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was not being shared peer to peer that caused the other trouble in impacting the brand image of
the firm negatively.
Moreover, the unethical practices followed by the bank credit Suisse were creating
serious consequences for the individuals and the company as a whole. In such scenario, FINMA
was being appointed which took care regarding the different matters and the investigation proved
that the CEO Thiam was at fault. Due to the same, he had to forcefully resign which impacted
their effectiveness negatively. He was being replaced by the other person and it created chaos
with the goodwill of company named Credit Suisse.
There was conflict of interest among the CEO and the other employees who were
employees at Credit Suisse. The main reason was that the CEO had different financial interests in
comparison to the other employees and it creates trouble between them as it did not match with
the different objectives of the company as a whole. When there is high conflict of interest
present, it deteriorates the shareholder’s trust from bank while making the corporate vulnerable
to litigation.

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References and Bibliography
Afsharipour, A. (2018). Corporate Social Responsibility and the Corporate Board: Assessing the
Indian Experiment. In Globalisation of Corporate Social Responsibility and its Impact on
Corporate Governance (pp. 95-119). Springer, Cham.
Al-Bassam, W. M., Ntim, C. G., Opong, K. K., & Downs, Y. (2018). Corporate boards and
ownership structure as antecedents of corporate governance disclosure in Saudi Arabian
publicly listed corporations. Business & Society, 57(2), 335-377.
BANKS, F. P. O. N. (2019). CORPORATE GOVERNANCE AND FINANCIAL
PERFORMANCE OF NIGERIAN BANKS–PDF–Complete Project
Material. Accounting & Finance.
Courteau, L., Di Pietra, R., Giudici, P., & Melis, A. (2017). The role and effect of controlling
shareholders in corporate governance. Journal of Management & Governance, 21(3),
561-572.
Davó, N. B., Martínez, V. M. M., & Rodríguez-Carrasco, J. M. (2019). Corporate Governance
Foundations. In Management Science (pp. 1-28). Springer, Cham.
Jacoby, S. M. (2018). The embedded corporation: Corporate governance and employment
relations in Japan and the United States. Princeton University Press.
Kaehler, B., & Grundei, J. (2019). HR Governance as a Part of the Corporate Governance
Concept. In HR Governance (pp. 27-50). Springer, Cham.

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Karamoy, H., & Tulung, J. E. (2020). The effect of financial performance and corporate
governance to stock price in non-bank financial industry. Corporate Ownership &
Control, 17(2).
Lucie, C., Di Pietra, R., Paolo, G., & Melis, A. (2017). The role and effect of controlling
shareholders in corporate governance.
Reuters.com (2020) Exclusive: Regulator probes board role in Credit Suisse spying scandal –
sources (Online) Retrieved from https://www.reuters.com/article/us-credit-suisse-spying-
exclusive/exclusive-regulator-probes-board-role-in-credit-suisse-spying-scandal-sources-
idUSKBN1ZQ014 [Accessed on 3th April 2020]
Veldman, J., & Willmott, H. (2016). The cultural grammar of governance: The UK Code of
Corporate Governance, reflexivity, and the limits of ‘soft’regulation. human
relations, 69(3), 581-603.
Yermack, D. (2017). Corporate governance and blockchains. Review of Finance, 21(1), 7-31.