BUSN104 Semester 2: NAB Ethical Practices and Social Responsibility

This report analyzes the ethical misconduct of the National Australia Bank (NAB) following the Australian Royal Commission's findings. It identifies specific instances of inappropriate behavior, including the issuance of loans based on inaccurate documentation, charging fees for undelivered services, and employees accepting bribes. The report examines NAB's practices from a socially responsible framework, referencing its code of conduct and commitments to stakeholders. It then assesses the impact of these malpractices on shareholder wealth, highlighting a decline in share value and organizational restructuring. The analysis also explores the relevance of sustainability and socially responsible outcomes, concluding with an overview of NAB's remedial measures and changes in behavior to regain customer trust and improve its ethical standing within the Australian banking sector. The report uses share market data to analyze the impact on shareholders, the code of conduct, and the ethical and unethical practices of the bank.

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The adoption and maintenance of an ethical culture in banking is an area of interest for
different stakeholder groups including customers, employees, banks management and regulators.
Maintenance of corporate ethics may come with multiple benefits for an organization. Ethical
practices may build customer loyalty and improve the overall reputation of an organization. In
addition, it might protect an organization from facing any associated legal consequences and play
a role in the maintenance of a positive work environment. Openness and fair dealings with
customers also enhances the retention of good employees. The Australian banking sector has
recently been on the spotlight over unethical business practices.in its findings on the misconduct
in the Australian Banking and superannuation industries. In particular, some of the country’s top
banks were recommended for prosecution due to unethical business practices. Some of the
affected banks include National Australian Bank, ANZ Banking Group and Commonwealth
Bank. The focus of this report will, however, be on the National Australian Bank
Nature of Inappropriate Behavior in the National Australian Bank
One of the unethical practices identified at the National Australian Bank was the issuance
of 2300 home Loans based on incomplete and inaccurate documentation. In addition, the Bank
was found to have breached the Corporations Act. It also failed to live to the expectations of
customers by charging fees for services that were not delivered (Wright, 2018). It was also found
out that the practice of doctoring client documents was widespread practice within the
company.it was also found out that a total of 353 employees of the company had falsely
witnessed the signing of client documents to help their colleagues despite the fact that they were
absent during client meetings. This practice had affected more than 2520 customers (Hutchens
and Knaus, 2018). Employees at the National Australian Bank were also found to have flaunted

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ethical laws by accepting cash bribes to approve falsified mortgages. Usually, they did this to
smash sales targets (Vercoe, 2019).
Practices of National Australian Bank from a socially responsible framework
An organization’s code of ethics specifies the acceptable and unacceptable behaviours
within the organizational context. It stipulates bests practices for the organization stakeholders
allowing organizations to have behaviours and values embedded in their corporate culture. In the
banking and superannuation sectors, organizations are required to operate on a socially
responsible framework through the provision of accurate information to their customers, abiding
by laws preventing corruption and money laundering. Part of the commitments by the Australian
National Bank is delivering value to its stakeholders and achieving sustainable performance
without compromising its trusted reputation and organizational values (National Australia Bank,
2019). The Company’s code of conduct outlines the ethical conduct and standards of
responsibility that need to be adhered to by both temporary and permanent employees.
Additionally, the organization strongly believes that all employees and customers should be
treated with dignity. All employees are also expected to behave ethically and in a socially
responsible manner (National Australia Bank, 2019 a).the code may be broken down into various
sections.
Personal conduct
All employees are expected to behave in a professional manner that promotes goodwill,
trust and confidence in fellow employees, special human rights, the community, suppliers and
colleagues. Employees are expected at all times both in and out of work to treat members of the
community, colleagues and customers respectfully, fairly and with dignity. In addition,
employees are expected to comply by all relevant laws, procedures, policies and

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regulations(National Australia Bank, 2019 a). Employees are also expected to seek authorization
before accessing information related to their colleagues or customers. Employees are also
required to keep their accounts in order at all times.
The use of information and informal systems
This code requires employees to use communication devices such as telephones,
computers and other communication devices appropriately at all times.in this regard, they should
desist from viewing or sharing offensive or sexually explicit content. Also, they should not use
threatening language, discriminatory, derogative of profane comments (National Australia Bank,
2019 a).
Social media
It a requirement for employees to appropriately use social media at all times. In keeping
up with this code, employees are required to act in accordance with the law, be responsible,
transparent and respectful to colleagues, customers and other people interacted with on social
media. Employees are also prohibited from posting as representatives of the National Australian
Bank unless under special authorization (National Australia Bank, 2019 a).
Media discussions and publicity
Employees are prohibited from making public statements about the company unless when
authorized to do so. They are also prohibited from allowing external photographers to
photograph the interior of the organization unless with authorization. Finally, employees are
expected to put the agenda of the company ahead of their personal agenda at all time (National
Australia Bank, 2019 a).
Honesty and integrity

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Employees are allowed access to information, goods or services belonging to the
company or its customers. They are however prohibited from stealing or
misappropriating(National Australia Bank, 2019 a).
Fairness
Fairness is also a key virtue in the organization. All customers, existing or new need to be
treated fairly through the provision of goods and services in a lawful and ethical manner. Such
goods and services must also be geared towards the satisfaction of consumer needs(National
Australia Bank, 2019 a).
Prevention of fraud and corruption
It is also a requirement for everyone within the organization to prevent corrupt and
fraudulent dealings by avoiding bribes, destroying, concealment or falsification of documents.
They are also responsible for preventing theft of money data or property belonging to the
organization or its customers (National Australia Bank, 2019 a).
Conflict of interest with customers and third parties
Employees are expected to manage personal and commercial interests ensuring that their
conduct promotes fairness and market integrity (National Australia Bank, 2019 a).
Compliance with obligations
The organization also requires its employees to comply with laws, regulations and other
voluntary codes relevant to the bank (National Australia Bank, 2019 a).
Confidentiality, access and disclosure
Employees may have access to information relating to customers, colleagues the organization or
suppliers. However, their use of such information is limited to only job-related tasks (National
Australia Bank, 2019 a).

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Impact of the alleged malpractices on shareholders wealth
Following the damning revelations of the Australian Royal Commission, the ground for
the four top Australian banks has been shaky. In particular, this has been due to revenue
challenges, tighter margins and mounting remediation costs. Of the three, however, Nab has been
the most affected having shed of 14% of its share. The company has lost its head of wealth
division, chairperson and CEO. This is likely to have a negative bearing on shareholders wealth
(Letts, 2019).The organization 300 hundred either through voluntary resignations or firing.
However, the departure of skilled employees from an organization may have a negative impact
on shareholders wealth on a short term or long-term basis.
The relevance of sustainability and socially responsible outcomes
Sustainability and social responsibility are basic components of any organization that
desires to maintain a competitive edge in the market. Through sustainability, the organization
will have an opportunity to minimize its negative impacts on the economy, community and
environment from where it operates. Additionally, social responsibility is needed to help the
organization attract and retain customers. Social responsibility is also required to make the
company more marketable. It will also play a role in the attraction and retention of investors
(Orlitzky, Siegel and Waldman, 2011).
Changes in Behavior
Following the revelations, the organization through its new leadership has expressed
intentions of doing away with its introducer payments program by October 2019. Through this
approach; the organization will seek to meet the expectations of the community and customers.
In addition, it aims at using the opportunity to simplify its operations in order to earn the trust of
its customers(National Australia Bank,2019 b). Through this approach, the organization aims at

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attracting customers based on its products and services and not on third-party referrals. The
organization has also announced that it will be removing godfather commissions from its
financial planning advisors. The organization also exempted agricultural farmers affected by the
draught from default interests. Finally, a board customer committee was established to oversee
the organization processes, evaluate customer complaints and feedback and enhance fairness in
services and products outcomes (National Australia Bank,2019 b).
In conclusion, the exposition of the rot in the Australian banking sector shows the
challenges that customers have been forced to go through at the expense of greedy financial
institutions. The National Australian Bank is one of the top Australian Banks found culpable.
The organization was found to have violated its ethical principles by charging its customers for
undelivered service. The organization was also found to have engaged in the doctoring of
customer documents on multiple occasions. Employees were also found to have taken bribes to
authorize falsified mortgages. Deceitful witnessing of the signing of customer documents was
also one of the misconducts of the bank. These actions were outright violations of the company’s
code of conduct which regulate the behavior of employees. National Australian Bank has
however taken up remedial measures as recommended by the royal banking commission to
redeem its reputation and correct its past mistakes

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References
Hutchens, G. and Knaus, C. (2018). Falsifying forms and impersonating clients among
revelations at banking inquiry. [online] the Guardian. Available at:
https://www.theguardian.com/australia-news/2018/apr/24/falsifying-forms-and-impersonating-
clients-among-revelations-at-banking-inquiry [Accessed 17 May 2019].
Letts, S. (2019). Banks on the shaky ground hit by inquiry costs, flat revenues and demands for
high dividends. [online] ABC News. Available at:
https://www.abc.net.au/news/2019-04-28/bank-results-season-will-reveal-tough-times/11050390
[Accessed 18 May 2019].
National Australia Bank (2019 ). National Australia Bank Ltd Code of Conduct. [online]
Nab.com.au. Available at: https://www.nab.com.au/about-us/corporate-governance/national-
australia-bank-limited-code-of-conduct [Accessed 17 May 2019].
National Australia Bank (2019 ). National Australia Bank | NAB News. [online]
News.nab.com.au. Available at: https://news.nab.com.au/tag/national-australia-bank/ [Accessed
18 May 2019].
Orlitzky, M., Siegel, D.S. and Waldman, D.A., 2011. Strategic corporate social responsibility
and environmental sustainability. Business & Society, 50(1), pp.6-27.
Vercoe, P. (2019). National Australia Bank Executives Get Lashed For Misconduct. [online]
Bloomberg.com. Available at: https://www.bloomberg.com/news/articles/2019-02-04/national-
australia-bank-executives-get-lashed-for-misconduct [Accessed 17 May 2019].
Westbrook, T. and Packham, C. (2018). Australia's NAB cuts 300 staff over wrongdoing.
[online] U.S. Available at: https://www.reuters.com/article/us-australia-banks-inquiry/australias-
nab-cuts-300-staff-over-wrongdoing-idUSKCN1MT03O [Accessed 18 May 2019].

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Wright, S. (2018). National Australia Bank boss Andrew Thorburn apologises after more royal
commission revelations. [online] PerthNow. Available at:
https://www.perthnow.com.au/business/banking/national-australia-bank-boss-andrew-thorburn-
apologises-after-more-royal-commission-revelations-ng-b88924123z [Accessed 17 May 2019].