One Tel Scandal: Analysis of Failures and Future Avoidance

This report provides a comprehensive analysis of the One Tel scandal, focusing on the ethical failures that led to the company's collapse. It identifies key issues such as the failure to disclose accurate financial information, unethical treatment of employees, and poor corporate governance. The report examines the factors that contributed to the scandal, including flawed financial reporting, ineffective communication, autocratic leadership, and a lack of proper organizational structure and training. It suggests several strategies to prevent similar failures in the future, such as enhancing transparency in business processes, improving corporate governance, strengthening internal controls, and ensuring ethical conduct. The report also emphasizes the importance of clear and understandable financial reporting, a sound code of conduct, and the protection of stakeholder interests. The report references several sources, including articles and academic papers, to support its findings and recommendations.

One Tel Scandal
Module Number-

A description of the ethical failure or scandal ethical
principle(s) involved
The main ethical failure in case of One Tel Organization is based on its failure to
disclose the required information to its stakeholders. One of the renowned Australian
corporates “”One.Tel suffered from a huge collapse in the telecommunication company due
to the unethical business practice. It failed to maintain the true and fair view of the recorded
assets and liabilities in the books of account (Cook, 2001). One.Tel has failed to comply with
the ethics for both its employees as well the other stakeholders as it could not treat its
employee’s equality and failed to provide them good working environment. The one of the
ethical failure of One Tel Company is related to its incompetency to meet employee`s
entitlement. Therefore, several other cases and its failure to ethical practice had resulted to
bankruptcy that lead to winding up of the company (Cook, 2001).
An analysis of the main factors that led to the failure or
scandal
Several articles on One.Tel scandal 2001. Reveals that the financial reporting was not
at all faithful that could represent poor economic performance and low quality (Cook, 2001).
The higher authority relied on the managers and trusted them blindly as they were not having
any evidence of their financial statement, which is free from the errors. While evaluating all
the issues, it is seen that One.Tel operate more through accrual component in earning as
compared to its competitors with the same size of operations (Yermack, 2017). As it is well
known that accruals are subject to various staff manipulations and also with higher proportion
of the accruals that would lead to low rate of earnings. This is clearly visible that earnings can
be seen that One.Tel profitability is of low quality as compared to the other competitors.
Some of the major ethical issues found in One.Tel has not developed its company`s structure
properly as it led to ineffective communication. The company has a highly centralised
hierarchy as managers forces the employees what they want to. This leads to leadership

turnover as they generally promotes the statement like “yes mam” and humiliate other leaders
and managers who wants to bring change, attention that lead to high turnover (Reza, 2011).
Further, the leaders focus too much on the advertisements to get the favour from the
customers. They do not accept any opinion from others and in lieu of that; employees are not
able to exercise any ability in order to solve the problems (Reza, 2011). The manager is
extremely autocratic and has no determined clear job responsibilities. Apart from this, there is
no feasible organisational chart and the relationship between the subordinates cannot be
determined. The company lacks proper formalisation of the activities that are undertaken
increase the efficiency, productivity, and organisational performance (Dimopoulos, &
Wagner, 2016). There is no related training process for the staff and it often recruit people
who are less experienced. The organisation has a series of disasters in regards to unorganised
staff, improper billing programs, billing processes, and stable financial account. Furthermore,
the company does not have clear planning to the staff training, product availability,
advertisement, and staff training that has just wasted the technology (Reza, 2011).
Suggestions for how such failure or scandal could be
avoided in future.
 In order to resolve the issues in One Tel scandal 2001, management department of
company should have focused on maintaining the transparency in its business process.
 There was a proper need to fix the issues related to corporate governance by
measuring the quality of governance, which is followed by One.Tel. The internal
management of the company should have ensured healthy environment between the
relations of executive as well as non-executive directors (Reza, 2011).
 There should have been separate internal control system to legally assess the ethical
failure and discrepancies in the process system of organization.

If companies want to mitigate such failure or scandal then they should focus on to create a
provision and quality facts to report everything to the board (Reza, 2011). The company
should provide clear, transparent, and understandable reporting of the statements (Tricker,
2015). The organisation should have a sound code of conduct with complying internal
controlled system. Apart from this, there should be defined management role, balanced
experiences, skills, and the independence of the board. A integrity and a balance between
organisation`s reporting, material events, management of risks, and the insight in the internal
control system. Most importantly, it is important to legitimate the interest of the shareholders
as well stakeholders (Tricker, 2015). All the listed companies should focus on strengthen the
quality of financial reporting to mitigate such failure or scandal (Tricker, 2015).

References
Cook, T., (2001). Collapse of Australia's fourth largest telco adds to growing list of corporate
failures. Retrieved from: https://www.wsws.org/en/articles/2001/06/onte-j08.html
Dimopoulos, T., & Wagner, H. F. (2016). Corporate Governance and CEO Turnover
Decisions. Swiss Finance Institute Research Paper, (12-16).
Reza, M., (2011). The One.Tel Collapse: Lessons for Corporate Governance. Retrieved from:
https://research-repository.griffith.edu.au/bitstream/handle/10072/42673/74746_1.pdf
Tricker, B. (2015). Corporate governance: Principles, policies, and practices. Oxford
University Press, USA.
Yermack, D. (2017). Corporate governance and blockchains. Review of Finance, 21(1), 7-31.