Management Ethics Case Study: Westpac Bank Ethical Analysis, BMA735

This case study analyzes the ethical issues surrounding the Westpac Bank scandal, focusing on money laundering and child exploitation. The paper delves into the key ethical breaches, particularly the bank's failure to report suspicious transactions and the CEO's response to the crisis. It examines the case through the lens of deontology, highlighting how the bank's actions violated ethical duties. Furthermore, the paper proposes and justifies strategies and recommendations to prevent similar incidents in the future, including enhanced ethical training, the implementation of a balance sheet approach, and the adoption of change management techniques. The analysis also suggests recommendations for improving the bank's internal environment, such as engaging employees at all levels and utilizing ethical reasoning in decision-making. The conclusion summarizes the findings, emphasizing the importance of ethical conduct in the banking sector and the need for proactive measures to uphold ethical standards.

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BMA735
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Contents
Introduction................................................................................................................................1
Key Ethical Issues in Case.........................................................................................................1
Ethical Theories in relation to Case...........................................................................................3
Implementation of Strategies.....................................................................................................4
Recommendations......................................................................................................................5
Conclusion..................................................................................................................................6
References..................................................................................................................................7

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Introduction
The purpose of this paper is enlighten the reader with the information about the ethical issues
presented in the case analysis of the Australian Bank Westpac. It should be noted that
recently in the later 2019, it was presented that the CEO of the bank Brain Hartzer was
pushed out of the organization for the crimes conducted by him. The report stated that the
Westpac CEO was found guilty under the crime of child exploitation and money laundering
as well. The below mentioned paper analyze the ethical aspects related to the news and the
case and evaluate theories relating to it. A crime is called a crime when it breaches the ethical
standards of the action. Further, the paper analyze the details about the case, its relation with
ethical theories and the implementation of strategies and recommendations that could be used
by the organization to prevent the bank from condemning such actions again.
Key Ethical Issues in Case
Initially analyzing the case of Westpac organization, it should be noted that the bank was
found guilty in the act of money laundering under the Australian anti-money laundering law.
The bank was sued by the financial intelligence agency AUSTRAC for committing such acts
in the real world. In the reports of AUSTRAC, it was stated that failed attempt of the
organization to appropriately account and monitor the transactions made the people commit
negative actions in the environment. This negligence of the organization made the convicted
of child sex offender to continuously transact with some person in Philippines (Hall 2019).
The CEO of the bank on the other hand told his staff to not create hype of the event and do
not overcook it. Mr. Hartzer believed that the organization has attempted mistake that
affected the ethical regulations of the bank, however, the event was not that big to pay with
such penalties. He also stated that he is the right person who is accountable for every action

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occurred in the business premises of Westpac. In response to which, Brain gave an early
resignation to the organization so as to save the bank and pay for the negligence conducted by
the bank. The bank failed to fulfill the expectation of the community by getting ties with the
child exploitation bodies. The chief executive of AUSTRAC reported the fact that the major
lender failed to report the international fund transfer of more than 19.5 million over the past 5
years. The transfers through such accounts stated the amount of $ 11 billion that was a result
of significant loss of intelligence (Hall 2019).
The bank failed to take this event into serious consideration and pass on this information
about the origin of international funds to the concerned authority. Around a dozen of
customers of the bank regularly paid a huge amount to few people in Philippines and South
East Asia. These payments of the customers were consistent with the people who were
involved in the child exploitation activities. Further, it was also stated by the Attorney
General that high number of alleged money laundering breaches by the Westpac has given
rise to most horrendous crimes in the worldwide environment (Hall 2019).
Considering ethical issues in the given case, it should be noted that negligence towards the
act was biggest mistake made by the organization. Being present in the banking sector, it is
important for the banks to scrutiny every transaction that seems doubtful to the organization.
Even if the transactions are not doubtful but consistent with international organization, then
also the banks should monitor the actions so as to check the right use of their actions.
Secondly, belief of the CEO of the bank that the act committed by the bank is not something
that should be compared with Enron and Lehman case (Hall 2019).
However, supporting people involved in child exploitation intentionally or unintentionally is
not right under any law. Based on the deontology theory of ethics, the intentions of a person
or an organization can be easily judged by the way of their actions presented in the

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environment. Relating the deontology theory with the case of Westpac, it should be noted that
the negligence of the bank to report the transfer of funds supported the child exploiters to rise
in the environment and continue their actions. Resulting in which, the actions of the bank
speaks against the ethical requirement of the society. Therefore, they are certified as wrong
doers in the society on the basis of deontology theory of ethics (Xu 2018).
Ethical Theories in relation to Case
The deontology theory of ethics clearly align with the actions presented by Westpac in the
business environment. Deontology is an ethical theory that uses the rules to differentiate
between right and wrong in the society. This type of theory of ethics lets the people govern
their actions by analyzing the actions that are right acceptable in the society and the negative
and intolerable actions as well. This theory is connected with philosopher Immanuel Kant
who believed that the ethical actions follow the universal morals like don’t steal, don’t cheat
as so on. This means that a person does not need to justify for their deeds in word as their
actions can easily be judged in order to know their intentions (Alston 2019).
Therefore, it is said that actions speak louder than words. People or organizations that follow
their duties and rules are tend to fit well according to this theory because their natural
intuition is fair and ethical for the society. Relating the theory of deontology with the given
case of Westpac bank, it should be noted that based on moral rules and guidelines of the
bank, it is crucial for the bank to monitor the transactions appropriately and immediately
report the activities to the concerned authority if they find any conspiracy. However, in the
real world scenario, the organization and the CEO of the bank did not reported about the
unethical transfers regularly occurring in their business environment (Hove, and Paek 2017).
It is the duty of the business to report the case even if they find something fishy in the
transfers of the client and do not have any proofs for it. Such actions would be considered

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moral for the society because it would show that the bank cares for the community and
consistently works to maximize their benefits as well (Chandler 2019).
However, the negligence or intentional not reporting of such events from the end of Westpac
bank could clearly state the money making mindset of the bank while keeping the interest of
general public aside (Phillips 2019).
Lastly, it should be noted that on the basis of this type of theory of ethics, it is important for
every person to faithfully perform the moral actions in the society as demanded by their job
role. If any person fails to implement such actions in the environment, then there are found
guilty under this theory of ethics. Bank breached their moral duty to work in favor of the
public through their actions, due to which it can be said that the results of such actions of
Westpac and its employees were just and fair (Avella 2017).
Implementation of Strategies
There are several ways through which the bank Westpac would have prevented themselves
from committing such negative actions in the business environment. Below mentioned is the
implementation of strategies that the bank should use so as to save themselves from
committing such unethical actions in the near future:
 Work on Ethical Laws and Regulations: now it has emerged as a crucial time for the
organization to analyze their ethical laws and legal regulations present in the
environment and work on them effectively. Although the CEO of the company faced
the penalties for the act but this mistake was committed by every lower to higher level
staff of the company as they were not able to catch this mistake (Hutchings 2018).
Therefore, the organization need to provide training to the employees about the
objective of the business, its reputation and legal regulations and ethics as well. This

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would help the organization to let the employees work in favor of the business and
comply with the deontology theory of ethics as well (Meyers 2018).
 Use Balance Sheet Approach: under the balance sheet approach, the management
writes the pros and cons of the action for the business and the society at large and then
take decisions accordingly. Therefore, the organization should make use of this
strategy while taking decisions for the business as it would help them in identifying
the actions that are in favor and against of the business and the society as well. The
balance sheet approach would prevent the organization from condemning any
negative action in the business environment (Hunt, and Vitell 2016).
 Implement change management activities: lastly, the organization should make use of
change management strategies in the business environment. It would help the
organization to make the internal environment more flexible and thus satisfy the
employees at better level. Satisfied employees would work more effectively for the
growth of the business that would subsequently prevent the bank from attracting
penalties in the real world situation (Ware 2018). The bank should also make use of
open door policy in the business environment. It would let the employees report the
issues in the business directly to the top level management if the supervisors do not
support them or take time in delivering the message. In this way, the issues would get
caught up and resolved at the initial level itself (Baumane-Vitolina, Cals, and Sumilo
2016).
Recommendations
Apart from the above mentioned strategies, the bank should also make use of several other
changes in the internal environment. Initially the bank should engage employees up and down
the hierarchy in the internal environment. It would let the business to attain views of the
lower level employees as well. Many times, situation appears where the problems are identify

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by the lower level management and rectified by the top level management of the company.
Thus, implementation of this strategy would align all the functions and departments of the
bank together to work towards a common motive (Lutz, Boon, and Xue 2016).
Secondly, it should also be noted that the bank should make use of ethical reasoning to decide
course of action in the workplace environment. This type of strategy would align with the
balance sheet strategy of the company and would protect the business from conducting any
negative action as well. By analyzing the ethical aspect in every action would let the
organization to think about the interest of their stakeholder, resulting in which they would
protect themselves from attract fines. Subsequently, this strategy would also help in defining
the right course of action for the strategy with right objective (Hove, and Paek 2017). Thus,
these recommendations would eliminate the scope of problems occurred due to negligence of
the employees in the business environment.
Conclusion
Thus, in the limelight of above mentioned events, the fact should be noted that the paper
represented the details about the ethical issues in the case of Westpac bank. The bank was
involved in the act of money laundering and child exploitation. Thus, the paper evaluated the
negative actions conducted by the bank while considering the deontology theory of ethics.
This theory helped in analyzing the wrong doings of the bank and suggesting appropriate
strategies to rectify the situation in the worldwide environment. The given recommendations
would also support the functioning of the bank and would prevent them to committing such
unethical actions in near future.

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References
Alston, W., 2019. Deontological Desiderata. Contemporary Epistemology: An Anthology,
pp.3-16.
Avella, J.R., 2017. The dilemma of ethical leadership. Journal of Leadership Studies, 11(2),
pp.42-44.
Baumane-Vitolina, I., Cals, I. and Sumilo, E., 2016. Is Ethics Rational? Teleological,
Deontological and Virtue Ethics Theories Reconciled in the Context of Traditional Economic
Decision Making. Procedia Economics and Finance, 39, pp.108-114.
Chandler, R.C., 2019. Deontological Dimensions of Administrative Ethics Revisited. In
Handbook of Administrative Ethics (pp. 205-220). Routledge.
Hall., J., (2019) Westpac CEO pushed out amid child exploitation scandal [online]. Available
from < https://www.coolum-news.com.au/news/westpac-ceo-pushed-out-amid-scandal/
3887605/> [accessed on 31 March 31, 2020].
Hove, T. and Paek, H.J., 2017. The personal dimensions of public relations ethical dilemmas.
Journal of Media Ethics, 32(2), pp.86-98.
Hunt, S.D. and Vitell, S.J., 2016. Personal Moral Codes and the Hunt-Vitell Theory of Ethics:
Why Do People’s Ethical Judgments Differ?. In Business ethics: New challenges for business
schools and corporate leaders (pp. 30-49). Routledge.
Hutchings, K., 2018. Global ethics: An introduction. US: John Wiley & Sons.
Lutz, D.J., Boon, A.T. and Xue, X., 2016. Resolving ethical dilemmas in academic advising
through core values and aspirational principles. The Mentor: Innovative Scholarship on
Academic Advising, 18.

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Meyers, C., 2018. 8 Deontology. Communication and Media Ethics, 26, p.139.
Phillips, D., 2019. Rossian Ethics: WD Ross and Contemporary Moral Theory. Oxford
University Press.
Ware, O., 2018. Fichte’s normative ethics: deontological or teleological?. Mind, 127(506),
pp.565-584.
Xu, Q., 2018. Decoding CSR investment in the global banking industry: a cross-industry
comparison and within-industry examination.