as soon as possibleurgent
Page 1 Kaplan Business School Assessment Outline
Assessment 2 Information
Subject Code: MBA402
Subject Name: Governance, Ethics and Sustainability
Assessment Title: Code of Ethics
Assessment Type: Code of Ethics
Choose an item.: 2,000 Words (+/-10%)
Weighting: 30 %
Total Marks: 30
Submission: Via Turnitin
Due Date: Week 10
Your Task
You are required to research recent news articles and other information about Westpac Bank.
Here is an example of a recent news article describing some of the corporate governance issues at
Westpac Bank:
https://www.bloomberg.com/news/articles/2019-11-27/why-heads-are-rolling-at-another-big-australian-
bank-quicktake
You must then draft a Code of Ethics for Westpac Bank
Assessment Instructions
Your Code of Ethics for Westpac Bank must specifically address:
A. Discrimination
B. Exploitation
C. Corruption
D. Dishonest and Fraudulent Behaviour
E. Whistleblower Protections
F. Enforcement
You will be required to include a minimum of 5 references in your Code of Ethics which must come from
academic journals or textbooks.
For further guidance here are the links to three example company codes of ethics:
1. Wesfarmers – http://www.wesfarmers.com.au/docs/default-source/corporate-governance/code-of-
Ethics—may-2015 ?sfvrsn=8
2. Stockland – https://www.stockland.com.au/about-stockland/corporate-governance
3. Woolworths – http://www.woolworthsgroup.com.au/icms_docs/183764_Code_of_Ethics
https://www.bloomberg.com/news/articles/2019-11-27/why-heads-are-rolling-at-another-big-australian-bank-quicktake
https://www.bloomberg.com/news/articles/2019-11-27/why-heads-are-rolling-at-another-big-australian-bank-quicktake
http://www.wesfarmers.com.au/docs/default-source/corporate-governance/code-of-conduct—may-2015 ?sfvrsn=8
http://www.wesfarmers.com.au/docs/default-source/corporate-governance/code-of-conduct—may-2015 ?sfvrsn=8
https://www.stockland.com.au/about-stockland/corporate-governance
http://www.woolworthsgroup.com.au/icms_docs/183764_Code_of_Conduct
Page 2 Kaplan Business School Assessment Outline
Important Study Information
Academic Integrity Policy
KBS values academic integrity. All students must understand the meaning and consequences
of cheating, plagiarism and other academic offences under the Academic Integrity and Ethics
Policy.
What is academic integrity and misEthics?
What are the penalties for academic misEthics?
What are the late penalties?
How can I appeal my grade?
Click here for answers to these questions:
http://www.kbs.edu.au/current-students/student-policies/.
Word Limits for Written Assessments
Submissions that exceed the word limit by more than 10% will cease to be marked from the point
at which that limit is exceeded.
Study Assistance
Students may seek study assistance from their local Academic Learning Advisor or refer to the
resources on the MyKBS Academic Success Centre page. Click here for this information.
http://www.kbs.edu.au/current-students/student-policies/
https://elearning.kbs.edu.au/course/view.php?id=1481
Page 3 Kaplan Business School Assessment Outline
Assessment Marking Guide
Criteria F (Fail)
0%-49%
P (Pass)
50%-64%
CR (Credit) 65%-74% D (
Distinction)
75% – 84%
HD (High
Distinction)
85%-100%
Mark
Code of Ethics
Discrimination
Code of Ethics does not
adequately explain the
concept of discrimination.
Code of Ethics fails to
expressly prohibit
discrimination.
Discrimination is
sufficiently explained in
the Code of Ethics.
Discrimination is
expressly prohibited but
more information required
to clarify the forms of
behavior that amount to
discrimination.
Specific examples of
discrimination are
included in the Code of
Ethics to support accurate
explanation. Express
prohibition of
discrimination included
making it clear that
specific examples of
behavior provided are in
breach.
A detailed explanation of
the concept of
discrimination is provided
for in the Code of Ethics
supported by relevant
examples. Such
discrimination is expressly
prohibited by the Code of
Ethics.
Discrimination is
comprehensively
explained and supported
by directly relevant
examples. Such
discrimination is expressly
prohibited by the Code of
Ethics with cross
reference made to
potential sanctions in the
Enforcement section.
/4
Code of Ethics
Exploitation
Little to no discussion of
the meaning of
exploitation. No express
prohibition of exploitation
in Code of Ethics.
Code of Ethics includes
adequate outline of the
concept of exploitation.
Express prohibition of
exploitation is included
but further details are
necessary to better
illustrate what forms of
exploitation will not be
tolerated in the
organization.
Exploitation is clearly
explained in the Code of
Ethics with specific
examples included.
Exploitation is expressly
prohibited and a direct
reference is made to
examples provided as
being in breach.
Elaborate explanation of
the concept of exploitation
is provided for in the
Code of Ethics and
supported by helpful
examples. Exploitation is
expressly prohibited by
the Code of Ethics.
Exploitation is thoroughly
explained and supported
by multiple relevant
examples. The Code of
Ethics expressly prohibits
exploitation and refers to
potential sanctions in the
Enforcement section.
/4
Code of Ethics
Corruption
Code of Ethics does not
adequately explain the
concept of corruption.
Code of Ethics fails to
expressly prohibit
corruption.
Corruption is sufficiently
explained in the Code of
Ethics. Corruption is
expressly prohibited but
more information required
to clarify the forms of
behavior that amount to
corruption.
Specific examples of
corruption are included in
the Code of Ethics to
support accurate
explanation. Express
prohibition of corruption
included making it clear
that specific examples of
behavior provided are in
breach.
A detailed explanation of
the concept of corruption
is provided for in the
Code of Ethics supported
by relevant examples
specifically including
corrupt activity. Such
corruption is expressly
prohibited by the Code of
Ethics.
Corruption is
comprehensively
explained and supported
by directly relevant
examples including
corruption. Such
corruption is expressly
prohibited by the Code of
Ethics with cross
reference made to
potential sanctions in the
Enforcement section.
/4
Page 4 Kaplan Business School Assessment Outline
Code of Ethics
Dishonest & Fraudulent
Behaviour
Little to no discussion of
the meaning of dishonest
and fraudulent behaviour.
No express prohibition of
dishonest and fraudulent
behaviour in Code of
Ethics.
Code of Ethics includes
adequate outline of the
concept of dishonest and
fraudulent behaviour.
Express prohibition of
dishonest and fraudulent
behaviour is included but
further details are
necessary to better
illustrate what forms of
dishonest and fraudulent
behavior will not be
tolerated in the
organization.
Dishonest and fraudulent
behaviour is clearly
explained in the Code of
Ethics with specific
examples included.
Dishonest and fraudulent
behaviour is expressly
prohibited and a direct
reference is made to
examples provided as
being in breach.
Elaborate explanation of
the concept of dishonest
and fraudulent behaviour
is provided for in the
Code of Ethics and
supported by helpful
examples specifically
including dishonest and
fraudulent behavior.
Dishonest and fraudulent
behaviour is expressly
prohibited by the Code of
Ethics.
Dishonest and fraudulent
behaviour is thoroughly
explained and supported
by multiple relevant
examples including
dishonest and fraudulent
behavior. The Code of
Ethics expressly prohibits
dishonest and fraudulent
behaviour and refers to
potential sanctions in the
Enforcement section.
/4
Code of Ethics
Whistleblower
Protections
Code of Ethics does not
adequately explain the
concept of whistleblower
or the need for adequate
protections. Code of
Ethics fails to expressly
provide for whistleblower
protections.
Whistleblowing is
sufficiently explained in
the Code of Ethics with
consideration of the need
for protections.
Whistleblower protections
are expressly provided for
but more protective
measures required to
encourage whistleblowers
to come forward.
Specific examples of
whistleblowing are
included in the Code of
Ethics to support accurate
explanation. Express
provision of whistleblower
protections included
making it clear that
specific examples of
behavior provided are
entitled to protection.
A detailed explanation of
the concept of
whistleblowing is provided
for in the Code of Ethics
supported by relevant
examples. Such
whistleblowing is
expressly protected by
the Code of Ethics.
Whistleblowing is
comprehensively
explained and supported
by directly relevant
examples. Such
whistleblowing is
expressly protected by
the Code of Ethics with
cross reference made to
potential sanctions in the
Enforcement section.
/4
Code of Ethics
Enforcement
Little to no discussion of
the enforcement and its
purpose. No express
provision for enforcement
in Code of Ethics.
Code of Ethics includes
adequate outline of the
enforcement. Express
provision for enforcement
is included but further
structure is necessary to
better illustrate sanctions
for breach and deter
breaching behavior.
Enforcement is clearly
explained in the Code of
Ethics with specific
examples included.
Enforcement is expressly
provided for and a direct
reference is made to
examples provided as
being in breach with
corresponding sanctions
clearly illustrated.
Elaborate explanation of
the concept of
enforcement is provided
for in the Code of Ethics
and supported by helpful
examples specifically
including discrimination ,
exploitation, corruption,
dishonest and fraudulent
behavior, and
whistleblower protections.
Enforcement is expressly
provided for in the Code
of Ethics.
Enforcement is thoroughly
explained and supported
by multiple relevant
examples including
discrimination,
exploitation, corruption,
dishonest and fraudulent
behavior, and
whistleblower protections
and more. The Code of
Ethics expressly provides
for enforcement and cross
references previous
section of the Code.
/4
Page 5 Kaplan Business School Assessment Outline
Structure, Format and
Presentation
Answer not clearly and
logically presented.
Appropriate theory and
research not used to
answer question posed.
Correct academic writing
style not used, including
correct spelling, grammar
and punctuation. Format
of answer inconsistent
with question
requirements and KBS
guidelines.
In-text referencing and
reference list does not
follow Harvard style and
consistent with KBS
guidelines.
Answer logically
presented. Some
appropriate theory and
research used to answer
question posed. Mostly
correct academic writing
style used, including
correct spelling, grammar
and punctuation. Format
of answer mostly
consistent with question
requirements and KBS
guidelines.
In-text referencing and
reference list mostly
follows Harvard style and
consistent with KBS
guidelines.
Answer clearly and
logically presented.
Appropriate theory and
research used to answer
question posed. Correct
academic writing style
used, including correct
spelling, grammar and
punctuation. Format of
answer consistent with
question requirements
and KBS guidelines.
In-text referencing and
reference list follows
Harvard style and
consistent with KBS
guidelines.
Answer clear, concise
and logically presented.
Appropriate theory and
additional research used
to answer question
posed. Correct academic
writing style used,
including correct spelling,
strong grammar and
punctuation. Format of
answer consistent with
question requirements
and KBS guidelines.
In-text referencing and
reference list follows
Harvard style and
consistent with KBS
guidelines.
Answer clear, concise,
effective, and logically
presented. Appropriate
theory and
comprehensive research
used to answer question
posed. Correct academic
writing style used,
including correct spelling,
advanced grammar and
punctuation. Format of
answer consistent with
question requirements
and KBS guidelines.
In-text referencing and
reference list follows
Harvard style and
consistent with KBS
guidelines.
/6
Comments:
/30
Code of Ethics: Tabular Presentation Template
You can think of your Code of Ethics as two documents in one:
Firstly, the inner core of your document: the Code of Ethics proper. This lays out the rules and behaviours expected of employees. This element of your document should NOT use any in-text referencing to support the statements made. You are creating rules, and not copying these from elsewhere. To use in-text referencing undermines the rule-like status of the statements produced.
Secondly, wrapped around the inner core: a discussion document which allows you to evidence your research and learning on the topic of Codes of Ethics/Codes of Conduct. Here, you should use in-text referencing to support your discussion of the core concepts for this assignment:
Discrimination
Exploitation
Corruption
Dishonest and Fraudulent Behaviour
Whistleblower Protections
Enforcement
The document you submit should make it apparent to your reader, which sections of the document are discussion (including citations); and which sections lay down the rules for the company employees (free of citations).
This is one of two Template documents, offering a method to separate out the two document functions.
Codes of Ethics
Write a short paragraph, no more than c.
2
00 -250 words, that shows you know what a Code of Ethics/ Code of Conduct is and what a company Code of Ethics is supposed to do. Use in-text referencing to some academic articles, to show the reading you have been doing on this topic.
Provide the same Core Information, as per the Linear Presentation template. The only difference: here you divide the remainder of your Document into two columns in a table. Doing this will separate the Code of Conduct sections, from the Discussions.
Draw a horizontal line in your table, where the longer section (Code, or Discussion) ends. Then begin the next Code section, in a new row.
Code of Ethics |
Discussion |
Discrimination: · Employees must show respect for other persons in the workplace; · During the recruitment process, employees must do ……. and not do ….. · Etc. Note: the Code of Conduct section should NOT provide in-text referencing. You are creating rules, and not copying these from elsewhere. |
Discrimination Brief discussion (one short paragraph, no more than 150 – 200 words) that defines the concept of Discrimination as a moral term. Use in-text referencing to support your definition. Provide one or two examples of workplace acts that would amount to discrimination. (Your examples may briefly mention facts you have learned through the Case Study.) |
Exploitation: Section follows the same procedure as for ‘Discrimination’ |
Exploitation:
Section follows the same procedure as for ‘Discrimination’ |
And so on to the end. References list appears after your table.
2
Code of Ethics: Linear Presentation Template
You can think of your Code of Ethics as two documents in one:
Firstly, the inner core of your document: the Code of Ethics proper. This lays out the rules and behaviours expected of employees. This element of your document should NOT use any in-text referencing to support the statements made. You are creating rules, and not copying these from elsewhere. To use in-text referencing undermines the rule-like status of the statements produced.
Secondly, wrapped around the inner core: a discussion document which allows you to evidence your research and learning on the topic of Codes of Ethics/Codes of Conduct. Here, you should use in-text referencing to support your discussion of the core concepts for this assignment:
Discrimination
Exploitation
Corruption
Dishonest and Fraudulent Behaviour
Whistleblower Protections
Enforcement
The document you submit should make it apparent to your reader, which sections of the document are discussion (including citations); and which sections lay down the rules for the company employees (free of citations).
This is one of two Template documents, offering a method to separate out the two document functions.
Codes of Conduct
This is all you need to write by way of ‘Introduction’ to your assignment.
Write a short paragraph, no more than c.
2
00 -250 words, that shows you know what a Code of Ethics (or Code of Conduct) is and what a company Code of Ethics is supposed to do. Use in-text referencing to some academic articles, to show the reading you have been doing on this topic.
Discrimination
Discrimination: Discussion
Brief discussion (one short paragraph, no more than 150 – 200 words) that defines the concept of Discrimination as a moral term. Use in-text referencing to support your definition. Provide one or two examples of workplace acts that would amount to discrimination. (Your examples may briefly mention facts you have learned through the Case Study.)
Discrimination: Code of Ethics
You can lay out rules for behaviour for the employees of Westpac Bank: things they are allowed to do, and actions that are not permitted. If you like, you can use dot points to lay out your rules:
· Employees must show respect for other persons in the workplace;
· During the recruitment process, employees must do ……. and not do …..
· etc.
Note: the Code of Ethics section should NOT provide in-text referencing. You are creating rules, and not copying these from elsewhere. To use in-text referencing undermines the rule-like status of the statements produced
Exploitation
Exploitation: Discussion
Section follows the same procedure as for ‘Discrimination’: short paragraph of definition plus examples of behaviours to be ruled out by your Code of Ethics. In-text citations are advisable
Exploitation: Code of Ethics
Avoid in-text referencing for this section.
Corruption
Section follows the same procedure as for ‘Discrimination’: short paragraph of discussion (with in-text citations); and a Code of Ethics section without in-text citations.
Dishonest and Fraudulent Behaviour
Section follows the same procedure as for ‘Discrimination’: short paragraph of discussion (with in-text citations); and a Code of Ethics section without in-text citations.
Whistleblower Protections
Section follows the same procedure as for ‘Discrimination’. You should give some sense as to why companies might provide whistleblower protections for employees that are revealing unwelcome truths about their operations. Freely employ in-text citations for this discussion.
Enforcement
An important final section to your assignment that offers the overall ‘conclusion’ to the document.
In this section, you are describing
How employees are educated around the Code of Ethics
The measures that will be taken against employees who fail to uphold the Code of Ethics. There should be a sliding scale of penalties to reflect the levels of infraction: fines, then for more serious offences, laying off from work; and perhaps finally dismissal from the job.
References
You list the sources (at least 5 of a properly ‘academic’ nature) that you consulted when writing your assignment.
Notes:
For the Definitions of key ethical terms: Use a range of sources of information. Try googling
Stanford Encyclopedia of Philosophy discrimination
Stanford Encyclopedia of Philosophy Exploitation
To secure quality academic articles to ground your definitions/discussions of the key ethical terms; and that you can cite in your References list.
2
Week
2
Workshop
MBA402 Governance, Ethics and
Sustainability
COMMONWEALTH OF AUSTRALIA
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The material in this communication may be subject to copyright
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Do not remove this notice.
2
• What does Irish statesman Edmund Burke mean
when he says:
The only thing necessary
for the triumph of evil is for
good men to do nothing.
• In groups, explain why Kitty’s neighbours ignored her cries
for help.
Catherine ‘Kitty’ Genovese finishes her shift as bar manager at
Eve’s Eleventh Hour Bar and drives home to her apartment in the
early hours of the morning, unaware she is being followed by
Winston Moseley. She only notices him after parking her car and
runs for her life, but Moseley catches her and stabs her twice in the
back.
“Oh my God, he stabbed me! Help me!” Kitty screams. Moseley
flees after a neighbour shouts “Let that girl alone!” He returns ten
minutes later however and finds Kitty collapsed and barely conscious
at the rear of an apartment complex. He stabs her several more
times, rapes her, steals $49 from her purse, then leaves. The attacks
last around 30 minutes. The New York Times reports 38 witnesses
saw or heard the attack and did not intervene.
Queens, New York City 1964
• A person is less likely to take
responsibility for action or inaction when
others are present and responsibility is
not explicitly assigned.
• This is known as diffusion of
responsibility.
• Corporations must assign managerial
roles and responsibilities.
• The ASX publishes the
Corporate Governance
Principles and
Recommendations.
• Although the Principles
and Recommendations
only apply to ASX listed
entities, they reflect a
contemporary view of
appropriate corporate
governance standards.
Principle 1
1. Lay solid foundations for
management and oversight
Companies should establish the roles
and responsibilities of their board and
management and monitor their
performance.
Recommendation 1.1
1.1 A listed entity should have and
disclose a board charter setting
out:
(a) the respective roles and
responsibilities of its board and
management; and
(b) those matters expressly
reserved to the board and those
delegated to management
• A clear division of responsibilities
between the board and management
will minimise the risk of diffusion of
responsibility.
• It will also help manage expectations
and avoid misunderstandings about
roles and accountabilities.
• The division of responsibilities could be
captured in a board charter.
Board
Responsibilities
Management
Responsibilities
Providing leadership and setting
strategic objectives
Implementing company’s strategic
objectives
Setting risk management
framework and risk appetite
Operating within risk management
framework and risk appetite
Overseeing management’s
implementation of objectives
Providing board with accurate,
timely, and clear information
Approving operating budgets and
major capital expenditure
Responsible for day to day
running of the company
In groups, come up with one example of each responsibility.
Recommendation 1.4
1.4 The company secretary of a listed
entity should be accountable
directly to the board, through the
chair, on all matters to do with the
proper functioning of the board.
• The company secretary has a crucial
corporate governance function.
• The company secretary is responsible
for many of the compliance and
governance related administrative tasks
of the board and the company.
• Accountability to the board helps ensure
this important function is exercised
properly by the company secretary.
Play Video
https://youtu.be/cbwL0uD4Eko
https://youtu.be/cbwL0uD4Eko
https://youtu.be/cbwL0uD4Eko
• What does Roman philosopher Marcus Tullius Cicero
mean when he says:
Small Group Discussion
The enemy is within the gates; it is with
our own luxury, our own folly, our own
criminality that we have to contend.
List ten internal risks or dangers lurking in
an organisation’s ‘back seat’.
• In groups, think of at least two strategies Andre could
implement to win the contract despite his wife’s refusal.
The opportunity of a lifetime falls right into the lap of small time
scrap metal dealer Andre Poisson. Victor Lustig, Deputy Director-
General of the Ministry of Posts and Telegraphs, invites Andre and
five other scrap metal dealers to a highly confidential meeting at the
Hotel de Crillon and explains the city’s plan to sell a dilapidated
metal structure for scrap. Andre is suspicious of all the secrecy.
During the limousine ride to inspect the structure he asks Lustig if
it’s near the Eiffel Tower. ‘It is the Eiffel Tower’ Lustig replies. Andre
sees this as his chance to break into the big leagues. Lustig asks for
bids to be submitted the next day; no problem for Andre, he has the
cash on hand but his wife and business partner, Mrs Poisson,
refuses to let him place a bid. She is suspicious of the secrecy, the
urgency, and Victor Lustig.
Small Group Challenge
Paris 1925
• Among the greatest risks faced by
corporations is the incompetence and
dishonesty of their own board and
management.
• Board and management should be
carefully screened prior to appointment
and provided with clear expectations in
a written agreement.
Recommendation 1.2
1.2 A listed entity should:
(a) undertake appropriate checks
before appointing a director or senior
executive or putting someone
forward for election as a director, and
(b) provide security holders with all
material information in its possession
relevant to a decision on whether or
not to elect or re-elect a director.
• The Australian Standard AS 4811-2006
Employment screening provides
guidance on appropriate checks.
• Directors should be screened for:
o Character
o Experience
o Education
o Criminal record
o Bankruptcy history
• Yahoo appointed Scott Thompson as its
new CEO in 2012.
• Thompson had lied to Yahoo on his
resume, falsely claiming he had a
degree in computer science.
• What does the lie reveal about
Thompson?
• What does his appointment reveal
about Yahoo?
Recommendation 1.3
1.3 A listed entity should have a
written agreement with each
director and senior executive
setting out the terms of their
appointment.
• The written agreement should generally
set out:
o Time commitment envisaged
o Requirement to disclose directors’
interests and any matters which may
affect the director’s independence
o Requirement to comply with key
corporate policies
Play Video
https://youtu.be/M0-Lznsr3E4
https://youtu.be/M0-Lznsr3E4
https://youtu.be/M0-Lznsr3E4
Small Group Discussion
• What does US President Donald Trump’s tweet infer
about sexism in general?
• In groups, solve this riddle.
A father and his son are in a car accident. The father dies instantly, and the
son is taken to the nearest hospital. The surgeon comes in and exclaims,
“I can’t operate on this boy!”
“Why not?” the nurse asks.
“Because he’s my son,” the surgeon responds.
Small Group Challenge
• Sexism is prejudice, stereotyping, or
discrimination, typically against women,
on the basis of sex.
• The percentage of female directorships
on ASX 200 boards in 2016 was 23.4%.
• A total of 20 boards in the ASX 200 still
do not have any women.
Recommendation 1.5
1.5 A listed entity should:
(a) have a diversity policy;
(b) through its board or a committee
of the board set measurable
objectives for achieving gender
diversity in the composition of its
board, senior executives, and
workforce generally; and
(c) disclose in relation to each
reporting period:
Recommendation 1.5
1.5 (1) the measurable objectives set for that
period to achieve gender diversity;
(2) the entity’s progress towards
achieving those objectives; and
(3) either:
(A) the respective proportions of men
and women on the board, in senior
executive positions and across the
whole workforce (including how the
entity has defined “senior executive” for
these purposes); or
Recommendation 1.5
1.5 (B) If the entity is a “relevant employer”
under the Workplace Gender Equality Act,
the entity’s most recent “Gender Equality
Indicators”, as defined in and published
under that Act.
If the entity was in the S&P/ASX 300 Index
at the commencement of the reporting
period, the measurable objective for
achieving gender diversity in the
composition of its board should be to
have not less than 30% of its directors of
each gender within a specified period.
• Increased gender diversity in
corporations generates:
o better financial performance.
o a broader pool for recruitment.
o enhanced employee retention.
o a closer connection with customers.
o improved corporate image and
reputation.
• Measurable objectives should be
meaningful benchmarks such as:
o Specific numerical targets for the
proportion of women employed
o Specific targets for the gender
equality indicators as outlined in the
Workplace Gender Equality Act
• Gender composition of the workforce
• Equal remuneration between men and
women
• Availability of employment conditions
supporting employees with family
responsibilities
• Sex-based harassment and
discrimination
Play Video
https://youtu.be/hjOPCTCtk5g
https://youtu.be/hjOPCTCtk5g
https://youtu.be/hjOPCTCtk5g
• What does Chinese philosopher Confucius mean
when he says:
Small Group Discussion
Real knowledge is to know the
extent of one’s ignorance.
• In groups, think of at least two ways McArthur can conceal his
identity
McArthur Wheeler, criminal mastermind, has a problem. He is
close to finalising his preparations for an ingenious bank heist.
He has carefully selected the two banks he will rob, Fidelity
Savings Bank and Mellon Bank, and the time of day that will afford
him the greatest chance of a clean getaway. He has hand-picked a
confident and capable accomplice, a man he can depend upon to
keep his cool under pressure and get the job done. And he has
chosen the most effective weapon, a large gun that will drive terror
into the hearts of the people he threatens and force them to willingly
comply with his demands. Only one issue remains outstanding.
McArthur sips his lemonade and turns his mind to the crucially
important matter of how to best conceal his identity whilst performing
his cunning crime.
Small Group Challenge
Pittsburgh, US 1995
• The Dunning–Kruger effect is a
cognitive bias in which low-ability
individuals suffer from illusory
superiority, mistakenly assessing their
ability as much higher than it really is.
• It is important for companies to have
formal and rigorous performance
evaluations of their directors and senior
executives.
Recommendation 1.6
1.6 A listed entity should:
(a) have and disclose a process for
periodically evaluating the
performance of the board, its
committees and individual directors;
and
(b) disclose for each reporting period
whether a performance evaluation
has been undertaken in accordance
with that process during or in respect
of that period.
Recommendation 1.7
1.7 A listed entity should:
(b) have and disclose a process for
evaluating the performance of its
senior executives at least once every
reporting period; and
(b) disclose for each reporting period
whether a performance evaluation
has been undertaken in accordance
with that process during or in respect
of that period.
• Corporations should consider
periodically using external facilitators to
conduct performance reviews of their
boards of directors.
• Many companies conduct regular
reviews of their directors’ and senior
executives’ performance but some
remain reluctant to disclose review
practices or explain non-compliance.
Week 2 Workshop
MBA402 Governance, Ethics and
Sustainability
Your mobile phone sings and dances its way right off your bedside table,
then continues to ring and vibrate on your bedroom floor. Still half asleep,
you clumsily feel around the floor for it in the dark.
“Hello?” you say, groggily.
“Hi, it’s me, sorry about the time but we need to talk,” Angela Lynn says.
Angela is an old friend who studied with you at Kaplan. She has spent the
years since graduation climbing the corporate ladder at News Limited and
holds a senior position overseeing the Financial Review.
“We’re working up a piece on the directors of the old Meridian board. It’s
pretty brutal. We’re covering the finger pointing, the meetings at strip clubs,
the incompetence and…” She pauses.
“And what?” you ask.
“Did you know the Chairman lied on his resume? He never did an MBA.”
“No, I didn’t know that,” you sigh. “Look Angela, thanks for the heads-up
but I need time to convene the board and get them across all this.”
“We go to print in three hours,” she says.
The directors arrive one by one at the emergency board meeting you
convene to discuss the newspaper story about the old Meridian board.
“Thank you for coming on such short notice and at such an ungodly hour,”
you begin. You then explain the newspaper story about the previous
Meridian board that will be in the Financial Review by sun up. You also
explain that the new Meridian board will need to issue a strong statement to
mitigate the anticipated impact on shareholder confidence.
Eric Driscoll, executive director and Meridian’s company secretary, speaks
up. “This whole mess is about the old board – we are the new board. I think
it’s best if we just keep quiet and say nothing.”
“Our refusal to respond becomes our response,” you point out, “as in:
‘Meridian Group was contacted but declined to comment’.”
“I don’t think that’s so bad in the circumstances. We don’t need a
statement,” Eric replies.
Some of the other board members nod in agreement with him.
At that point you realise Meridian needs more than just a statement, it
needs a management strategy…
Group One
In your group, prepare a management strategy for
Meridian to help diffuse the newspaper article.
Focus on the following:
• Explain the concept of diffusion of responsibility
• Discuss Recommendations 1.1 and 1.4 of the ASX
Corporate Governance Principles and
Recommendations
• Propose three things Meridian could do to
implement the Recommendation
Group Two
In your group, prepare a management strategy for
Meridian to help diffuse the newspaper article
Focus on the following:
• Explain the nature of internal threats faced by
corporations
• Discuss Recommendations 1.2 and 1.3 of the ASX
Corporate Governance Principles and
Recommendations
• Propose three things Meridian could do to
implement the Recommendations
Group Three
In your group, prepare a management strategy for
Meridian to help diffuse the newspaper article.
Focus on the following:
• Explain the concept of sexism
• Discuss Recommendation 1.5 of the ASX Corporate
Governance Principles and Recommendations
• Propose three things Meridian could do to
implement the Recommendation
Group Four
In your group, prepare a management strategy for
Meridian to help diffuse the newspaper article.
Focus on the following:
• Explain the Dunning-Kruger effect
• Discuss Recommendations1.6 and 1.7 of the ASX
Corporate Governance Principles and
Recommendations
• Propose three things Meridian could do to
implement the Recommendations
Group One Group Two
Group Three Group Four
• Present your management strategy to the Meridian board.
“You know what, Eric?” you ask, “You’re absolutely right. Meridian doesn’t
need a statement.”
Eric smiles, pleased to have your agreement.
“We need a management strategy,” you add.
“A what?” Eric asks.
“A management strategy. If we really want to distance ourselves from the
behaviour and practices of the old board we need to prove to our
shareholders and the general public that we genuinely are different from
them. And not just because we say we are but because we operate by
different standards.”
“What kind of standards?” Eric asks.
The Board Chair, Veda Hosnik, places a hand on your shoulder and
thanks you for your presentation. She rises from her seat to address the
board.
“Our CEO has proposed to us a management strategy for the company
that lays a solid foundation for management and oversight. We will now take
a vote as to whether we adopt the proposed management strategy. All those
in favour please raise your hands. Thank you. All those against, please raise
your hands. Thank you.”
She records the votes tally on her iPad.
“The board resolves to…”
- Corporate Management
- COMMONWEALTH OF AUSTRALIA�Copyright Regulations 1969��WARNING�This material has been reproduced and communicated to you by or on behalf of Kaplan Business School pursuant to Part VB of the Copyright Act 1968 (the Act).��The material in this communication may be subject to copyright under the Act. Any further reproduction or communication of this material by you may be the subject of copyright protection under the Act.��Do not remove this notice.
- Principle 1
- Recommendation 1.1
- Recommendation 1.4
- Recommendation 1.2
- Recommendation 1.3
- Recommendation 1.5
- Recommendation 1.6
- Recommendation 1.7
- Slide Number 40
- Slide Number 41
- Slide Number 42
- Slide Number 43
- Slide Number 44
Small Group Discussion
Small Group Challenge
Responsibility
ASX Corporate Governance
Clear Responsibilities
Example
Company Secretary
Insecurity
Small Group Discussion
Small Group Challenge
Security
Appropriate Checks
Ethical Appointments
Written Agreement
Women on Board
Small Group Discussion
Small Group Challenge
Sexism
Recommendation 1.5
Recommendation 1.5
Gender Diversity
Measurable Objectives
Gender Equality Indicators
X Factor
Small Group Discussion
Small Group Challenge
Ignorance
Performance Evaluations
Playtime
Week 3 Workshop
MBA40
2
Governance, Ethics and
Sustainability
COMMONWEALTH OF AUSTRALIA
Copyright Regulations 1969
WARNING
This material has been reproduced and communicated to you by or
on behalf of Kaplan Business School pursuant to Part VB of the
Copyright Act 1968 (the Act).
The material in this communication may be subject to copyright
under the Act. Any further reproduction or communication of this
material by you may be the subject of copyright protection under
the Act.
Do not remove this notice.
2
• In groups, design and build a structure that will support the weight
of a marshmallow.
Your building materials include:
• 20 sticks of spaghetti
• 1 metre of tape
• 1 metre of string
• 1 marshmallow
You have 18 minutes to complete your challenge.
The group with the tallest structure wins.
Play Video
https://youtu.be/FEgn_Eui8-U
https://youtu.be/FEgn_Eui8-U
https://youtu.be/FEgn_Eui8-U
• A collaborative, well structured board is
essential for effective governance.
• Board size can be determined by
appointing the appropriate number of
directors for the
company.
• Board composition can be determined
by appointing directors of varying type,
skill, and commitment.
Principle 2
2. Structure the board to be effective
and add value
Companies should have boards of an
appropriate size, composition, level of
skill and level of commitment to enable
them to discharge their duties
effectively.
• A non-executive director is not also a
part of the executive team, or senior
management, of the company.
• Non-executive directors are necessary
to challenge management and hold
them to account and represent the best
interests of the company and its
shareholders as a whole.
Recommendation 2.1
2.1 The board of a listed entity should:
(a) have a nomination committee
which:
(1) has at least three members, a
majority of whom are independent
directors; and
(2) is chaired by an independent
director,
Recommendation 2.1
2.1 and disclose:
(3) the charter of the committee;
(4) the members of the committee;
and
(5) as at the end of each reporting
period, the number of times the
committee met throughout the period
and the individual attendances of the
members at those meetings; or
Recommendation 2.1
2.1 (b) if it does not have a nomination
committee, disclose that fact and
the processes it employs to
address board succession issues
and to ensure that the board has
the appropriate balance of skills,
knowledge, experience,
independence and diversity to
enable it to discharge its duties
and responsibilities effectively.
• All directors are equally responsible for
the governance of the company.
• Board committees can provide
independent and objective corporate
governance supervision.
• Board committees prevent management
domination of board decisions.
• A separate nomination committee can
be an efficient and effective mechanism
to bring transparency, focus and
independent judgement needed on
decisions regarding the composition of
the board.
Nomination Committee
• The nomination committee makes
recommendations to the board
regarding:
o board succession planning.
o induction and continuing professional
development of
directors.
o the process for recruiting a new director.
o the appointment and re-election of
directors.
Play Video
• What does Canadian educator Laurence Peter mean
when he says:
Managers are promoted to their level of
incompetence.
2. List three skills that are required to perform the job.
1. Find an advertisement for a job that interests you on the
internet.
3. Assign yourself a skill rating for each skill:
High = 3, Medium = 2, Low = 1
• The Peter Principle states the selection
of a candidate for a position is based on
the candidate’s performance in their
current role, rather than on abilities
relevant to the intended role.
• The skill set necessary for a director to
effectively govern is different from the
one they may have relied upon
previously to effectively manage.
• A well-structured board will have a good
balance of professional director skills.
• In groups, identify four such skill areas.
o Risk & Compliance
o Financial & Audit
o Leadership & Strategy
o Policy Development
• A well-structured board will also have a
balance of specialist skills relevant to
the operations of the company such as:
o Geomechanics for a mining multinational
o Toxicology for a pharmaceutical
conglomerate
o Computer engineering for a tech start up
o Cognitive science for a university
Recommendation 2.2
2.2 A listed entity should have and
disclose a board skills matrix
setting out the mix of skills that the
board currently has or is looking to
achieve in its membership.
• A board skills matrix is a useful tool that
can help identify any gaps in necessary
skills to be addressed by further
education, professional development
initiatives, or board succession
planning.
• Each director is assigned a skills rating:
High = 3, Medium = 2, Low = 1, NA = 0
• Where is the skills gap?
Board Skills Matrix
Director Skills Santosh Dora Omais Ngoc Jess
Risk & Compliance 3 1 2 3 2
Financial & Audit 3 2 3 1 3
Leadership & Strategy 2 3 3 2 2
Policy Development 1 1 2 1 1
Computer Engineering 0 3 0 2 0
Play Video
https://youtu.be/c5m9CFIwX2w
https://youtu.be/c5m9CFIwX2w
https://youtu.be/c5m9CFIwX2w
• Do you agree with fictional corporate raider
Gordon Gekko when he says:
Small Group Discussion
Greed, for lack of a better word,
is good.
2. Now assume the role of student and take the quiz by writing
answers to the three questions.
Individual Challenge
1. Choose a topic that you find interesting. Assume the role of teacher
and create a three-question quiz about that topic.
3. Now assume the role of assessor and mark the quiz answers by
scoring each one a mark out of 5 for a total score out of 15.
Imagine this is your only assessment for MBA402.
That is, your final grade depends entirely on the mark you award
yourself.
• Self-interest can obscure perception
leading to tainted judgements.
• A person motivated by self-interest acts
for their own personal advantage,
sometimes without regard for others.
• A conflict of interest can arise where a
director has a personal interest in the
outcome of a board decision.
• A director may be placed in a position of
conflict if he or she is:
o allied with the interests of
management.
o a substantial shareholder in the
company.
o a relevant stakeholder of the
company.
Recommendation 2.3
2.3 A listed entity should disclose:
(a) the names of the directors
considered by the board to be
independent directors;
Recommendation 2.3
2.3 (b) if a director has an interest,
position or relationship of the type
described in Box 2.3 but the board is
of the opinion that it does not
compromise the independence of the
director, the nature of the interest,
position or relationship in question
and an explanation of why the board
is of that opinion, and
(c) the length of service of each
director
Recommendations 2.4 & 2.5
2.4 A majority of the board of a listed
entity should be independent
directors.
2.5 The chair of the board of a listed
entity should be an independent
director and, in particular, should
not be the same person as the CEO
of the entity
• An independent director is free of any
interest, position, association or
relationship that might influence his or
her capacity to bring an independent
judgement to bear on issues before the
board, and to act in the best interests of
the company.
• Box 2.3 outlines relevant factors to
assessing the independence of a
director including:
o Employment in an executive capacity
o Receipt of performance based pay
o Having a material business relationship
o Being a substantial holder of securities
in the entity
• The chair of the board is responsible for
leading the board, facilitating the
effective contribution of all directors and
promoting constructive and respectful
relations between directors, and
between the board and management.
• A majority independent board with an
independent chair minimises the risk of
any individual dominating the board’s
decision-making and maximises the
likelihood that board decisions will
reflect the best interests of the company
and its shareholders generally.
Play Video
https://youtu.be/mVxnLGP0eqA
https://youtu.be/mVxnLGP0eqA
https://youtu.be/mVxnLGP0eqA
• What does Austrian philosopher Karl Popper mean
when he says:
Small Group Discussion
True ignorance is not the
absence of knowledge, but the
refusal to acquire it.
• In groups, think of something the Zen Master could say in response
to his disciple’s comment.
A Zen Master is meditating deeply when he is interrupted by a question
from an inquisitive disciple.
“What happens after we die, Master?” the disciple asks.
The Master opens his eyes, “I don’t know.”
“Oh,” says the student with disappointment.
“I thought you were a Zen Master.”
Small Group Challenge
Truc Lam Tay Thien Zen Monastery, Vietnam 230 BC
• Management educator Peter Drucker
says:
“We now accept the fact that learning is
a lifelong process of keeping abreast of
change. And the most pressing task is
to teach people how to learn.”
Recommendation 2.6
2.6 A listed entity should have a
program for inducting new
directors and for periodically
reviewing whether there is a need
for existing directors to undertake
professional development to
maintain the skills and knowledge
needed to perform their roles as
directors effectively.
• The board or nomination committee
should regularly review whether the
directors have the skills, knowledge and
familiarity with the company’s
operations required to fulfil their roles
effectively, and consider what training or
development could be undertaken to fill
any gaps identified.
• In the case of ASIC v Healey & Ors the
Federal Court held that it is a duty of
every director to read the company’s
financial statements carefully and to
consider whether what they disclose is
consistent with the director’s own
knowledge of the company’s affairs.
Financial Statements
• This means each director must have an
appropriate base level of understanding
of accounting matters.
• The board or nomination committee
should ensure that any director who
lacks specialist accounting skills is
provided with professional development
to learn how to interpret the company’s
financial statements.
Week 3 Workshop
MBA402 Governance, Ethics and
Sustainability
The convenience store cashier grows impatient as Ruth Laughton
frantically searches her pockets for enough change to purchase two $3.99
sandwiches. You offer to pay for lunch and hand the cashier your credit card,
enjoying the irony of FundCorp’s CEO being caught short of funds. The two
of you walk to the park and find a seat under some shade to eat your lunch.
“FundCorp and Meridian’s other institutional shareholders were more than
ready to sell down our holdings when the Financial Review story broke,”
Ruth begins, “but your management strategy announcement stayed our
hand. That was a deft manoeuvre.”
“Thank you,” you say.
“But don’t think we’ve taken our finger off the trigger just yet,” Ruth warns
as she bites into her sandwich. “Some of us are beginning to wonder if we
were perhaps a bit hasty in electing a few of the directors to the new board.”
“What would give FundCorp and the other institutional investors
confidence in the new board and ease your concerns?” you ask.
“They lack experience and not a single director on Meridian’s board is
independent, including Veda. You might want to consider a restructure.”
You explain to the Meridian directors that FundCorp and the other
institutional investors are concerned about the board’s lack of experience
and independence. They are not altogether thrilled by the news.
“The institutional investors are hypocrites!” roars Marco Nolan, a non-
executive director with a quick temper. “How independent are their boards?
Independence doesn’t make boards better – incentives do. Directors should
have their financial interests tied to the performance of the company’s share
price by being shareholders themselves.”
The other directors agree with Marco on this. They all talk of previous
company boards they’ve sat on that had lucrative equity-based remuneration
schemes and little to no regard for director independence.
Ironically, the only director who doesn’t appear to be in complete
agreement is Veda, the chair of the board, and she owns more Meridian
shares than any of them.
It’s obvious you’re going to need a comprehensive board restructure
proposal and a compelling case for its adoption…
Group One
In your group, propose a board restructure to gain the
confidence of the institutional investors
Focus on the following:
• Explain the concept of board composition
• Discuss Recommendations 2.1 of the ASX
Corporate Governance Principles and
Recommendations
• Propose three things Meridian could do to
implement the Recommendations
Group Two
In your group, propose a board restructure to gain the
confidence of the institutional investors
Focus on the following:
• Explain the difference between general board skills
and specialist board skills
• Discuss Recommendation 2.2 of the ASX Corporate
Governance Principles and Recommendations
• Propose three things Meridian could do to
implement the Recommendation
Group Three
In your group, propose a board restructure to gain the
confidence of the institutional investors
Focus on the following:
• Explain the concept of a conflict of interest
• Discuss Recommendations 2.3, 2.4, and 2.5 of the
ASX Corporate Governance Principles and
Recommendations
• Propose three things Meridian could do to
implement the Recommendations
Group Four
In your group, propose a board restructure to gain the
confidence of the institutional investors
Focus on the following:
• Explain the importance of ongoing education and
professional development
• Discuss Recommendation 2.6 of the ASX Corporate
Governance Principles and Recommendations
• Propose three things Meridian could do to
implement the Recommendation
Group One Group Two
Group FourGroup Three
• Present your board restructure proposal to the Meridian board.
Marco Nolan continues his tirade against the institutional investors.
“FundCorp simply can’t push us around like this. The general power of
management resides with this board. The shareholders may own Meridian
but they do not control Meridian.”
The other directors cheer in support of Marco and the board meeting
descends into a muddled sort of troop rally.
You almost have to shout just to be heard above the melee.
“The institutional shareholders hold the majority vote, Marco. We can
either wait for them to exercise that voting power to replace every single
director in this boardroom or we can restructure.”
The directors calm down and fall silent.
“Restructure what?” Marco asks.
Everybody silently waits for the Board Chair, Veda Hosknik, to respond to
your presentation. She doesn’t move for a long time. Finally, she clears her
throat to address the board.
“Our CEO has presented a proposal to restructure the Meridian board to
add value and placate the concerns of our institutional investors. I know this
will not be an easy decision for many of us to make. For some of us, a
resolution to adopt the proposal will require us to sell off our Meridian
shareholdings at a time when the share price is not particularly favourable.”
Veda pauses. Marco and Eric look at you and shake their heads.
“We will now take a vote as to whether we adopt the proposed board
restructure. All those in favour please raise your hands. Thank you. All those
against, please raise your hands. Thank you.”
She records the votes tally in her iPad.
“The board resolves to…”
- Structuring the Board
- COMMONWEALTH OF AUSTRALIA�Copyright Regulations 1969��WARNING�This material has been reproduced and communicated to you by or on behalf of Kaplan Business School pursuant to Part VB of the Copyright Act 1968 (the Act).��The material in this communication may be subject to copyright under the Act. Any further reproduction or communication of this material by you may be the subject of copyright protection under the Act.��Do not remove this notice.
- Principle 2
- Recommendation 2.1
- Recommendation 2.2
- Recommendation 2.3
- Recommendations 2.4 & 2.5
- Recommendation 2.6
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
- Slide Number 48
Small Group Challenge
Marshmallow Challenge
Board Collaboration
Non-Executive Directors
Recommendation 2.1
Recommendation 2.1
Board Committees
Nomination Committee
Nomination Committee
Wrong Guy
Small Group Discussion
Individual Challenge
The Peter Principle
General Board Skills
Specialist Board Skills
Board Skills Matrix
Board Skills Matrix
An Elephant in the Dark
Small Group Discussion
Individual Challenge
Self-Interest
Conflict of Interests
Recommendation 2.3
Independent Directors
Relevant Factors
Chair of the Board
Independence and the Board
Dragon Warrior
Small Group Discussion
Small Group Challenge
Learning and Development
Professional Development
Financial Statements
Financial Statements
Playtime
Week 1 Workshop
MBA40
2
Governance, Ethics and
Sustainability
COMMONWEALTH OF AUSTRALIA
Copyright Regulations 1969
WARNING
This material has been reproduced and communicated to you
by or on behalf of Kaplan Business School pursuant to Part
VB of the Copyright Act 1968 (the Act).
The material in this communication may be subject to
copyright under the Act. Any further reproduction or
communication of this material by you may be the subject of
copyright protection under the Act.
Do not remove this notice.
2
Play Video
https://youtu.be/Cc4hSd5Q1aw
https://youtu.be/Cc4hSd5Q1aw
https://youtu.be/Cc4hSd5Q1aw
• Asked to recite a poem by a group of university
students, boxing legend Muhammad Ali says:
• In groups discuss what he meant.
Me …We
• In groups, think of at least two ways Adithya and her
community could gain access to international trade markets.
Adithya sits on the shore of Colaba Island at sunset and watches
another fleet of Portuguese merchant vessels, fully loaded with all
the riches of her beloved Maharashtra, slowly begin its long voyage
back across the Atlantic.
She wonders at the magnitude of the wealth leaving her home
forever in those timber hulls and of the countless ways it could have
been spent for the benefit of her entire community, rather than
enriching a mere handful of foreign traders. Not that her people are
poor; there are many that own valuable land, livestock and
businesses. But the international trade markets have very costly
barriers to entry and there is no individual in Adithya’s community
that could afford to establish a rival enterprise and reap the vast
rewards on offer.
Mumbai, 1618
• Fraternity means friendship and mutual
support among a group of people sharing
common interests.
• The word ‘corporation’ comes from the
Latin word corpus which means ‘body’ or
‘body of people’.
• The first corporations were fraternities of
people sharing or pooling their resources
to achieve things together they could not
achieve individually.
• Prior to the 17th century, the earliest
corporations were created in Europe as
not-for-profit organisations to build
institutions for the public good, such as
universities and hospitals.
• These corporations were established by
charter – an act granted by a monarch
or passed by a parliament.
• These corporations had written bodies
of fundamental principles detailing their
duties and were overseen by the
government.
• Operating beyond these constitutional
limitations was forbidden and
punishable by law.
What are some of the major contributions
corporations have made to the betterment of
society
?
• Scientific discoveries
• Technological progress
• Medical developments
• Economic growth
In groups, provide one example of each.
Small Group Discussion
We are determined that our nation, and the
world as a whole, shall not be the plaything
of one small corner of the world.
• What does Indonesian President Sukarno mean
when he says:
• In groups, figure out at least two strategies William could
recommend to the King to reduce the size of the convict
population.
The Americans win the War of Independence and refuse to accept
any more British convicts. Before long the prisons are overcrowded
with the city’s poor, many of them convicted for stealing food to
survive. The prison barges recommended by Lord William Darcy,
adviser to King George III, fill as quickly as the prisons and soon
choke the Thames, stalling sea traffic and shutting down the docks.
His Majesty the King convenes an emergency meeting to resolve
the matter. The Admiral of the Royal Fleet blames William for what
he describes as a disgrace to the British Empire and calls for his
immediate resignation. William, realising just how grim his prospects
have become, folds his hands behind his back so nobody sees them
shaking. He is out of friends, out of ideas, and out of time.
Small Group Challenge
London, 1783
• Imperialism is a policy of extending a
country’s power and influence.
• Corporations were used by European
imperial powers to advance colonial
expansion by maintaining draconian
control of trade, resources and territory in
Asia, Africa and the Americas.
• Three examples: the
,
the
and the
.
East India Company
• The East India Company, regarded as
history’s first corporate raider, received
a Royal Charter from Queen Elizabeth I
in 1600 to pursue trade in India.
• The company plundered India. Powis
Castle, a private house in Wales, stores
more Mughal artefacts than on display
at any one place in India – including the
National Museum in Delhi.
Dutch East India Company
• The Dutch East India Company was
established by the Dutch government in
1602 and granted a 21-year monopoly
on Dutch spice trade with Asia.
• The company had quasi-governmental
powers including the ability to wage
war, imprison and execute convicts, and
establish colonies.
• Were there any advantages to foreign
countries from imperialism?
o Introduction of new technology?
o Improved sanitation and health
care?
o Establishment of infrastructure?
o Better means of transportation?
South Sea Company
• The South Sea Company was
incorporated in Britain in 1711 to reduce
the size of public debts and was given
exclusive rights to trade with Spain’s
South American colonies, mainly in
slaves.
Play Video
https://youtu.be/iqJgs7CYopw
https://youtu.be/iqJgs7CYopw
https://youtu.be/iqJgs7CYopw
Small Group Discussion
We know what we are, but know
not what we may be.
• What does English playwright
William Shakespeare mean when he says:
• In groups, advise George if he should take legal action against
Salomon to recover his business loan.
George Farwell has a problem…
Salomon & Co Ltd, a small boot-making enterprise to which George gave
a substantial business loan, has failed and gone into liquidation. George was
expecting to recover at least some of the loan principal after the business
assets were sold and the proceeds distributed among the creditors. But the
sole director and majority shareholder of the failed company, Aron Salomon,
is claiming a security interest over the liquidated funds.
George’s lawyer explains that Aron Salomon used his position as director
to arrange the security interest in favour of himself. But as Aron Salomon is
the sole director and majority shareholder of Salomon & Co Ltd, he basically
is the company and he shouldn’t be able to issue a security interest to
himself over business assets he effectively owns.
George seeks your advice.
Small Group Challenge
London, 1896
Directors?
Shareholders?
Customers?
Employees?
Suppliers?
Broader
Community?
?
• The landmark case of Salomon v
Salomon & Co Ltd upheld the doctrine
of corporate personality.
• That is, a corporation is a legal person
or entity separate from its owners
(shareholders) and controllers
(directors).
• Corporations have the legal capacity to
enter contracts and hold many of the
same rights a natural person does.
• Corporations can:
o buy, own, and sell property.
o sue and be sued.
o enter contracts on their own behalf.
• Shareholders have limited liability.
• This means the debts and obligations of
the company do not belong to the
shareholders; they belong only to the
corporation itself.
• Shareholders, directors, employees
cannot be pursued by creditors if the
corporation becomes insolvent.
• What does Scottish economist Adam Smith mean
when he says:
Small Group Discussion
When regulation is in support of the
workman, it is always just and equitable;
but it is sometimes otherwise when in
favour of the masters.
• In groups, advise Gilford Motors if it should take legal action
against EB Horne for breaching the restraint of trade clause.
Gilford Motor Co Ltd has a problem…
EB Horne, their former CEO, has set up his own business and has even
approached Gilford Motor’s clients. Luckily, when Horne joined Gilford
Motors he signed an employment contract containing a restraint of trade
clause which prohibited him from approaching the company’s clients after
leaving the company.
Gilford Motors explains this in a cease and desist letter to Horne
threatening legal action if he does not comply. But Horne responds saying
that he hasn’t breached the restraint of trade clause because he’s operating
the business through a company, JM Horne & Co Ltd. His company, he
claims, is a separate legal person not subject to the restraint of trade clause
and therefore free to approach Gilford Motor’s clients.
Gilford Motors seek your advice.
Small Group Challenge
London, 1933
• Corporations law controls or regulates the
ways corporations can be used and
operated by their directors to protect third
parties, shareholders and the corporation.
• Corporations law imposes duties on
directors and confers rights upon third
parties, shareholders and the corporation.
• Corporations law gives shareholders
confidence to invest their money in
corporations.
• The courts will not permit a corporation
to be used as an instrument of fraud.
• In such cases the court will treat the
shareholders and corporation as one.
• This is also called piercing the
corporate veil.
Directors owe legal duties to the
corporations they control:
• Duty to exercise powers with care, skill,
and diligence
• Duty to exercise powers in good faith in
the best interests of the company and
for a proper purpose
Directors’ Duties
• Duty not to improperly use position to
gain a personal advantage for, or to
cause detriment to, the company
• Duty not to improperly use information
obtained for personal advantage or to
cause detriment to the company
• Duty to prevent the company trading
whilst insolvent
Fraternity Imperialism Identity Regulation
Week 1 Workshop
MBA402 Governance, Ethics and
Sustainability
Denise Summers, your executive assistant, bursts through the door of
your new office in a state of panic.
“Sorry boss. I know it’s your first day on the job but we have a serious
problem out here.”
“What is it?” you ask.
“The AFP have arrested all of the old Meridian board members. They’ve all
been charged with breaching their directors’ duties. It’s all over the news.”
You curse under your breath. You knew when Meridian’s new board asked
you to be their CEO there’d be tough days ahead. But you didn’t think it
would start on the first damn day.
You take a deep breath. “The previous directors deserve to stand trial for
what they did. They were supposed to act in Meridian Group’s best interests,
not their own. That’s why our shareholders voted them off the board and
replaced them with a new board of directors. And we knew ASIC and the
AFP would catch up with the old directors soon enough, right?”
“We knew, sure,” Denise agrees, “but apparently the rest of Meridian’s
employees didn’t. They’re out there now emptying their desks into cardboard
boxes.”
You jump to your feet. “What! Why?”
“The press are calling it Australia’s biggest corporate scandal, ever. The
employees are all in shock. They feel betrayed and ashamed and don’t want
to work for a company that’s now infamous for its greed and corruption.”
You take a quick look outside your office. There’s a large group of
employees still watching the story break on the flat screen but many are
packing up their personal belongings. A few are already at the elevators
waiting for a lift.
Without the employees Meridian doesn’t have a hope. And you are the
only person that has any chance of convincing them to stay…
Group One
In your group, prepare a short speech to the employees
that will persuade them not to leave.
Focus on the following:
• Explain the concept of fraternity and the origin of
corporations
• Discuss how corporate structures give small
investors access to large business ventures
• Give an example of something remarkable people
were able to achieve by using a corporation
Group Two
In your group, prepare a short speech to the employees
that will persuade them not to leave.
Focus on the following:
• Explain that just as corporations can used for good
they can also be used for bad
• Discuss how corporations can become powerful and
how this power can be abused
• Give an example from history of a corporation that
was used by one group of people to take advantage
of another
Group Three
In your group, prepare a short speech to the employees
that will persuade them not to leave.
Focus on the following:
• Explain the concept of separate legal entity
• Discuss the stakeholders that make up a corporate
structure
• Explain why the company itself is a victim of the
previous board’s behaviour
Group Four
In your group, prepare a short speech to the employees
that will persuade them not to leave.
Focus on the following:
• Explain how corporations law regulates corporate
activity
• Discuss the previous board’s actions and why they
were against the law
• Explain how corporations law gives shareholders
confidence to invest their money in corporations
Group One Group Two
Group Three Group Four
• Deliver your speech to the Meridian employees and convince them
to stay.
‘Ding.’ The lift doors open and the first of the departing employees cram
themselves in.
“Hey! Wait a minute!” you call after them as you stride over to the group
still watching the flat screen and switch it off. “Please, I can appreciate just
how hurt and angry you all must feel about this but please hear me out.”
The ones still at their desks don’t stop packing and the ones at the lift
continue to squeeze inside.
“I get that you don’t know me and have no reason to trust me. But if you
give me just five more minutes of your time and after hearing me out you still
want to leave then I’ll book a fleet of taxis and pay for your trip home
myself.”
Silence. Then the lift slowly empties and everybody comes to crowd
around you. The pain and confusion in their eyes breaks your heart.
You take a deep breath and steady yourself to speak…
Your speech is over. No one moves.
Finally, Denise speaks up. “You may not know our new CEO but I’ve been
an employee here at Meridian for over nine years now and you all know me.
And I’ve worked for enough CEO’s in my time to know the real thing when I
see it.”
She turns and gives you a smile.
“And our new CEO here is the real thing.”
The crowd murmurs.
Denise continues. “This morning is just the beginning. There will be more
days like this to come. But with the right leadership we can together reclaim
what’s been taken and make our company great again.”
A handful of employees nod.
“Who’s with us?”
- Corporations
- COMMONWEALTH OF AUSTRALIA�Copyright Regulations 1969��WARNING�This material has been reproduced and communicated to you by or on behalf of Kaplan Business School pursuant to Part VB of the Copyright Act 1968 (the Act).��The material in this communication may be subject to copyright under the Act. Any further reproduction or communication of this material by you may be the subject of copyright protection under the Act.��Do not remove this notice.
- Slide Number 32
- Slide Number 33
- Slide Number 34
- Slide Number 35
- Slide Number 36
Welcome
Small Group Discussion
Small Group Challenge
Fraternity
Earliest Corporations
Earliest Governance
Achievements of Corporations
Small Group Discussion
Small Group Challenge
Imperialism
East India Company
Dutch East India Company
Advantages of Imperialism
South Sea Company
Who am I?
Small Group Discussion
Small Group Challenge
Who is the Corporation?
Separate Legal Entity
Capacity and Rights
Limited Liability
Small Group Discussion
Small Group Challenge
Regulation of Companies
Restrictions on Use
Directors’ Duties
Directors’ Duties
Evolution of Corporations
Playtime
Week 5 Workshop
MBA40
2
Governance, Ethics and
Sustainability
COMMONWEALTH OF AUSTRALIA
Copyright Regulations 1969
WARNING
This material has been reproduced and communicated to you by or
on behalf of Kaplan Business School pursuant to Part VB of the
Copyright Act 1968 (the Act).
The material in this communication may be subject to copyright
under the Act. Any further reproduction or communication of this
material by you may be the subject of copyright protection under
the Act.
Do not remove this notice.
2
Play Video
https://youtu.be/PzbHAV21IqM
https://youtu.be/PzbHAV21IqM
https://youtu.be/PzbHAV21IqM
• Do you agree with Ancient Greek philosopher Plato
when he says:
for the most part is less
profitable than dishonesty.
• In groups, create an innovative advertising concept for the
pizza.
You are an advertising executive for a prestigious advertising firm
that specialises in television commercials for the food and beverage
industry.
The Pizza Hut franchise is about to launch a new pizza and has
engaged you to create an innovative advertising concept for use in a
television commercial.
The new pizza is called the Mitey Stuffed Crust. It is essentially a
normal pizza containing melted cheese and vegemite inside the
crust.
Adelaide, Australia 2017
Mitey Stuffed Crust
Play Video
https://youtu.be/AXMYfgRZsyY
https://youtu.be/AXMYfgRZsyY
https://youtu.be/AXMYfgRZsyY
Honesty
• Honesty means being honourable in
principles, intentions, and actions.
• It is about truthfulness and
respectability.
• Honesty enhances a company’s brand
and reputation and assists in building
long-term value for its investors.
• In 2011, the Federal Court fined Harvey
Norman $1.25 million for using
advertising catalogues containing a fine
print disclaimer that the prices in the
catalogue were only offered at one
Harvey Norman store, not all stores
nationwide.
Principle 3
3. Instil a culture of acting lawfully,
ethically and responsibly
Companies should act ethically and
responsibly.
• Acting ethically and responsibly is about
more than meeting legal obligations and
involves dealing honestly and fairly with
suppliers and customers.
• This would include being honest in the
marketing and advertising of products
and services.
Recommendations 3.1 & 3.2
3.1 A listed entity should articulate and
disclose its values.
3.2 A listed entity should:
(a) have and disclose a code of
conduct for its directors, senior
executives, and employees; and
(b) ensure that the board or a
committee of the board is informed of
any material breaches of that code
• The code of conduct should clearly
state the company’s expectation that all
directors, senior executives and
employees will act honestly and with
high standards of personal integrity.
• Good corporate governance depends
on the personal integrity of those on
boards and in management.
• Investor confidence can be enhanced if
the code of conduct clearly articulates
what is regarded as acceptable
business practices for its directors,
senior executives and employees.
Play Video
https://youtu.be/dNCXRw8_7p4
https://youtu.be/dNCXRw8_7p4
https://youtu.be/dNCXRw8_7p4
• Do you agree with Plato’s student Aristotle when he
says:
Small Group Discussion
That which is common to the
greatest number has the least care
bestowed upon it.
William Forster Lloyd, Drummond Professor of Political Economy at
Christ Church, Oxford, has a problem. For weeks now he has
struggled to come up with a suitable metaphor for the over-
exploitation of the world’s natural resources.
He takes a stroll through the surrounding countryside to help clear
his mind and passes by a pasture colloquially called “the commons”.
The pasture is called this because it is common land and local
farmers may bring their cattle to graze there as often as they like. He
notices that “the commons” is currently overcrowded with cattle.
It suddenly occurs to William that “the commons” may somehow be
the metaphor for over-exploitation he’s been searching for.
Small Group Challenge
• In groups, help William come up with a metaphor for the
over-exploitation of the world’s natural resources.
Oxford, England 1833
• The tragedy of the commons is an
economic theory of a situation within a
shared resource system where
individual users acting independently
according to their own self-interest
behave contrary to the common good of
all users by depleting that resource
through their collective action.
• The tragedy of the commons can be
considered in relation to environmental
issues such as sustainability.
• The commons dilemma stands as a
model for a great variety of resource
problems in society today, such as
water, forests, fish and non-renewable
energy sources such as oil and coal.
Ethical and Responsible Action
• Acting ethically and responsibly
includes acting responsibly towards the
environment.
• This would include not only complying
with environmental protection laws but
also following environmentally friendly
practices such as waste minimisation
and energy-saving initiatives.
Code of Conduct
• The code of conduct should clearly
state the company’s expectation that all
directors, senior executives and
employees will comply fully with
environmental protection laws and
follow environmentally friendly practices
and procedures.
• Environmental law prohibits
organisations from:
o causing pollution.
o creating an environmental hazard.
o creating unreasonable noise or
odour that will impact a residential
area.
• Environmental practices create positive
brand associations among consumers,
politicians, and regulators.
• They also anticipate regulatory trends
and position the company favourably
when such policies become law.
• Employees have higher morale when
they believe that what their company is
doing is environmentally friendly.
Play Video
https://youtu.be/6H4gioe5aWI
https://youtu.be/6H4gioe5aWI
https://youtu.be/6H4gioe5aWI
Small Group Discussion
Am I a hero or a traitor?
https://www.google.com.au/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjM_6zSp8rPAhXJrJQKHXy9AX8QjRwIBw&url=http://www.express.co.uk/news/science/608711/Will-NSA-whistleblower-Snowden-release-proof-of-alien-visitations-to-Earth&bvm=bv.135258522,d.dGo&psig=AFQjCNF8IP0zg2m0AqbbbrlgYZe2AdqIKw&ust=1475985210956640
You are studying MBA402 Governance, Ethics and Sustainability at
Kaplan Business School. You receive the following email:
Small Group Challenge
• In groups, decide what you should do about the email.
• A whistleblower is a person who informs
on a person or organisation regarded as
engaging in an unlawful or immoral
activity.
• Whistleblowers may face retaliation
from those they accuse of wrongdoing
including legal action, criminal charges,
social stigma and job termination.
Recommendation 3.3
3.3 A listed entity should:
(a) have and disclose a
whistleblower policy; and
(b) ensure that the board or a
committee of the board is informed
of any material breaches of that
policy
Ethical and Responsible Action
• Acting ethically and responsibly
includes encouraging employees to
report unlawful or unethical behaviour.
• This includes having and promoting an
internal complaints handling system for
effectively managing employee reports
of unethical activity within the company.
Code of Conduct
• The code of conduct should identify the
measures the company follows to
encourage the reporting of unlawful or
unethical behaviour.
• This would include how the company
protects whistleblowers who report
violations in good faith.
• AS 8004-2003 Corporate governance –
Whistleblower protection programs for
entities provides guidance on
whistleblower programs for companies.
• An effective whistleblower program
would need to focus on developing and
implementing anti-retaliation policies to
protect whistleblowers.
• Do you agree with this statement by Ancient Roman
poet Horace:
Small Group Discussion
We are often deterred from crime by
the disgrace of others.
https://www.google.com.au/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwiXld-38srPAhXGGZQKHTDYAjYQjRwIBw&url=http://www.crystalinks.com/horace.html&bvm=bv.135258522,d.dGo&psig=AFQjCNGch_HVEyYTxl13G4j4QrlgZEkbKg&ust=1476005293698840
• In groups, come up with at least two strategies that will deter
parents from collecting their children after four in the
afternoon.
You are the manager of a day-care centre for young children. The
centre is scheduled to operate every day until four in the afternoon,
when the parents are supposed to come and collect their children.
Quite frequently, however, parents arrive late, forcing child care
workers to stay after working hours.
The proprietors of the day-care centre expect you to resolve this
issue.
Small Group Challenge
• Deterrence is the use of punishment as
a threat to prevent people from
offending.
• Research indicates that increasing the
severity of a punishment does not have
much effect on crime, while increasing
the certainty of punishment does have a
deterrent effect.
• In some circumstances, the punishment
can actually encourage the misconduct
it was supposed to deter.
• Care must be taken to ensure any
punishment is not viewed as the price
for non-compliance.
• In groups, think of some punishments
that encourage misconduct.
Ethical and Responsible Action
• Acting ethically and responsibly
includes not only training employees on
behavioural expectations but also
deterring non-compliant behaviour.
• This includes having an effective
system for responding to instances of
unethical behaviour with appropriate
disciplinary action.
Code of Conduct
• The code of conduct should be
reinforced by proper training and
proportionate disciplinary action if it is
breached.
• Forms of disciplinary action include:
o Counselling
o Verbal warning
o Official written reprimand
o Performance management meeting
o Final written warning
o Suspension or demotion
o Termination of employment
• The board of directors should lead by
example when it comes to acting
ethically and responsibly.
• The board should specifically charge
management with the responsibility for
creating a culture within the company
that promotes ethical and responsible
behaviour.
Week 5 Workshop
MBA402 Governance, Ethics and
Sustainability
“Every company has a few skeletons in the closest,” you begin.
“Hmmm… I don’t like where this is going,” interrupts Eric Driscoll,
Meridian’s company secretary.
“Senator Stone broadsided me last week at the Committee hearing with a
fistful of submissions that reflected very poorly on our corporate culture. I
need to know what else he might have up his sleeve so he doesn’t ambush
me again tomorrow.”
“I can walk you through the company’s complaints register,” Eric offers.
“No, I don’t have time for that,” you say, “I need to know about the matters
the company has tried to bury, the ones that can come back to hurt us.”
“Stone mightn’t have anything else. Meridian’s gone to great lengths over
the years to keep its dirty laundry private.”
“Are you kidding me, Eric? Our former board is facing prosecution for
multiple Chapter 7 breaches. A small army of ASIC officers and investigative
journalists are trawling through our garbage with fine-tooth combs. We have
no choice but to assume Stone knows the worst of it, and that means I need
to know the worst of it. Right now.”
Eric scratches his head, “Did Stone mention anything specific?”
You think back to Senator Stone’s closing remarks at the hearing. “Yes, he
said a company’s code of conduct should include its expectations regarding
honesty and personal integrity, environmental responsibility, and a program
for protecting whistleblowers.”
“Ok. Here’s what I think he’s referring to,” Eric says. “Last year Meridian
paid two substantial fines to the government. The first was to the ACCC for
misrepresenting the true price of Meridian services in advertising to potential
clients. The second was for discharging commercial trade wastewater from
one of our commercial sites without a proper authority.”
“What about whistleblower protection?” you ask.
“He must be talking about Brendan Johnson. He’s the internal auditor who
first reported the illegal activities of the former board to ASIC.”
“Please tell me Meridian didn’t fire him.”
“We didn’t. But everyone treated him like a pariah until he resigned.”
You realise you need to draft a revised code of conduct addressing these
issues that will also be strictly enforced…
Group One
In your group, draft a statement introducing the revised
code of
conduct
Focus on the following:
• Explain the concept of honesty
• Discuss how Meridian employees have engaged in
dishonest conduct
• Propose a statement for inclusion in Meridian’s
code of conduct that addresses dishonest practices
Group Two
In your group, draft a statement introducing the revised
code of conduct
Focus on the following:
• Explain the tragedy of the commons
• Discuss how Meridian employees have engaged in
conduct that is harmful to the environment
• Propose a statement for inclusion in Meridian’s
code of conduct that addresses environmentally
harmful practices
Group Three
In your group, draft a statement introducing the revised
code of conduct
Focus on the following:
• Explain what a whistleblower is
• Discuss how Meridian employees have engaged in
retaliatory conduct against whistleblowers
• Propose a statement for inclusion in Meridian’s
code of conduct that addresses whistleblower
protection
Group Four
In your group, draft a statement introducing the revised
code of conduct
Focus on the following:
• Explain the concept of deterrence
• Discuss how Meridian can deter employees from
breaching the code of conduct
• Propose a strategy for enforcing Meridian’s code of
conduct
Group One Group Two
Group Three Group Four
• Deliver your address to the Parliamentary Joint Committee on
Corporations and Financial Services.
By the time you pass through the security checks and enter the hearing
room the members of the Parliamentary Joint Committee on Corporations
and Financial Services are already seated and waiting for you.
Deputy Chair Stone is wearing the same expression of disapproval from
last week.
Madam Chair Allen invites you to address the Committee.
When you finish your address, Deputy Chair Stone is again the first to
speak.
“I have to say I hold a dim view of Meridian’s past dealings and little faith in
the new board and management’s ability to save the company from the end
many of us believe it genuinely deserves.”
His stern words once again make your heart thump.
“But I want to thank you on behalf of the Committee for appearing here
again this morning. I personally appreciate your candour and I sincerely
hope your proposed code of conduct will bring much needed guidance and
certainty to the directors, senior executives, and employees of Meridian
Group.”
You breathe a heavy sigh of relief, “Thank you, Deputy Chair Stone.”
- Ethics – Part II
- COMMONWEALTH OF AUSTRALIA�Copyright Regulations 1969��WARNING�This material has been reproduced and communicated to you by or on behalf of Kaplan Business School pursuant to Part VB of the Copyright Act 1968 (the Act).��The material in this communication may be subject to copyright under the Act. Any further reproduction or communication of this material by you may be the subject of copyright protection under the Act.��Do not remove this notice.
- Slide Number 7
- Slide Number 8
- Slide Number 9
- Principle 3
- Recommendations 3.1 & 3.2
- Recommendation 3.3
- Slide Number 43
- Slide Number 44
- Slide Number 45
- Slide Number 46
- Slide Number 47
The Pen is Blue
Small Group Discussion
Small Group Challenge
Mitey Stuffed Crust
Honesty
Truth in Advertising
Ethical and Responsible Action
Code of Conduct
Personal Integrity
Leonardo DiCaprio
Small Group Discussion
Small Group Challenge
Tragedy of the Commons
Environmentalism
Ethical and Responsible Action
Code of Conduct
Environmental Protection Law
Environmental Practices
Ed Snowden
Small Group Discussion
Small Group Challenge
Whistleblowing
Ethical and Responsible Action
Code of Conduct
Whistleblower Programs
Small Group Discussion
Small Group Challenge
Deterrence
Punishment
Ethical and Responsible Action
Code of Conduct
Disciplinary Action
Corporate Culture
Playtime
– Part I
Week 4 Workshop
MBA40
2
Governance, Ethics and
Sustainability
COMMONWEALTH OF AUSTRALIA
Copyright Regulations 1969
WARNING
This material has been reproduced and communicated to you by or
on behalf of Kaplan Business School pursuant to Part VB of the
Copyright Act 1968 (the Act).
The material in this communication may be subject to copyright
under the Act. Any further reproduction or communication of this
material by you may be the subject of copyright protection under
the Act.
Do not remove this notice.
2
Play Video
https://youtu.be/COlKB2agOts
https://youtu.be/COlKB2agOts
https://youtu.be/COlKB2agOts
• What does US Supreme Court Justice Potter Stewart
mean when he says:
Ethics is knowing the difference between
what you have a right to do and what is
right to do.
• In groups, discuss this dilemma and decide what course of
action to take.
An angry mob armed with machetes are hunting you. They need
only open the door to the second bathroom to find you and seven
other adults crouched together in silence in an area no larger than
12 square feet. The pastor, risking his own life by hiding you in his
home, slides a large cabinet across his living room to conceal the
bathroom door as the men enter his house.
Your newborn baby stirs in your arms and sneezes loudly. She is
going to cry and the men with machetes will hear her. The seven
others, you, and your baby, will all be murdered. Or you could save
their lives and your own by suffocating your child.
Kigali, Rwanda 1994
• People don’t choose to do what is ‘bad’
or ‘wrong’: they choose the ‘good’ or the
‘right’ as they perceive the ‘good’ or the
‘right’.
• Even men with machetes committing
acts of genocide perceive their horrific
actions as a justifiable moral crusade or
the ‘right’ thing to do.
Ethics
• Ethics is the set of principles a person
uses to determine whether an action is
‘good’ or ‘bad’ or ‘right’ or ‘wrong’.
• Corporate ethics examines the moral
and ethical problems that arise in a
business environment and is relevant to
the conduct of individuals and entire
companies.
Principle 3
3. Instil a culture of acting lawfully,
ethically and responsibly
Companies should act ethically and
responsibly.
• Acting ethically and responsibly is about
more than meeting legal obligations and
involves acting with honesty, integrity
and in a manner that is consistent with
the reasonable expectations of
investors and the broader community.
Recommendations 3.1 & 3.2
3.1 A listed entity should articulate and
disclose its values.
3.2 A listed entity should:
(a) have and disclose a code of
conduct for its directors, senior
executives, and employees; and
(b) ensure that the board or a
committee of the board is informed of
any material breaches of that code
• A code of conduct is a set of rules
outlining the social norms and proper
practices of a company.
• The code of conduct should clearly
express the company’s commitment not
only to comply with its legal obligations
but also to act ethically and responsibly.
Play Video
https://youtu.be/uyQwO0GHbWo
https://youtu.be/uyQwO0GHbWo
https://youtu.be/uyQwO0GHbWo
• What does Russian novelist Aleksandr Solzhenitsyn
mean when he says:
Small Group Discussion
The battleline between good and evil
runs through the heart of every man.
• Read the biography about the successful CEO then complete
the survey.
• Discrimination is the unjust or
prejudicial treatment of different
categories of people, especially based
on the grounds of race, age, or sex.
• The Commonwealth Government and
state and territory governments have
introduced laws to help protect people
from discrimination and harassment.
Ethical and Responsible Action
• Acting ethically and responsibly
includes creating a safe and non-
discriminatory workplace.
• This includes ensuring there is no
discrimination involved in:
o Recruitment
o Management
o Termination
Code of Conduct
• The code of conduct should clearly
state the company’s expectation that all
directors, senior executives and
employees will comply with the laws
and regulations that apply to the
company and its operations, including
anti-discrimination laws.
• Age Discrimination Act 2004
• Disability Discrimination Act 1992
• Racial Discrimination Act 1975
• Sex Discrimination Act 1984
• Australian
Commission
Act 1986
Play Video
https://youtu.be/Zy-J2CrNiq0
https://youtu.be/Zy-J2CrNiq0
https://youtu.be/Zy-J2CrNiq0
• What does German playwright Bertolt Brecht mean
when he says:
Small Group Discussion
The law was made for one thing alone,
for the exploitation of those who don’t
understand it, or are prevented by naked
misery from obeying it.
https://www.google.com.au/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjWmOrcu7jPAhXIKpQKHX8AAc0QjRwIBw&url=https://en.wikipedia.org/wiki/Bertolt_Brecht&bvm=bv.134495766,d.dGo&psig=AFQjCNEuaKo9cmwc8VXBveumGaJBHXhfUQ&ust=1475372152528010
• In groups, come up with at least two strategies the Minister
could implement to address the issue of international
student worker exploitation.
The issue of international student exploitation in the workplace is
gaining more and more attention in the press. Fresh evidence is
emerging that many large Australian corporations are systematically
falsifying their payroll records to conceal their practice of forcing
international students to work more than 20 hours a week for less
than the minimum wage. The Minister realises the problem is
underreported because the victims will not admit to breaching their
visa conditions and risk deportation.
The Minister seeks your advice.
Small Group Challenge
The Minister for the Department of Immigration and Border
Protection has a problem…
• Exploitation is the action of treating
someone unfairly in order to benefit
from their work.
• Some companies in Australia are
placing international students in a
position where they are in breach of
their visa conditions and then exploiting
them.
Ethical and Responsible Action
• Acting ethically and responsibly
includes respecting the human rights of
employees.
• This would include not employing forced
or compulsory labour or young children
even where that may be legally
permitted.
Human Rights
• Human rights recognise the inherent
value of each person, regardless of
background, where we live, what we
look like, what we think or what we
believe.
• Human rights are based on principles of
dignity, equality, and mutual respect.
• Human rights are about being treated
fairly and treating others fairly.
Code of Conduct
• The code of conduct should clearly
state the company’s expectation that all
directors, senior executives, and
employees will not enter into any
arrangement or participate in any
activity that would be likely to infringe
upon the human rights of any other
person.
Play Video
https://youtu.be/1hpsJo2Blbc
https://youtu.be/1hpsJo2Blbc
https://youtu.be/1hpsJo2Blbc
• Do you agree with this statement by French Emperor
Napoleon Bonaparte:
Small Group Discussion
Men are moved by two levers
only: fear and self-interest.
https://www.google.com.au/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjIkLDh4LjPAhVDpJQKHc-yBCsQjRwIBw&url=http://yourkamagraguide.com/files7/napoleon-bonaparte.html&psig=AFQjCNEla2jLqjjAYBCxIKV8L3futYH7Uw&ust=1475382087463505
• In groups, consider the merits of the proposal and decide
whether the governors should implement it.
The modern sewers introduced by the French colonial government
now teem with rats. The governors are formulating a novel proposal
to manage the infestation. They are considering offering a bounty for
the rats; they will pay citizens a small sum of money for every rat
killed. To prove a rat kill and claim the bounty a citizen need only
present the dead rat’s tail to the authorities.
The governors like the proposal because they believe it will serve
two interests. Firstly, it will benefit the whole city by eradicating the
rats and, secondly, it will benefit those individual citizens who
participate by providing them a source of income.
Small Group Challenge
Hanoi, Vietnam 1902
• Corruption is a form of dishonest or
fraudulent conduct.
• It is a perversion of proper business
practice and standards.
• An example of corporate corruption is a
company offering a potential client a
bribe or a kickback to secure an
advantage over competitors.
• In 2006, German prosecutors
conducted an investigation to determine
if Siemens AG employees paid bribes in
exchange for business.
• The company was found to have bribed
public officials in Libya, Russia, and
Nigeria in return for the awarding of
contracts.
Recommendation 3.4
3.4 A listed entity should:
(a) have and disclose an anti-
bribery and corruption policy; and
(b) ensure that the board or a
committee of the board is informed
of any material breaches of that
policy.
Ethical and Responsible Action
• Acting ethically and responsibly
includes refraining from activities that
would conflict with the company’s best
interests.
• This would include not using company
property or information for personal gain
and not offering or accepting bribes.
Code of Conduct
• The code of conduct should clearly
state the company’s expectation that all
directors, senior executives and
employees will not take advantage of
their position or the opportunities arising
therefrom for personal gain.
• The code of conduct should also
describe the company’s processes for
preventing the offering or acceptance of
bribes and other unlawful or unethical
payments or inducements.
• This might include how the company
regulates the giving and accepting of
business courtesies and facilitation
payments.
Week 4 Workshop
MBA402 Governance, Ethics and
Sustainability
Ms Sandra Allen, Chair of the Parliamentary Joint Committee on
Corporations and Financial Services, invites you to make your statement.
“Thank you Madam Chair. Meridian Group has implemented a number of
significant reforms in the wake of ASIC’s prosecution of former directors of
our board. We have adopted a board charter, a screening process for new
directors, a diversity policy and a process for evaluating board and senior
executive performance. We have also established a nomination committee,
a board skills matrix, a professional development program for directors, and
we have restructured the board to have a majority of independent directors
with an independent chair.”
“That sounds like a promising start,” Madam Chair Allen says, “Our
investigation into Meridian Group is as concerned with the affairs of the new
board as it is with the old.”
Committee Deputy Chair Senator Michael Stone adjusts his microphone,
“There seems to me to be a broader problem at Meridian that goes beyond
board and senior management structure. What is being done to facilitate a
corporate culture that promotes ethical and responsible behaviour?”
Senator Stone’s question takes you by surprise. “What is it about
Meridian’s corporate culture that is causing you concern, Deputy Chair?”
He places his hand on a small pile of documents.
“A number of submissions made to this Committee paint a very bleak
picture of Meridian’s corporate culture. It appears unethical behaviour occurs
at every level of the organisation. One particularly disturbing submission
comes from an unsuccessful job applicant who was told by her interviewer
she would not be a good fit because she wears a hijab.”
You swallow hard as Senator Stone riffles through his pile.
“There was another one… yes, here it is, the submission from the former
employee. He was an international student forced by his manager to work
twice the hours he was actually paid for.”
“But this one’s my personal favourite,” he declares, “a submission alleging
Meridian employees secure new business from clients by offering them
kickbacks.”
As Senator Stone continues to talk you realise you should not have come
to the hearing without having first prepared a company code of conduct…
Group One
In your group, draft a statement announcing the
introduction of Meridian’s new code of conduct
Focus on the following:
• Explain the concept of ethical and responsible
action
• Discuss Recommendations 3.1 & 3.2 of the ASX
Corporate Governance Principles and
Recommendations
• Propose three things Meridian could do to
implement the Recommendations
Group Two
In your group, draft a statement announcing the
introduction of Meridian’s new code of conduct
Focus on the following:
• Explain the concept of discrimination
• Discuss how Meridian employees have engaged in
discriminatory conduct
• Propose a statement for inclusion in Meridian’s
code of conduct that addresses discriminatory
practices
Group Three
In your group, draft a statement announcing the
introduction of Meridian’s new code of conduct
Focus on the following:
• Explain the concept of exploitation
• Discuss how Meridian employees have engaged in
exploitative conduct
• Propose a statement for inclusion in Meridian’s
code of conduct that addresses exploitative
practices
Group Four
In your group, draft a statement announcing the
introduction of Meridian’s new code of conduct
Focus on the following:
• Explain the concept of corruption
• Discuss how Meridian employees have engaged in
corrupt conduct
• Propose a statement for inclusion in Meridian’s
code of conduct that addresses corrupt practices
Group One Group Two
Group Three Group Four
• Deliver your announcement of Meridian’s code of conduct to the
Parliamentary Joint Committee on Corporations and Financial Services
Deputy Chair Stone finishes his speech about Meridian’s corporate
culture.
Madam Chair Allen invites you to respond.
You drink an entire glass of water and clear your throat…
Deputy Chair Stone appears unmoved by your announcement of
Meridian’s new code of conduct.
He removes his reading glasses and rubs his eyes.
“Your proposed code of conduct seems half-baked and incomplete. A
company’s code of conduct should include its expectations regarding
honesty and personal integrity of the board, senior executives, and
employees. It should also include a statement about environmental
responsibility and a program for protecting whistleblowers. And most
importantly, a code of conduct must contain clear provisions on how it is to
be enforced. Your code does not include these essential ingredients.”
Your chest tightens and your heart thumps in your ears.
“I recommend you appear before the Committee again when we next
convene to explain how your revised code of conduct addresses these
omissions.”
- Ethics – Part I
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- Principle 3
- Recommendations 3.1 & 3.2
- Recommendation 3.4
- Slide Number 36
- Slide Number 37
- Slide Number 38
- Slide Number 39
- Slide Number 40
Social Experiment
Small Group Discussion
Small Group Challenge
Moral Ambiguity
Ethics
Ethical and Responsible Action
Code of Conduct
Brown Eyes
Small Group Discussion
Individual Challenge
Discrimination
Ethical and Responsible Action
Code of Conduct
Anti-Discrimination Laws
International Students
Small Group Discussion
Small Group Challenge
Exploitation
Ethical and Responsible Action
Human Rights
Code of Conduct
Inside Job
Small Group Discussion
Small Group Challenge
Corruption
Bribery
Ethical and Responsible Action
Code of Conduct
Unethical Payments
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