T2-2014 – BBMM201_Assignment_20% Report plus 10%
T2-2014 – BBMM201_Assignment_20% Report plus 10%
T2-2014 – BBMM201_Assignment_20% Report plus 10% Presentation.docx Page 1
BUSINESS SOCIETY and ETHICS (BBMM501)
Case Study Report
DUE WEEK 6.1
Learning Outcome Assessed: a – e
Weighting: 30% ( Report 20% + Presentation 10%)
Written Report Case Study Analysis (2000 words)
Assessment -2
Ethics, morality and leadership: The Reserve Bank of Australia
The series of corporate scandals and transgressions that have emerged over the last decade,
including those associated with Fannie Mae, Freddie Mac, Alcoa, Enron, HIH, Merck,
Lehman Brothers, Parmalat, Union Carbide and WorldCom, have not only contributed to
global ?nancial crises. They have also raised questions about the quality of corporate
leadership and ethics, and damaged the psychological relationships between such companies
and their multiple stakeholders. Studies of such scandals and transgressions in Australia
suggest that fraud, including corporate scandals and institutional corruption, has cost
the Australian economy dearly.
This is supported by extensive research on corruption carried out by Transparency
International, which targets particular countries in Asia and Africa and their governments for
special attention. In response, many governments and enlightened corporations have
established tighter corporate governance (CG) and personal accountability regulations
and mechanisms, together with a wide range of corporate social responsibility (CSR)
programs. While the former are aimed speci?cally at preventing fraud and other
unethical practices, CSR is primarily intended to enhance corporate reputations through
undertaking socially responsible community activities.
This assignment considers the case of Note Printing Australia a subsidiary of the Reserve
Bank of Australia and claims that it bribed government officials in a number of countries to
secure lucrative contracts to print their currency notes.
You are provided with the Reserve Bank of Australia’s Code of Conduct
http://www.rba.gov.au/about-rba/code-conduct-rba-staff.html
You may also find the following video presentation and newspaper article useful:
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Date : September 15, 2012
Richard Baker, Nick McKenzie and Maris Beck
AUSTRALIA’s corporate watchdog bungled its handling of the nation’s biggest bribery
scandal by failing to interview a single relevant witness and misspelling the lead police
investigator’s name in emails, leaving crucial correspondence stalled or unread.
The Australian Securities and Investments Commission announced in March that it would not
act on a federal police referral to investigate the RBA bank note scandal, despite the AFP and
government lawyers finding compelling grounds to do so.
The Saturday Age can reveal that so strong is the evidence of possible corporate malfeasance
that prior to referring the matter to ASIC, the federal police considered taking the rare step of
getting a special delegation from the Gillard government to investigate corporate law
offences.
ASIC’s failure to conduct the most basic of investigations into the matter has not only
infuriated senior law enforcement sources in Canberra, but left a major part of Australia’s
worst corporate corruption scandal untouched. It has also sparked questions about whether
the intense political sensitivities that could flow from a probe that ensnared top serving and
former RBA officials has influenced ASIC’s conduct.
Liberal MP Tony Smith said he intended to grill ASIC chief Greg Medcraft about the issue,
while independent senator Nick Xenophon questioned ”the extent ASIC has been blindsided
by the fact that these allegations involve subsidiaries of the Reserve Bank”.
”It seems extraordinary that given the seriousness of these allegations and what is at stake
here, that not one relevant witness has been interviewed by ASIC,” Senator Xenophon said.
”This is serious enough to warrant a special taskforce from ASIC.”
A senior legal source aware of evidence implicating some of the directors of allegedly corrupt
RBA subsidiaries Securency and Note Printing Australia said it was ”very strong” and
included the reckless approval of payments to a suspected corrupt arms dealer and to front
companies in known tax havens.
Yesterday The Age revealed that several directors of both companies – including top RBA
officials – were told of explicit bribery and corporate corruption concerns in 2007 but chose
not to call police.
It was revealed in court on Thursday that a corruption whistleblower, former RBA banknote
company secretary Brian Hood, was made redundant in 2008 by top reserve official Bob
Rankin after Mr Hood repeatedly raised corporate corruption concerns.
Australian corporate laws that ASIC ostensibly enforces prohibit victimisation of
whistleblowers or reckless conduct by directors.
ASIC’s task of beginning a probe was made vastly easier after the AFP gave it boxes of
evidence related to possible corporate charges identified during the AFP’s probe of criminal
bribery offences.
T2-2014 – BBMM201_Assignment_20% Report plus 10% Presentation.docx Page 3
But it is understood that ASIC investigators did not question a single director, or interview
any relevant witness, about the material provided by police. Documents obtained by The
Saturday Age under freedom of information laws also reveal ASIC only twice corresponded
in writing with police about the bribery scandal before deciding not to launch a formal probe.
In July last year, a senior ASIC investigator emailed the head of the federal police taskforce
investigating Securency and NPA to seek advice.
”The deputy chair of ASIC has requested that I inquire of the AFP as to the scope of its
investigations and the charges that have been laid before ASIC makes any decision as to
whether we need to investigate anything arising from this matter,” the investigator wrote.
”ASIC would not want to duplicate any work that the AFP has already undertaken so it would
be appreciated if you could assist ASIC in determining whether it should commence any
investigation.” However, the ASIC investigator misspelt the email address of the senior AFP
officer, calling him ”Roland Pike” instead of Rohan Pike.
This meant Agent Pike did not receive ASIC’s initial email.
In the email, ASIC also mistakenly writes that the AFP ”was given delegation by the minister
to prosecute Corporations Act offences as part of their investigation,” despite the fact that this
was not ultimately given to the federal police by the government.
ASIC declined to release the only other piece of written correspondence between it and the
federal police, a series of emails sent in March just before it announced it would not
investigate directors of the RBA firms. While police have charged both Securency and Note
Printing Australia, along with eight former executives, with criminal bribery offences, no
action has been taken against the directors of the companies. ASIC chairman Mr Medcraft
has yet to publicly explain the basis for his decision not to investigate.
An ASIC spokesman told The Saturday Age that a thorough assessment of the material
provided by federal police had occurred before it was decided not to investigate. But he
declined to answer a series of specific questions.
”Should new information come to our attention that warrants further examination, we will
review that in the normal course, but cannot be drawn on the specific circumstances you have
raised,” the spokesman said.
Yesterday, during the criminal committal proceedings of the former banknote executives
charged with bribery, the Melbourne Magistrates Court heard fresh evidence from Mr Hood.
He told the court he was ”surprised” when Note Printing’s Malaysian agent, arms dealer
Abdul Kayum, arrived at his Melbourne office to ”deliver a message” to Mr Hood about what
his $2.2 million commission payment was used for. Mr Hood said Kayum did not use the
word ”bribe” but left ”absolutely no room for interpretation”.
T2-2014 – BBMM201_Assignment_20% Report plus 10% Presentation.docx Page 4
Instructions:
1. Please conduct your own independent research on the topic in addition to the
material provided above. Approach the questions by a) Identifying the key issues b)
Outlining the theories of ethics and discussing the competing arguments as a group,
and c) Making your conclusions giving reasons
2. You will be required to make a presentation to your class during Session 6.1.
3. You must link your discussions to the normative theories of ethics and the course
material. It is not sufficient to just give your subjective opinion.
4. The Answers will account for 20% weighting and your presentation will account for
an additional 10% weighting.
Questions: (40 Marks)
1. Who are the key stakeholders in this case? (5 Marks)
Part A: (15 Marks)
1. Was the action of the NPA in line with its and the RBA’s Code of Conduct.
2. What should the NPA have done when it learned that they would be required to pay a
bribe to do business in Asia?
3. How do you think of the actions of the whistle blower Brian Hood ?
Part B: (10 Marks)
1. How did the RBA react when it was told of possible corruption at NPA
• Cover –up ?
• Was it in the best interest of the public that they should hush things up ?
• What do you think were the other factors
2. Should the RBA have called in the police ?
3. Why do you think they kept it under wraps ?
Part C (10 Marks)
1. What about ASIC – what do you think of their excuse ?
2. What do you think the next steps should be :
• Royal Commission ?
• What about the position of the RBA Governor – Should he have resigned ?
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