The AWB Scandal - Violation of Ethical Principles, Morality, and Leadership - Case Study Example

Ethics, Morality and Leadership: The AWB Scandal Name Course Name and Code Instructor’s Name Date Violation of Ethical Principles (AWB and Australian government) The AWB scandal is regarded as a scandal of global magnitude, for instance, the company paid heavy monetary bribes to Iraq Government something that was in contradiction to the regulations set out in the Oil-for-Food Program established by the UN. The establishments of the Cole Royal Commission that comprehensively investigated this scandal have it that AWB and Australian government gravely violated the business ethical code of conduct in their operations. The company’s ventures were masked with numerous malpractices including bribes, deceit and inhumane acts. There was regulatory failure on the part of the government that allowed and facilitated corruption and fraudulent acts at AWB. This section discusses the acts of ethical violations with regard to Australian Wheat Board and the Australian government in the event of Oil-for-Food Program. Australian Wheat Board Winning of contracts: the Cole commission established that the Australian wheat Board paid large amounts of kickbacks to Iraq government representatives in order to ensure continued wheat supply, notwithstanding that they were acting contrary to the Australian government legislation and United Nation’s Oil-for-Food program regulations (Parker, and Evans, 2007). The use of bribery in order to win wheat export contract was automatically unethical. This is clear evidence that the company executives were involved in winning contracts carelessly without carefully determining the legality and morality of what they were paying for (Overington, 2007). Similarly, among the approximately over 3000 companies that had contracts with Oil-for-Food program to supply food commodities to Iraq, none of them had paid bribes like AWB. Accordingly, AWB executives dealt directly or indirectly with the Iraq government officials; for example, when AWB paid US$500,000 into the Jordanian account owned by Alia; a transport company, the Canadian Wheat Board was told to pay US$700,000 into the same account by the Iraq government officials. This clearly shows that despite of the UN regulations that food suppliers should not involve the Iraq government in their business; AWB still went ahead and breached this initial requirement thus violating the UN trade sanctions on Iraq. The AWB’s executives together with government officials heading large government organizations conspired to fraud the company shareholders. They were deceitful in their undertakings, only focusing on obtaining fraudulent benefits from shoddy deals. They wholly failed all tenets of corporate governance of AWB while at the same time falsifying every detail of their corrupt deals in order to escape personal accountability (Overington, 2007). In the same line of argument, their deals tarnished the image of the company in the national and global arena. The company was displayed as one that is not socially responsible transgressing all requirements of business ethics and business morality. This corporate scandal similarly, cost the Australian image on a global perspective; for instance, the country’s rank on the Transparency International Corruption Index to fall from 9 to 11. The actions of AWB’s executives were significantly unethical. Given the fact that AWB was the sole company responsible for marketing and exporting Australia’s wheat: the major export commodity for the country, it gravely deed more harm than good. AWB’s structure allowed the manifestation of corruption, for instance, all the Australian wheat exports were channelled through AWB in what was termed as single-desk export authority, which gave the company bureaucratic power that helped it in perpetuating its illegal and corrupt deals (Parker, and Evans, 2007). Accordingly, the company used these extreme powers to defraud its shareholders out of their financial investments together with profits as well as tarnishing Australia’s trade reputation across the world (Overington, 2007). This was immoral and unethical on the part of the company; it should have acted in the best interest of the shareholders and the country at large. The failure of AWB to have an internal audit entity that could have governed the way money flows in and out of the company were a recipe for illegal and unethical dealings. This allowed AWB top management to engage unethically in activities that would later hurt the image of the company (Overington, 2007). Similarly, it allowed them to compromise their leadership principles negating to accomplish their leadership duties as required and indulging in corrupt and fraudulent undertakings. These leadership shortcomings was unethical and failure on the part of AWB executives (Bartos, 2006). In this regard, it allowed them to cover-up their unethical behaviour and putting the company in a vulnerable position in the national and global face. Australian Government From the introduction above, it is established that the Australian government negligence to monitor sufficiently AWB’s activities, largely contributed to the social ills that were committed by AWB. First to mention, the latter is a government organization that ought to have been well managed to ensure that all activities of the organization are ethical and up to the required standards (Botterill, 2012). This case exhibits a governmental corporate culture, which significantly displays a plethora of organized and systematic regulatory, and policy failure, which vastly influenced AWB’s unethical decision-making. In accordance with the above government complicit, the Cole Enquiry established that the government was non-committal in ensuring that AWB’s activities are checked and monitored accordingly. For example, when the government received tip-offs that AWB was continuously paying kickbacks to the Iraq government in order to secure a lasting wheat export contract, it could have promptly initiated an inquiry to establish the facts and similarly stop the company from these illicit activities. The government ministers and top government officials were aware of the company’s fraudulent activities and never took any action to ensure that these fraud-stars are brought to justice (Botterill, 2012). The complicity of the government in this matter was extremely unethical and unwarranted. AWB and Australian government actions that would have prevented corruption accusations Harris and Hartman (2002) established that it is common knowledge that conventional criminals consider it normal to utilize any instrument to perpetuate a crime; therefore, it would seem normal for companies and corporate organizations to utilize the organization itself to acquire money from the victims by way of its deviant behaviour (Miller, et al, 2011). Similarly, these victims are varied whereby they can be members of the organization or customers (Knapp, 2010). The Australian ought to have known this in the first instance and come up with corporate regulations that will ensure standardized ethical and moral operations of all corporate institutions within the country (Bartos, 2006). In the same line of argument, the government should have ensured that corporate activity monitoring regulations are in place and must be followed to the latter by any company operating within its borders. When the government first received the tip-off that AWB was fraudulently extending its wheat export contract with regard to the UN’s Oil-for-Food program, it should have acted immediately by investigating those allegations (Miller, et al, 2011). In accordance with this, they could have established the facts and put a stop AWB’s corrupt activities thus ensuring that the company acts ethically (Knapp, 2010). Given that AWB was a government organisation, the government could have acted better in monitoring its operations. Furthermore, the government should have formulated ethical code guidelines that each company within the country should use in developing their ethical codes that must always be observed by all company employees (Knapp, 2010). Similarly, individuals recruited to head government corporations, their conduct must be evaluated to ensure that they less enticed to commit illegal and unethical crimes. They should be people with high moral standards to take care of the corporation and the country image at large. Vetting of AWB leaders could have helped vastly in averting the scandal and saving the country’s face from the global public. It was up to the government to monitor all the corporate export activities, overseeing how foreign export contracts are brokered and acquired. Export regulations should have dictated that any company with export dealings deal legally upholding all the ethical standards accepted on the global market (Knapp, 2010). In this regard, they should have ensured that AWB adhere to global corporate governance together with global corporate ethics. Steps AWB should put in place to avoid such scandals in future In order for corporate governance to succeed, it is vitally important that all stakeholders are accountable in ensuring that the company acts in the best interest of its stakeholders. For the case of AWB, the following steps must be put in place for proper corporate management, corporate ethics and sound corporate leadership to be adhered to: The company board of management should closely work with company management continually asking the executives how the organization operating. For this matter, the profitability of the company will be established, and similarly, if there are any issues with regard to the company’s operations it will also be determined (Parker, 2007). This will ensure that vigilance prevails and thus abolishing chances for fraudulent activities. The AWB’s written code of ethics must be supported by the board, which must also ensure the code is followed from the topmost managers of the company to low-level managers. Arguably important, any clash between the ethical code of conduct and the company’s corporate culture it is automatic that unethical activities are likely to prevail (Parker, 2007). For this matter, the company’s code of ethics must be in line with its corporate culture. In the same line of discussion, the company should have a distinction with regard to whom the company should serve and who it should not. Following this argument, AWB is not to blame for its esteemed desire to serve its wheat-grower client base; however, this meant hurting the interests of others together with organization’s interests in the end (Parker, 2007). The AWB’s board need to be diverse; for instance, in its background, views and expertise. The board should be fully functional in order to ensure consistency and effective company operations. Irreconcilable conflicts should aptly be solved thus establishing a unified AWB workforce that has a common mission and vision for the company (Parker, 2007). Conclusion Corruption together fraudulent acts of any company render it unethical. The government by no means has an obligation by formulating corporate regulations that govern the operations of all corporate organization operating within its borders. The case of Australian Wheat Board (AWB) exhibits a scenario where company executives did what they wanted to do when they deemed it right to themselves without considering the implication of their actions to the company’s future. Engaging in bribery and paying kickbacks to the Iraq government in order to secure lasting wheat export contracts contravened the global corporate governance together with global corporate ethics. It is also important to mention that the Australian government negligence in monitoring this company’s corporate activities even after receiving information that the company was involved in illicit corporate activities helped in perpetuating corruption at AWB. The government should have acted in the best interest of its larger public and saving its face in the global corporate atmosphere. There are steps explained above that will ensure that the corruption and illegal activities that were experienced at AWB do not recur. Bibliography Bartos, S. 2006. Against the Grain: The AWB Scandal and why it happened. University of New South Wales Botterill, L. C. 2012. Wheat Marketing in Transition: The Transformation of the Australian Wheat Board. London: Springer, p.108 Clegg, S. R. 2009. SAGE Directions in Organization Studies. Sydney: SAGE, p. 220 Harris, J. O., and Hartman, S. J. 2002. Organizational behaviour. New York: Best Business Books Knapp, M. C. 2010. Contemporary Auditing: Real Issues and Cases. Washington: Cengage Learning, p. 457 Miller, P. F., Vandome, A. F. and McBrewster, J. 2011. AWB Oil-for Food Scandal. Sydney: VDM Publishing Overington, C. 2007. Kickbacks: Inside the Australian Wheat Board Scandal. Melbourne: Allen & Unwin Parker, C., and Evans A. 2007. Inside Lawyers’ Ethics Parker, D. 2007. Australian Institute of Management: Management Today article. 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