Corporate Governance Assignment: Review On Money Laundering Of Westpac
This corporate governance assignment task asks you to consider the impact of business decisions from different perspectives and then write a cohesive argument to support others’ points of view rather than your own. This task is also designed to improve your business research skills. Researching the business environment is an important skill for any manager.
You are required to research a particular problem in sufficient detail to be able to discuss the problem from differing points of view. If you consider differing stakeholders and the impact that the problem will have on them, you will more easily be able to construct different cohesive discussions. The task is more difficult than it sounds because of the limited word count that you are given.
Within this limited word count, you are required to mount a lucid and convincing argument about the topic from two different points of view. Remember these must be different perspectives on the provided case and therefore should have a different expected outcome. As there are two different expected outcomes, there will be different discussions that lead to that outcome.
As this is an academic piece within a different format in-text citations are not required, however (and this is important), you must include a bibliography. A bibliography includes all places where you have found information about the topic, even if you have not included any specific information in your work.
The topic: Westpac has been in the news recently regarding the millions of alleged breaches in relation to money-laundering transactions.
Westpac CEO Brian Hartzer dramatically resigned in early December 2019 and the Chairman of Westpac Lindsay Maxsted will also stand down from his position early. The bank has drawn public criticism for paying Hartzer $2.69 Million on his departure. In your editorials, you must consider the executive remuneration issue from different ethical/moral perspectives (e.g. take one position from a wider community perspective, and a contrasting position from a business/shareholder perspective).
Assignment details: Write two editorials (500 word limit for each editorial), one for each of two different media outlets that have different readerships, owners and perspectives (for example, if you choose print media, your two editorials might be for “The Courier Mail” newspaper and the “Australian Financial Review” newspaper). You do not have to restrict your choice of media outlet to print, you may choose digital media platforms such as news blogs and similar. You may, as an example, choose one editorial to be written for a print medium such as the “Australian Financial Review” and your second editorial for the web news outlet “Huffington Post Australia”. Each media outlet you choose must have a different audience and should be owned by different stakeholders. You will need to research the style of editorial/opinion pieces that each of your media outlets provides and prepare your own editorials accordingly. These outlets have different concerns and points of view and you are expected to write each editorial giving regard to these differences.
Impact of Money Laundering on Community
The research on corporate governance assignment signifies that Westpac is the second largest bank in Australia and was charged against anti-money laundering laws for approximately 23 Million in Dec 2019. The bank has received public criticism for remunerating the CEO$2.69 million for 12 months. This article emphasizes the money laundering of the Westpac and high remuneration paid to Hartzer for resigning.
Banks are the most trusted institutions as they support financial activities for small business units, individuals, and charities. However, the money laundering of 23 million has questioned the operations of trusted financial institutions. The article discusses international transactions from 2013- 2018 related to child exploitation and terrorism. It is estimated that the bank earned profits of $2 million from the transactions that occurred from the internal payments of recurring and government pensions of many individuals and corporates residing in Australia.
The banks are the most trusted institutions and people keep their hard-earned money, pensions, assets,payments, and financial resources with the banks. Westpac is the second largest bank; thus, the money laundering has impacted the trust in the financial institutions. It is surprising for the people to know that despite this scandal, the CEO was paid such a high amount. It is questionable how will the bank pay recurring deposits and pensions to the individuals and corporates. The people that are dependent on the pensions and deposits will be greatly impacted by this remuneration. The company is charged with a penalty of A$21 million thus the deposits of the public are at risk. In history, money laundering and law breaching by banks has impacted the public to a large extent. It is reported that many small businesses and independent units will collapse due to this law breach.
The charities that are dependent on the investments by such largest banks have decided to keep a check oninstitutions as they will not collaborate with any holdings that have detrimental impacts on the society and environment. The management has paid high remuneration due to which funds invested by the Australian Communities Foundations are at risk. The foundations have claimed that it raised $110 million in funds for community development in Westpac. Furthermore, the distrust on banks will encourage individuals to indulge in black money. Thus, the government will not be able to keep track of the transactions and earnings of small business units and individuals. Banks enable the government to check and supervise the black economy. However, if the customers do not keep their deposits with the bank, black money might increase in the economy. Thus, this will also increase criminal activity in the economy. It is reported that loss of morale increases due to which the business units will similarly earn profits with that of criminals. The workers losing on their pension will prone them to involve in drug scandals and other crimes of the society. Strict scrutiny should be done on frequent intervals to protect harm to the community.
Chanticleer. (14 Dec, 2019). Westpac scandal means new banking paradigm. Australian Financial Review.Retrieved from [https://www.afr.com/chanticleer/westpac-scandal-means-new-banking-paradigm-20191213-p53jtj]
Impact of Money Laundering on Business and Stakeholders
Westpac one of the largest banks was accused of breaching money laundering laws due to which the company will be fined for each of the breaches. Westpac failed to showcase reports transactions of more than 19.5 million for six years. The board of directors has decided to change their management team due to which CEO Hartzer was remunerated AU$2.7 Million as a salary for 12 months.
On responding on the remuneration of its CEO, the board directors stated that Hartzer was paid for 12 monthsexcluding short- and long-term bonuses. Even after changing the management team, the company has lost its trust and goodwill amongst all its stakeholders. This is going to impact the investments that big companies, governments, and small companies deposit in Westpac. Westpac will heavily be fined for breaches and the bank is expected to pay approximately $US33O trillion. The bank will face issues in repaying public deposits and pensions. The director has claimed that the breach will impact the business in the long run. The acting CEO revealed that it's banking in the royal commission will be blocked for 18 months until all the charges are cleared by the banks. Many of the investors have already drawn their investments to avoid social and environmental impacts from the money laundering case of Westpac. Additionally, the shares of the company dropped by 3.3% in Sydney ratings after this breach. It is speculated many investors and business units will incur losses due to this breach while it will also be affecting the saving habits amongst the general public. The bank is a big financial institution due to which the media reports have published many aspects of money laundering by the bank. It was reported that the transactions involved online foreign transfers from nations like Iraq while Westpac is alleged in encouraging foreign transfer by the child abuse contractors.
The goodwill of the company in the market and on its shareholders have drastically declined due to which the business of Westpac will be impacted to large extents. As mentioned, many charitable trusts and renowned institution will not collaborate with such financial institutions. The company is in the deep grave but the CEO has been given good remuneration for causing this loss. The stakeholders and directors should consider that high remunerations will impact repayments to its various customers.The directors have claimed that it is only the salary that is given to Hartzer, however, one can imagine how much Hartzer would gain if incentives and bonuses were included. This scenario has questioned the existence of financial institutions in the world. Many reports have been filed regarding illegal money laundering of big finance houses that operate worldwide.After the allegations of AUSTRAC, Hartzer claimed that the matter was overcooked. However, paying a pension to its customer was more essential than paying such high remuneration to the alleged CEO. Directors and governments should conduct internal and external audits more frequently to avoid detrimental impacts on the business as well on the communities.
Kaye, B. (26 November 2019). CEO of Australia's Westpac exits over money laundering scandal. Corporate governance assignment Reuters. Retrieved from [https://www.reuters.com/article/us-westpac-regulator-ceo/westpac-ceo-resigns-as-money-laundering-scandal-rocks-australias-second-biggest-bank-idUSKBN1XZ2FH]