Economy assignment critical review analysis: Australian history
AWB scandal was one of the biggest scandals of the era in Australian history; it showed the worst part of an unethical practice by the governance and its bad consequences to the whole world. It was a scandal of around $221.7 million (USD). That is really a huge amount and could have been utilized for some effective purposes rather than wasting as kickbacks to the Iraqi government. The UN Oil for Food program was being overlooked by the AWB people to make the money and that leaded to the happening of such a huge scandal. Due to this fraud of AWB people, Australian wheat farmers lost the shareholders value and market protection, this is all due to the unethical practices and bad corporate governance of AWB.
Major ethical issue which can be seen behind this scandal are as follows:
- Bad corporate governance: The scandal shows a clear view of the unethical and bad corporate governance system at AWB. The whole system was involved in this scandal and due to that such a huge scandal could occur. It shows that the presence of a good corporate governance system is very much required for the effective and sustainable development of the organization (Klein 1989).
- Unethical practices by AWB: It is an example of unethical practices and its consequences to the common people, shareholders, economy and even to the whole world. This has shown a path of corruption and unethical practices to others. So these kinds of undesirable situations are being encouraged and enlighten by us only. And at last who is going to suffer, and then it’s again we people, who all will be suffering from this. So, it is very important to understand the consequences and then only can we take any action.
- Breaching of laws: US has made the Oil for Food program to make an effective and sustainable relationship between both the economies, and farmers-shareholders values and these people just kept the whole rules and laws beside and moved ahead with their own perspective. This is a huge crime and must be punished to give them lesson that the breaching of law is punishable everywhere.
- Impact on Australian economy: Australian economy was greatly affected by this economy as any scandal in any business in a country shows the ethical practices followed in the country. Economy of a country is reflected by the way its various businesses are being followed in the country.th reputation of a country goes up if a particular business is doing well and on the other hand, it goes down by any scandal. This scandal had a bad impact on the reputation of the country as a whole and it showed that the corporate governance being followed in Australia companies were not ethical, so overall it had a bad impact.
- Fraud with Shareholders: Shareholders lost their belief in the company as they had they invested their money in the wrong company. Shareholders are the one who play a great role in the revenue generation of the company (Ritchie 1988). Shareholders also had a great loss which was major setback for the whole economy as a whole. Shareholders play an indirect role in the success of the company through stock market. Shareholders must be timely informed of the company’s status so that they can have no idea where is the company going where they have invested their money. But this scandal was totally a black day for them as they had to suffer a great loss. Shareholders lost their faith in the AWB and decided not to invest in this company again. This was a direct loss for the Australian wheat farmers to bear the huge loss of shareholder’s value and protection.
- Failure of the system: The scandal was reflection of the whole system corruption, how unethical practices were dominating the whole economy of the country (Ritchie, 1988). Shareholders were cheated, customers were blinded, and in fact the whole country was not having an idea how AWB was earning profit from selling wheat to Iraq. This had bad impact on the whole country’s system as whole. People had a bad perception about the corporate governance and the corrupt practices followed in the country. The CEO and the CFO of the company were undue advantage of company money and showing the wrong balance sheet to the shareholders, other than the senior executives there were other people also involved from middle management, so this was fraud from the whole system-top to bottom.
These are the various ethical issues which can be seen while looking after the outcomes of the AWB scandal. There is involvement of whole system but the main concern is to stop these kinds of unethical practices, which can be possible only by making the whole system transparent and corruption free. Good corporate governance is one of the best ways to stop these kinds of unethical practices in the economy (Klein 1989), but it is again the human being who are the part of governance system, so it is very necessary to understand the impact of these kinds of unethical issue to the world economy and common people. That is really shameful and drastic and must be stopped to make the whole nation and economy transparent and ethical. This scandal could have prevented if there would have proper check on the governing policies, Corporate governance and the ongoing business policies of the company. It was totally immoral to cheat the shareholders, customers and the country as a whole. So such ethical and corrupt practices should be prevented and there should be regular check on the ethical practices of the company.
Utilitarian perspective says that the final action should be taken after what are the various alternatives available for us, how these alternatives and different actions taken will affect different segments, what will be the benefits and the harm done and then a final decision is taken which is beneficial to all (Beach 1993). As a utilitarian, the main concern that may arise is that the course of action that is totally unfavourable and unethical and taken without looking at the consequences that may hamper the whole name and fame of AWB and even it may have a negative impact of Australian economy to the whole world’s economy. Rather than just making decisions and taking action, it is very important to make the strategic analysis and then based upon the findings the action should be taken. Here in this case of AWB, the management took an unethical decision to give bribes to the government of Iraq that is solely unethical and shows the wrong action taken by the management of AWB.
Kantian perspective states that the action must be taken by considering all the terms and conditions of roles and responsibilities which is ethical and for the sake of the common people and economy rather than just for the sake of practical aspects and needs. Here the AWB people did the same if we talk about their doings that shows that they were just avoiding the roles and responsibilities which is assigned to them by the governance system/top management. But they were just influenced with the outcomes of the action. That is really unwanted and not considerable at a larger context, when it comes to the economy.
Undoubtedly, the whole case was a huge scandal and cannot be treated as a small unethical practice, due to its huge impact on the world economy and unethical outcomes and it lead to the various other financial scandals in the world.
Yes, Sara is right that she should not agree with James’ points that this is just a win-win situation for the whole system. But the motive and the practices which is running behind the system also matters a lot. This is not about a city or state or town but here the whole country and economy is being questionable for this unethical practice of AWB, in this Food-for-Oil program. US government had run this program to make an effective relationship with the two economies but the bad corporate governance and the unethical system lead to the failure of the whole system and the programme.
To bypass the system and the ethical aspects is not the final solution but using the ethics and values while taking any action is the best option and that will also help for the long term perspective and sustainability rather than just taking a short cut. So it is better to take a responsible and ethical action based on the strategic analysis and planning rather than just crossing the whole limits and boundaries (Beach 1993).
To perform is good but to perform with ethics and beliefs considering all the system and its aspects is the sustainable performance (Ritchie 1988). Sustainability and competitive advantage is one of the most essential aspect for the long run of business. This could be reached and achieved only by effective implementation of good corporate governance system and ethical business aspects within the organization.
So it is very important for firms to take the action which leads to the sustainable performance and development of the firm rather than just looking after a short term perspective. Even if, the perspective is short term but the practices must be ethical and by obeying all the rules and regulations to make a strong viewpoint for the future context.
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