Corporate Goverance
Order Description
Assessment Criteria:
• Demonstration of knowledge of the issues and evidence of wide reading to support your analysis
• Demonstration of your ability to apply the knowledge to identify keys issues leading to your recommendations
• Evidence of sound reasoning and the exercise of professional judgement to support your recommendations
• Development and statement of concise recommendations for presentation to the AII
• Overall structure and professional presentation of your report to the ASA
• High quality written communication of concepts and terms in ordinary English as the report will be published on the ASA web site and not all readers can be assumed to be professionally competent in corporate governance
Required
Assume you have been employed as a corporate governance consultant by the Australian Shareholders Association (ASA). The ASA is concerned with the risks associated with investments in corporations that do not have a ‘best practice’ whistleblower policy. In order to minimise this risk the ASA wants to know what are the best-practice contemporary standards for whistleblower policies. Your assignment is to prepare a report to be published on the ASA web site recommending best-practice whistleblower policy for adoption by listed companies on the Australian stock exchange.
In order to assist you in preparing for Assignment 2 you should consider the evidence and issues raised in a number of contemporary cases involving whistleblowers and alleged corrupt payments and practices by Australian companies.
1. BHP-Billiton Whistleblower Case in the USA
It has been reported the US Government paid US$3.75 million to a whistleblower in the BHP Billiton case involving the allegations that foreign government officials were given free trips and other benefits to attend the Beijing Olympic Games in 2008 as an incentive to secure mining rights and access to mineral resources. BHP Billiton paid a US$25 million fine to the Securities and Exchange Commission to settle this matter which was brought to public attention as a result of whistleblower disclosure. News of this payment in the US to the whistleblower has highlighted the lack of any equivalent laws or protections for whistleblowers in Australia.
The article below also outlines allegations in the case involving Dr Kirstin Ferguson who is an independent director of Leighton Holdings (now named CIMIC) and was also the Chair of the Ethics Committee and had overall responsibility for the company’s ethics. In this case the whistleblower allegedly disclosed to Dr Ferguson that the company had been involved in corrupt payments. The result was that the whistleblower was dismissed from the company and it appears Dr Ferguson took no action to protect the whistleblower. The whistleblower has now taken action through the Fair Work Commission and the matter has been settled confidentially. Therefore, we do not have any specific details of this case. However, from the evidence in the public domain it can be seen the company moved to protect its reputation by settling the matter confidentially and reached an undisclosed settlement with the whistleblower.
As a result of this case there has been a call from many of the newly elected Senators and Parliamentarians for reform of Australia’s whistleblower protection regime. For example, Andrew Wilkie the independent MP from Tasmania is quoted as stating: ‘Greater whistleblower protection is one of the building blocks of a healthy democracy and … of a healthy corporate culture.’
https://www.smh.com.au/business/americans-pay-millions-to-whistleblower-at-bhp-we-hound-them-out-of-their-jobs-20160824-gr0b6a.html
2. 2. Foreign Bribery by Australian Companies
Over the last few years there have been a number of high profile Australian public companies allegedly involved in foreign corrupt practices. The Senate is proposing to hold a Committee inquiry into Australia’s corporate crime regulatory and investigative system and will require CEOs of companies involved in allegations to appear and testify. Specific cases mentioned are:
• Tabcorp alleged bribery of a company connected to the sister of Cambodia’s President.
• Leighton Holdings alleged corrupt payments to the Deputy Prime Minister and Oil Minister of Iraq
• Sundance Resources alleged issuance of shares to the son of the President of the Congo
• Snowy Mountains Engineering Company alleged corrupt payments to win a number of contracts in Asia in countries such as Sri Lanka and Bangladesh
Further details of the above cases can be accessed from the links below:
https://www.abc.net.au/news/2016-08-25/labor-to-relaunch-corporate-corruption-inquiry/7783326
https://www.theage.com.au/business/australian-companies-linked-to-bribe-scandals-in-sri-lanka-and-congo-20160823-gqyzlp.html
https://www.abc.net.au/news/2016-08-24/australian-companies-embroiled-in-bribery-scandals/7778324
3. 3. Padbury Mining Company Director Corporate Law Breaches
The Chief Executive Officer and Chairman of Padbury Mining Corporation have both admitted to breaching corporate law provisions relating to director’s duties. Specifically they have admitted to breaching the ‘care and diligence requirements for company directors’ and ‘continuous disclosure obligations’. This case highlights the need for company directors to act ethically and in the interests of shareholders at all times.
https://www.smh.com.au/business/consumer-affairs/padbury-directors-cop-to-asic-breach-20160727-gqet0d.html
https://www.smh.com.au/business/mining-and-resources/asic-investigates-padburys-botched-6b-oakajee-deal-20150623-ghw2s8.html
