Awb Scandal - Bad Apples or Bad Barrels?
Executive Summary
Organisational factors or ‘bad barrels’ are said to have instigated many occurrences of corporate corruption and deviant behaviour (Wharton 2002, p 2), involving large numbers of active or passive participants; these are ‘rarely the result of a few bad apples’ (Murphy 2007, p 7). The AWB case is a clear example of corporate culture and other systemic failures influencing and defining an organisation’s decision making and its ethical posture.
This report addresses the underlying organisational causes of the AWB scandal, whereby AWB paid kickbacks to Iraq in defiance of the rules of the Oil-for-Food programme, instituted by the United Nations (Cole 2006) In so doing, it will consider the evidence and conclusions presented in the Cole inquiry, a Royal Commission established to investigate the conduct of several Australian companies in relation to the program.
The questionable Utilitarian approach of ‘seeking the greatest good for the greatest number of people’ (Kay 1997, p 1) assumed by AWB itself and its Board, is analysed in this report. It draws attention to the underlying shortcomings in both corporate governance and culture, which play a significant role in allowing or precluding the occurrence of unethical activities. Further, the inaction from DFAT and Australian government in investigating claims against AWB highlights the systemic failures that permitted AWB’s unethical behaviour.
The key causes of and influences on unethical behaviour ascertained from this report are:
• An organisation’s strong profit driven demand to meet financial or business objectives, promoting tolerance for illegal acts
• A culture of ‘getting the job done’ (Overington 2006, p 1), where corrupt acts are justified under the proviso that the greatest good will be achieved for the company
• Lack of control mechanisms and moral agents in both corporate and public sector governance, and
• The dominance and control of organisation’s operating as a monopoly; allowing
Organisational factors or ‘bad barrels’ are said to have instigated many occurrences of corporate corruption and deviant behaviour (Wharton 2002, p 2), involving large numbers of active or passive participants; these are ‘rarely the result of a few bad apples’ (Murphy 2007, p 7). The AWB case is a clear example of corporate culture and other systemic failures influencing and defining an organisation’s decision making and its ethical posture.
This report addresses the underlying organisational causes of the AWB scandal, whereby AWB paid kickbacks to Iraq in defiance of the rules of the Oil-for-Food programme, instituted by the United Nations (Cole 2006) In so doing, it will consider the evidence and conclusions presented in the Cole inquiry, a Royal Commission established to investigate the conduct of several Australian companies in relation to the program.
The questionable Utilitarian approach of ‘seeking the greatest good for the greatest number of people’ (Kay 1997, p 1) assumed by AWB itself and its Board, is analysed in this report. It draws attention to the underlying shortcomings in both corporate governance and culture, which play a significant role in allowing or precluding the occurrence of unethical activities. Further, the inaction from DFAT and Australian government in investigating claims against AWB highlights the systemic failures that permitted AWB’s unethical behaviour.
The key causes of and influences on unethical behaviour ascertained from this report are:
• An organisation’s strong profit driven demand to meet financial or business objectives, promoting tolerance for illegal acts
• A culture of ‘getting the job done’ (Overington 2006, p 1), where corrupt acts are justified under the proviso that the greatest good will be achieved for the company
• Lack of control mechanisms and moral agents in both corporate and public sector governance, and
• The dominance and control of organisation’s operating as a monopoly; allowing
References: Coghlan, I.A and Dunlop, ER. 2006 ‘The Ethics of International Trade: An examination of the Australian Wheat Board Scandal’. International Journal of Business Research, Volume V, Number 1, Darley, J.M Kay, C.D. 1997 ‘Notes on Utilitarianism’, Wofford College, January 20 Marr, D & Wilkinson, M 2006 ‘They backed the scam to the bitter end’, Sydney Morning Herald, April 16th The Australian, 2006 ‘Time to account for AWB scandal’, Editorial, September 20 Verschoor,C 2006 ‘Strong ethics is a critical quality of leadership’, Strategic Finance, January 2006, p Wilkinson M. 2006 ‘AWB relied on Foreign Affairs, inquiry told’, Sydney Morning Herald, February 1