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Table of Contents
Introduction ............................................................................................................................................ 3
Answer 1 ................................................................................................................................................. 3
Answer 2 ................................................................................................................................................. 5
Answer 3 ................................................................................................................................................. 6
References .............................................................................................................................................. 8




















Introduction
This assessment is centred on a case study involving AWB scandal where the organization
indulged in paying huge amounts of kickbacks to secure its wheat export contracts with Iran.
In context of this case study, the assessment seeks to critically discuss and provide answers to
questions which have been posed by the case study.
Answer 1
The case study indicates several actions undertaken by AWB and the Australian government
which stringently violated the principles of ethics and morality. The greatest unethical and
immoral action was undertaken by AWB by paying large amounts of kickbacks to
government representatives in Iraq in order to ensure that they remained primary wheat
suppliers to Iraq and majorly benefited from the Oil for Food program as established by the
United Nations. This caused them to pay approximately US$ 300 million in kickbacks. AWB
in Australia acts as a single desk wheat export authority in Australia which was established in
order to help Australian farmers sell their produce in global markets. In order to be able to do
this, Australian farmers are required to pay a fixed amount to AWB. In this context, AWB’s
action could be deduced as robbing farmers in their own country and transferring wealth to
Iran in order to secure their own profits. This action could also be considered unethical and
immoral as this might have helped Iran acquire military power to disrupt the world. The Oil
for Food program was established by the United Nations in the year 1995 in order to allow
Iran to sell its oil produce in global markets in exchange for medicines, food and other
humanitarian substances without being able to boost its military capacity. However kickbacks
payed in order to secure profits might have allowed Iran to fuel its military developments.
Thus, this action undertaken by AWB might have made a direct contribution in harming
hundreds of innocent people (Aguilera & Jackson 2010).
Another unethical and immoral action undertaken by AWB can be cited in the form of
missing internal audit procedures. Scope of internal audits in any organization is broad and
includes managing control over operational effectiveness, maintaining reliability in financial
reporting, ensuring that the organization complies with rules, regulations and laws of the state
and the nation. Most importantly, internal audits are responsible for identifying and
preventing the organizations involvement in any potential fraudulent activity. In this case,
AWB completely skipped internal audit procedures (which are mandatory) thus allowing it to
openly indulge in fraud and transfer’s their nation’s wealth to Iran for their own profits
(Harjoto & Jo 2011).
Even when the Cole Inquiry was established to investigate AWB’s actions, the organization
instead of admitting their fraudulent activities and compensating farmers who lost money
owing to the fraud, tried its best to cover up the fraud. When asked about the hefty kickbacks,
representatives of the organization merely replied by saying that they were unaware of the
payments made. This action can be recognised both as unethical as well as immoral as the
organization can be seen shying away from its responsibilities towards the community.
According to the theory of corporate citizenship, an organization is a part of the community
and is responsible for maximizing returns of its stakeholders and giving back to the
community. In this case, AWB only cared about its own interests and did not even
acknowledge the fact that it had done anything wrong. This action is also unethical in nature
as it severely affected Australia’s reputation globally. Australia’s ranking on the transparency
index fell from 9 to 11 and AWB made no attempts on its own to make up for this damage
(Van Ees et al 2009).
Falling in line with AWB, the Australian government also made no attempts to stop the
fraudulent activity. Cole Inquiry report suggested that there were several warnings of
unethical practice carried out by AWB. The government however chose to keep quiet and not
take actions against AWB. This could be equated to supporting AWB in robbing Australian
farmers to ensure that wheat export contracts stayed with Australia (Brammer et al 2012).
It has also been pointed out that since kickbacks demanded by bureaucrats in Iran were quite
high, it is not possible that government officials in Australia were unaware of the ongoing
transactions. Thus, it is also possible that a few government officials had their own share in
these ongoing transactions. This move can also be considered as both unethical and immoral
in nature and can directly be equated to cheating. These government officials could be filling
their own pockets in the name of doing well for their country by maintaining wheat exports.
Lastly, it might also be argued that they were completely aware of the fact that their actions
might serve to damage the reputation of their country and this did not stop them from
indulging in fraud (Brammer et al 2012).
Answer 2
Several things could have been done in a different manner both by AWB and by the
Australian government in order to avoid these allegations of corruption. First, AWB should
not have participated in paying kickbacks when demanded in order to secure contracts. Since
Iraq was a huge market with great potential for AWB exports, AWB was desperate to keep
contracts with it and not lose them to U.S or Canadian competitors. Under these
circumstances, AWB might have reported the issue to United Nations and should have
ensured appropriate actions were taken. Once AWB indulged in making a kickback payment,
it became a vicious circle and they had to do this every time. If they had reported the issue to
United Nations the very first time, they would have indulged in fair competition enabling
them to be praised for their actions rather than being criticised (Aguilera & Jackson 2010).
Additionally, AWB should have established an internal audit commission which would have
been able to advise the management on ethical decision making and compliance with rules
and laws. The internal audit would have been able to guide the company officials that
indulging in kickback payments is unethical in nature and this should not be done (Aguilera
& Jackson 2010).
AWB should also have established training procedures in order to educate employees on
corporate ethics and generate responsibility towards framers and their own country. By
looking at the case study, it is evident that managers and decision makers in the organization
had not been trained in corporate social responsibility. Under these circumstances, it would
have helped if training procedures had been in place. The training procedures would also
have helped the organization justify that they care for the community they carry out their
business activities in (Spitzeck & Hansen 2010).
Lastly, AWB should not have made attempts to cover up their actions by saying that they
were unaware of the payments made. Rather, they should have taken responsibility for their
actions and should have initiated strategies to undo the damage caused. This might have told
the community that they care and might have helped in controlling anger of the community
thereby reducing allegations of outright corruption (Spitzeck & Hansen 2010).
The Australian government on the other hand should have increased liability of the
organization towards the community by making the contract procedure more transparent to
the community. AWB should have been urged by the Australian government to indicate
methodology adopted by it to secure contracts with Iran. AWB should also have been urged
to share the contract procedure with United Nations thereby further promoting transparency.
Alternately, the Australian government could also have requested representative from United
Nations to oversee the contract signing procedure. This would have served a great deal in
avoiding allegations of corruption (Spitzeck & Hansen 2010).
Further, the Australian government should have exercised a tighter control on its own
officials so that they do not indulge in personal profit making. Also, government officials
should have reacted to complaints and suspicion against AWB when they first arose. This
would have enabled the government to curb corruption at the very beginning and such a
scandal would not have arisen (Siddiqui 2010).
Finally, the Australian government should have approached United Nations and notified the
same about demands made by Iran. With the help of these measures, corrupt practices would
have been eliminated at the very beginning. This would not only have avoided allegations of
corruption but would also have served to protect the government’s reputation in the
community as well as globally (Siddiqui 2010).
Answer 3
In order to minimise the risk of future unethical practices and enhance its reputation, AWB
needs to put several measures in place. First internal meetings need to be held involving all
individuals who might have a say in the manner in which AWB functions. Managers of the
organization need to be consulted as they would be aware of exact procedures and loopholes.
Areas of improvement need to be specifically highlighted and improvement proposals need to
be created and implemented (Christopher 2010).
Decision makers need to ensure if a manual governing company relation with the community
is available, is up to date and is followed. If not, a manual for governing company relations
needs to be created and this manual needs to clearly lay out expectations of the organization
from all its employees including members of the senior management. Responsibilities of
owners, decision makers and managers need to be clearly indicated so that other employees
can keep a check on fulfilment of these responsibilities. Employees should be allowed to
make their contributions towards creation of this manual by allowing them to provide
improvement suggestions. Alternately, if such a manual is available, it needs to be thoroughly
discussed within the company and its implementation needs to be ensured (Christopher
2010).
AWB needs to enhance transparency of its procedures in order to win back public trust. For
this purpose, corporate rules need to be disclosed to all stakeholders of the firm. These rules
and regulations can also be placed on the organization’s website in order to ensure that the
organization complies with them (Jensen 2010).
An internal audit commission needs to be established in order to regularly monitor the
behaviour of the organization and decision makers within the organization. This would help
in ensuring that the company does not engage in fraudulent activities henceforth (Jensen
2010).
In order to improve the organization’s reputation in public and globally, a public apology
might be issued stating that the organization seeks to bear complete responsibility of its
actions and ensuring the community that such a scandal would be discouraged in the future.
AWB might also set up an internal inquiry in order to pin point the names of all officials who
might have been involved in the scandal. These officials might be suspended and penalised.
The organization might also initiate to end corruption by writing a letter to the United
Nations and disclosing the names of all Iranian officials who have been demanding money in
order to secure contracts. AWB might also look forward to publish these actions in the local
media and in international publications (Jo & Harjoto 2011).
Damage done to the reputation of the organization as well as to the nation as a whole is huge
and this would take time to recover. However if the organization vows to refrain from
fraudulent practices in the future and genuinely make an attempt to enhance its reputation, the
damage would be recovered over a course of time. Additionally, the organization would have
to take care of the fact that any further negative publicity might cause an irreparable damage
(Jo & Harjoto 2011).




References
Aguilera, R. V., & Jackson, G, 2010, Comparative and international corporate
governance, The Academy of Management Annals, vol 4, no 1, pp 485-556
Brammer, S., Jackson, G., & Matten, D, 2012, Corporate social responsibility and
institutional theory: New perspectives on private governance, Socio-Economic Review, vol
10, no 1, pp 3-28
Christopher, J, 2010, Corporate governance—A multi-theoretical approach to recognizing the
wider influencing forces impacting on organizations, Critical perspectives on accounting, vol
21, no 8, pp 683-695
Harjoto, M. A., & Jo, H, 2011, Corporate governance and CSR nexus, Journal of Business
Ethics, vol 100, no 1, pp 45-67
Jensen, M. C, 2010, Value maximization, stakeholder theory, and the corporate objective
function, Journal of applied corporate finance, vol 22, no 1,pp 32-42
Jo, H., & Harjoto, M. A, 2011, Corporate governance and firm value: The impact of
corporate social responsibility, Journal of Business Ethics, vol 103, no 3, pp 351-383
Siddiqui, J, 2010, Development of corporate governance regulations: The case of an
emerging economy, Journal of Business Ethics, Vol 91, no 2, pp 253-274
Spitzeck, H., & Hansen, E. G, 2010, Stakeholder governance: how stakeholders influence
corporate decision making, Corporate governance, Vol 10, no 4, pp 378-391
Van Ees, H., Gabrielsson, J., & Huse, M, 2009, Toward a behavioral theory of boards and
corporate governance, Corporate Governance: An International Review, vol 17, no 3, pp
307-319