Business Case Studies,Corporate Governance & Business Ethics Case Study, Flour Corp's Business Ethics Practices: Creating Six Sigma Standards in Staying Corruption-Free

Code : GOV0009

Year : 2004

Industry : Banking, Insurance and Financial Services

Region : Australia

Teaching Note:Not Available

Structured Assignment :Not Available

<< Previous

Introduction: FromJanuary throughMay 2004, NationalAustralia Bank Ltd (The National or NAB) went through the worst crisis in the Bank’s 147-year history.Amajor forex scandal cost the Bank Aus$360 million (pre-tax).3 Investor confidence took a beating as they recalled Barings Bank collapse of 1995 due to rogue trading. Share price dipped and led to an erosion of around $710million in the Bank’smarket value.4 Standard &Poor’s lowered The National’s credit rating fromthe earlierAAtoAAminus.5 Following the scandal, the Bank decided to raise $3 billion6 (including equity and subordinated debt) to meet the prudential requirements.

But what started as a scaminvolving four rogue traders evolved into a personal level battle in the boardroom resulting in a major overhaul at the board. Focus shifted from risk management and financial controls to boardroominfighting. It led to the resignation of the chairman CharlesAllen as well as the managing director Frank Cicutto. CatherineWalter, chairman of theAudit Committee, was held partly responsible for the failings that led to the scandal...