Read the brief AMP case (see below) from the start of chapter 5 (Shaw et al., 2021, p.159)

Answer these critical reflection questions:

1.) At the start of this chapter was a case study concerning AMP and how it misled the corporate regulator. Based on what you read, list some examples of the ways accountability degraded at AMP?

2.) What is the primary obligation of a corporation? Is it to make money for its shareholders or is it to look after its communities?

3.) If the primary role of corporations really is to make money for its shareholders, wasnt AMP doing the right thing in misleading the regulator about fees for no service? Support your answer with information from week 5 (chapter 4)

4.) Can corporate social responsibility ever be anything but glossy marketing?

AMP Misleads the Regulator

There is a truism in corporate governance and business ethics that the tone is set at the top. Kenneth Hayne, the Royal Commissioner enquiring into misconduct in the banking, insurance and financial services industry, certainly believed in this.* Imagine his shock when a senior executive was being questioned over AMPs ongoing practice of charging fees for services not provided (referred to in the Banking Royal Commission as fees for no service).

AMP was certainly not the only company being grilled over fees for no service, but when it came to questions about when AMP informed the regulator ASIC (Australian Securities and Investments Commission) about the practice, AMPs group executive for advice, Anthony Regan shocked his questioner when he admitted that AMP had lied to ASIC. ASIC had been told that the practice was a mistake, when in fact it was deliberate management practice. However, when questioning moved onto what happened when AMP informed ASIC about how the mistake had been rectified, Regans answers became truly shocking. In fact, AMP had simply continued to lie about the practice. How many times, asked Michael Hodge, special counsel assisting the commission? Eventually Mr Regan lost count once 14 instances were admitted, but by the time questioning finished, the count had gone past 17 times and onwards towards 20.*

You can imagine that a corporate board would take a hostile view of such behaviour within senior management and take steps to clean up such terrible behaviour. AMPs board did initiate an independent report for ASIC, to be undertaken by law firm Clayton Utz. But Mr Regan was not finished yet. Senior management and the board had the supposed independent report edited and amended until it was in a form that was acceptable to the board.*

So there it was, in the open. AMPs management had misled its regulator on a massive and systemic scale, yet the boards priority was its own reputation. Perhaps the Chinese understood corporate governance better than we do: they have an alternative truism, The fish rots from the head down