Running head: Leighton Holdings: Building Bribery case study

Leighton Holdings: Building Bribery case study

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Leighton Holdings: Building Bribery case study

Q1.

Pertinent Corporate Laws

Leighton holding case study provides the reader with pertinent issues regarding the corporate law

offences. In regard to this case study, the fundamental laws that the corporation brings forth

include corporation corruption, cover-up, corporate bribery and corporate governance offense

(Feldstein, 2019). Moreover, the watchdog bodies such as the Australian security and investment

commission (ASIC) and the Australian federal police (AFP) laxity and the laws pertaining to the

inaction of such bodies in the light of the corruptions.

Relations with Leighton international case study

In that context, the case study reveals the numerous cover-up that the board of directors

committed in their quest to enrich themselves to the disadvantage of the Leighton company. For

instance, the board emphasis on the profit as a key performance indictor of rewarding the

executive. Thus, the directors Ove rewarded themselves using the corporate funds even though

the firm was not making much profit like its peers at time. For instance, During King’s tenure, he

overpaid themselves with A$ 100 million in 2004 and A$14.7 compensation package in 2010.

The corporate governance offence, is evident when the organization board of directors uses

company confidential information to start another private company that competes with Leighton.

Moreover, the directors use the internal emailing of the company to start another firm. For

example, the top executive, Savage at the time lured the rest of the directors to initiate the

company that would compete with the organization.

The official of Leighton international committed offences that led jeopardies the integrity of the

organization. For instance, Hodge one of the project manager diverted A$500,000 to a black

market project. the fund was met to build a barge for an Indian firm (Adams, 2013). Despite

these malpractices the company did not take any action for Hodge actions instead Waugh who

was the right hand man of Mr. Savage did not warn the officer and instead initiated investigations

that were met to cover up the actions of the officer. This scenario raised integrity issues on pat of

the company management. In that context, the company committed corporate corruption offense.

Also, there was a culture of bribery in the organization, under the bribery act 1900, it is an

offence for the organization to practice foreign bribery. For instance, David Stewart had written a

memo indicating that David savage, the Leighton managing director together with Wal king were

aware of $42 million kickbacks that were offered to a Monaco firm in order to give the firm a

$750 million tender (Farrar, 2008). Consequently, Leighton international exposed itself in

bribery offences. Thus, the firm was using the bribes to gets contracts.

The laxity of the bodies that the law task to act on the rogue corporation is illegal and thus, by

failing to initiate investigation and legal proceeding on time caused the shareholders to loose the

cash. On that account, ASIC and AFP broke the corporate regulation and procedure laws by

failing to act on the bribery allegation on time as raised by Fairfax media.

Q2.

Regulatory responsibility
ASIC administers corporation act of 2001. This legislation is the fundamental principle that

governance the affairs of the companies in Australia. Also, the body oversees the registration,

notifications and serves to ensures that corporates, directors, practioners and auditors fulfils their

obligations (He, 2009).ASIC, s a regulatory body that foresee regulation in the Australian

financial services, corporate market and the consumer credits. In that context, the body has its

regulatory tools that ensures it perform its mandate as required. The firm has ability to enforce

the corporations to follow the rules and regulations. Moreover, the body is providing education

to the corporation in the market to ensure that this firms follows the rules and regulations.

Moreover, ASIC supervises and provides surveillances on the corporation in the financial

industry and their operations to guide the stakeholders and provide advice. ASIC, provides the

advice on the corporate governance to individuals and the related entities to ensure that the firm

complies with the required standards of the corporate governance.

ASIC main objectives is to continuously improve the performance of the financial systems, and

to ensure that once it receives the information it shares it with the public as soon as possible.

Therefore, this entity has the right to present the vital information to the public pertaining certain

transactions. Thus, protecting the investors from being scammed or being misled through

malicious acts. Moreover, the organization investigation and institute a legal proceeding on the

organizations that do not complies with the rules and regulations. Moreover, the entity takes any

necessary action to perform commonwealth laws.

ASIC’s weak foundations

The ASIC in the case study has been described as the organization with the weak foundation. The

attributes of this description is because the firm action when it received the information
regarding the bribery and the corruption in Leighton corporation (O’Shannassy, 2017).One of the

weakest foundations of ASIC is the ability to corporate with AFP. The organization depends on

the AFP to provide the necessary information so that it can initiate the investigation or take

action on a case. On the other hand, the key organization that ASIC depends on -AFP, lacks

technical knowledge and funds to carry out the necessary instigation. Also, the federal police

lack matters of urgency and as a result it took two years since the Fairfax media revealed the

scandal to act on the matter.

Also, ASIC, has laxity on acting on the case that requires agencies. For example, it did not

question even a single witness regarding the bribery and corruptions allegations facing the

company. Therefore, the institution had a weak corporate structure that would ensure it is

efficient and conducts the necessary investigation within the right period (Daneshgar & Wang,

2007). Moreover, Leighton international scandal requires experts to unravel the financial

misappropriations and transaction relating to Leighton scandal. However, the federal police do

have capacity and on the other end ASIC did not have good working collaboration with the

federal police –a key partner in solving corporate criminal offices. In summary, the poor

collaboration with federal police and laxity makes ASIC to have weak foundation in solving

corporate offences.

Q3.

Business Structure

The Leighton Holdings, utilizes the company structure too runs its business. In that regard, the

company structure has distinct features. Company is a legal person and as such the Leighton

holdings under the law is a n artificial person (Fanselo, 2015). Therefore, the organization has no
will on itself but it depends on the other people elected to perform its functions. Secondly, the

company is a spate legal entity and due to this trait the death of the one member does not mean

the end of the company. The shareholders are only limited to the face value of their shares in the

company. Consequently, in case the company is insolvent the members will not be liable.

Moreover, the company has the right to sue people or entities. However, it can also be sued as

well. The company seals the assets on its own name and can as well buy the goods, assets and

services on its own name. Thus, the members or directors cannot assume the company’s assets

belongs to them. The company is managed through the board of management (Filatotchev, I., &

Allcock, 2010). These shareholders elect the boards who on behalf of the members oversee the

management of the firm. On that account, the members do not foresee the day to day running of

the company. Therefore, the members delegate the rights to run the affairs of the organizations to

the board of directors. On the other hand, the board hires the managers who in turns foresee the

day to day running of the company. Therefore, the organization depends on the goodwill of the

managers to run the firm with trust and transparency.

Separate legal entity

The principle of the separates legal entity means that corporation is a legal entity that is spate

from those shareholders, the directors, the employees and stakeholders. Therefore, this concept

indicates the extends of the liability (Lail, MacGregor, Stuebs & Thomasson, 2015). The

company is an artificial person, it only depends on the directors, shareholders and employees to

run but all these parties are not liable to the action of the company even though the directors are

the mind that runs the organization. In that context, the Leighton Holdings’ employees cannot be

sued or sue on behalf of the company since the firm has its own name. therefore, if the employee
acts on behalf of the company, then the decision will not affect the employee but rather the

company. Therefore, all the corruption, bribery and cover up acts that the directors and employee

undertook while acting on behave of the company cannot be used against them since under the

company law, employee, board of directors and shareholders are just parts of the company and

thus they cannot be sued on their capacity but rather, only the company can be sued.

Consequently, company laws, separate legal entity protects the employees.

Q4.

Tone at the Top

Contributing to corruption

Tone at the top describes the type of leadership within the organization. The board of the

directors are at the top of the hierarchy. Thereafter, the leadership trickles down to the senior

managers, middle managers to the bottom line management (Van Klinken, & Aspinall, 2010).

Therefore, the concept of the tone at the top indicates that the type of leadership style that the

board of directors offers to an organization influences all levels of the organization. Therefore, if

the board of management engages incorporate malpractices, the behavior will trickle down to the

bottom level employee. Therefore, the whole organization will embrace the culture of bad

corporate culture. For instance, the Leighton board of directors engaged in massive bribery,

cover-ups and corruption. As a result, the junior staff were as well encourage to engage in
corruption and bribery within and outside the company. On that account, corruption become a n

acceptable culture within Leighton.

Preventing corruption

Therefore, the tone at the top can is an important tool that can be used in preventing the

corruption. The first step in preventing corruption, is for the board of directors to promote,

communicate and displaying ethical values and behaviors. That way, the junior staff will also

emulate the values and code of conduct that they do absorbed from the top leadership. Moreover,

the board of directors can encourage workers to report any case of misconduct. Therefore, in case

any person encourages corruption within the organization, other employee can report such a case

to the board of directors. That way, it will be easier for the mangers to eliminate the corruption at

all level.

Remuneration Policy

Contribution

The remuneration policies contribute to the corruption cases in many corporations in various

ways. First, when the mangers are underpaid, they do seek ways in which they can earn more

cash to meets their need. Such way, include doing unethical business and offering bribes and

being corrupt. Therefore, poor remuneration policies affect the conducts of the managers. The

board of directors and the shareholders have agency relationship. Therefore, if the agent ids not

well compensated he or she may seek ways to compensate himself. Therefore, the directors will

not have the goodwill and trust in working with the organization leading to the corruption cases.
For example, the directors of Leighton are engaging in business ventures that competes with the

firm. also, they engage in corruption deals to earn extra cash.

Prevention

The company can prevent corruptions in the firm using the numeration policies that are sound

and satisfactory to employees. Since the agency relationship requires trust and a good

compensation plan should be in place to ensure that the managers and the workers are well

motivated to avoid the corruption and cover-up scenarios that may lead to the collapse of the

business.
References

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