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Corporate Governance and Ethics Solved

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PART 1

EXECUTIVE SUMMARY

The corporate governance issues of a company depend from sector to sector depending on the role that it plays and disclosures that are expected to come from it for a fair business practice. Thus the case shows that the BHP Billiton Ltd was unable to teach its employees about the valuation techniques of an invitation which could be a bribery case. This gives the new man in, the chance to draft the new policy that could safeguard the BHP's interest in future so that it do not face any such bribery charges in the future.

BACKGROUND

BHP Billiton Ltd is a global resource provider of major commodities such as coal, copper, uranium, nickel, iron ore along with oil and gas. The company provides high quality products by meeting the challenges of the economy. The corporate strategy of the company is to own and operate the assets by embracing openness, diversity and relationships and encourage teamwork. The core values of the business are to respect and focus upon the business by building loyalty and pride. There are four structures of the board for corporate governance. The Risk and Audit Committee, Nomination Committee, Sustainability Committee, and Remuneration Committee. The company focuses on giving a low cost and diversifying their market, commodities and geographical aspects (Bhpbilliton.com, 2015).

CORPORATE GOVERNANCE STATEMENT

The corporate governance statement for BHP Billiton goes beyond the interest of shareholders. The good corporate governance involves assumptions such as commodity prices, costs, currencies, the rate of tax and the involvement of risk company faces. The corporate governance at BHP Billiton has two aspects, namely, if the employees' interests are considered and whether the employees have an active participation. The board follows If not, Why not a regime. The company believes in creating a balance for long-term tenures. The company wants to adopt the best practice for stakeholders, economic aspect, environmental aspect and social aspects (Booker and Bontis, 2010).  The agency theory views the corporate governance from a finance and economic perspective while the transaction cost theory examines it from the economic and organizational context. Stakeholders' theory suggests that the same is from the socially oriented perspective while institutional theory examines corporate governance from a regulatory, industry and organizational perspective (Belak, 2013). Thus, the report would discuss the same in broad details and make a proper assessment of each of the four perspectives from BHP Billion's perspective. Africa and Asia have relatively high reputations of corruption. So in some degree these are almost exploiting the growing business. But BHP is defending with saying this is how doing business. Shareholders have a right in the company to challenge the companies' explanations. There is a need of engagement with the shareholders due to UK's corporate governance regime. The shareholders and company have a responsibility to remain effective on a system based on rules. The administrative obstacles must be considered for improvement between board and shareholders.

The assessment for the case could have been done by the firm where they offered the delegates free hospitality in the Beijing Olympic. The case was unknown to the employees as the case of what is ethically right to give or not, was not clear to the employees. Looking at that perspective, the training of the corporate governance was needed for these people and the idea of hospitality of a firm to its rival was again unclear (Armstrong, 2014). BHP Billiton paid $25m as settling charges from the US Securities and Exchange Commission. Thousands of dollars were offered by the company to attend 2008 Beijing Olympics. Sponsored guests enjoyed free hospitality and excursions worth $12000 to $16000. Also, the company negotiated with mining minister. It was further reported that the internal accounting controls wee insufficient, and there were mo findings for corrupt practices (Patterson, 2015).

In the case of Ok Tedi, there were ethical issues faced in environmental management by local communities. The mining site at Ok Tedi dumped the tailings operated by BHP Billiton into the river. The controversy lasted for a few years. Papua New Guinea Sustainable Development Program was set up by the company in the year 2002. This program aimed at making contributions to the community affected by the mining operations. A lesson was learned by the company as it walked over its social and environmental responsibilities before (Jia and Tomasic, 2010).

RECOMMENDATIONS

As a consultant of BHP Billiton Ltd, further avoidance of malpractices and corruption is necessary. The best governance practices must be followed for which the following recommendations are made.

Good governance is a requirement of any company. BHP Billiton Ltd must ensure compliance of few principles that will help in the well-being of the company. The company must handle acting transparently and reporting the payments it makes to the governments. There must be openness for the best interest of stakeholders and handle responsible investment. The host communities must have a future establishment with the company. There must be the accessibility of information that helps in analyzing information provided by the company (Jenkins and Yakovleva, 2006).

It is important for the company to working with Integrity. BHP Billiton Ltd must also follow a principle of doing the right thing. Integrity is essential in business. The company must keep by its words and do what they promise to do. There must be improvement techniques developed for ethical conduct and regulatory compliance. The company must aim for global expansion and construct policies for gift and hospitality (Webley and Werner, 2008).

BHP Billiton must comply with Anti-corruption practices. The code of business conduct must involve approval by compliance functions such as the provision of hospitality, gifts and travel benefits. The company must not sponsor any of these functions. There must be risk assessment that manages and focuses on the highest risk exposure areas. The effectiveness of control must be tested. The internal audit team must assess the policies, procedures and standards.

The Competition Law Compliances must be taken into account. There must be stringent measures taken for price-fixing and bid-rigging. The company must not boycott any supplier or customer. The production capacity must not be limited, and margins and rebates must not be fixed. There must be training provided to the people to work with integrity and comply with competitive law practices. The markets must not be allocated to specific geographic territories for personal benefit.

One of the most important recommendations for the company relates to environmental management. BHP Billiton Ltd must demonstrate their responsibility by contributing to the goodness of environment. The impact of their operations on the environment must be minimized through identification, assessment and control measures. The environment management involves greenhouse gas emissions, water management, protection of biodiversity and land management. The company must contribute in reducing emissions by greater use of fossil fuels. The company must recognize their roles and effectively increase its influence globally.

The global challenge of meeting all such challenges for efficient decision making and assessment of risk form a part of corporate governance. The different committees must comply with policies and procedures to mitigate risks. The company can be served better by disclosing policies on Independence of Directors. Also, the best mix for the interest of shareholders may be developed (Cooper and Owen, 2007).

 

 

 

 

 

 

 

 

 

 

 

 

 

REFERENCES

Armstrong, A. (2014). Guest Editorial Governance and ethics: an indispensable relationship. Journal of Business Systems, Governance & Ethics, 3(3).

Belak, J. (2013). Corporate Governance and the Practice of Business Ethics in Slovenia. Systemic Practice and Action Research, 26(6), pp.527-535.

Bhpbilliton.com, (2015). BHP Billiton | Company profile & Corporate Social Responsibility. [online] Available at: http://www.bhpbilliton.com/aboutus/ourcompany [Accessed 16 Aug. 2015].

Booker, L. and Bontis, N. (2010). Curbing economic crime with RFID enabled currency. International Journal of Business Governance and Ethics, 5(1/2), p.26.

Cooper, S. and Owen, D. (2007). Corporate social reporting and stakeholder accountability: The missing link. Accounting, Organizations and Society, 32(7-8), pp.649-667.

Jenkins, H. and Yakovleva, N. (2006). Corporate social responsibility in the mining industry: Exploring trends in social and environmental disclosure. Journal of Cleaner Production, 14(3-4), pp.271-284.

Jia, X. and Tomasic, R. (2010). Corporate governance and resource security in China. New York: Routledge.

Littoz-Monnet, A. (2014). Ethics Experts as an Instrument of Technocratic Governance: Evidence from EU Medical Biotechnology Policy. Governance, 28(3), pp.357-372.

Patterson, S. (2015). SEC Fines BHP $25 Million After Gifts Probe. [online] WSJ. Available at: http://www.wsj.com/articles/sec-charges-bhp-with-violating-fcpa-at-2008-summer-olympics-1432127870 [Accessed 16 Aug. 2015].

Webley, S. and Werner, A. (2008). Corporate codes of ethics: necessary but not sufficient. Business Ethics: A European Review, 17(4), pp.405-415.

 

PART 2

EXECUTIVE SUMMARY

A report has been prepared in concern with AII for minimizing the risks faced by FIFA. Good governance compliances required by the association has been developed. The corrupt practices undertaken by FIFA has been enlisted which ruined its reputation. The mitigation steps for the same have been framed. This would help the corporate sponsors of the association to invest with the association.

BACKGROUND

The Federation International de Football Association (FIFA) was founded in the year 1904 which constantly improvements football. The structure of the company is democratic and amends to the laws of the game. FIFA has adapted several procedures that increase the effectiveness of the organization. The member associations that is 209 in number form the backbone of the company. Expertise support and strength is established by the company foR regulation of confederation club licensing systems (FIFA.com, 2015).

CORPORATE GOVERNANCE STATEMENT

The corporate structure of FIFA comprises of Congress that is the supreme and legislative body. The other committees comprise of Executive Committee, Standing Committee, Ad-hoc Committee and General Secretariat. As part of AII the changes in the Association of Institutional Investors, the FIFA needs to change its investor's policy where the sponsors have to be speak and span. The risks associated with the investments are many which may have adverse effects on both the game and the feature altogether. However, the preventive measures are taken to see that lease damage is done to the brand that is associated with FIFA. For this specific reason, people who are more skeptical about the way the FIFA is funded needs to find more about it from the AII webpage. This page shall first suggest that the sponsors have nothing to do with the beautiful game. This is the doing of the sponsors whose earnings may be under question, but the game cannot be blamed for that. This makes the situation a bit simple for all who loves sports as well as for them who are ethically very touchy. Thus, the game goes on as the web page says while the investigations on the source of money can be on too (Reddy, 2009).

Therefore, the money source would be questioned only by the pertinent authority and that too based on evident and well-grounded clauses. This shall keep the fuss of investigative fuss away when the investigation, as well as FIFA, may do what they do best (Wieland, 2001). The other part is that all sponsors are individual and are not linked with each with each other so the behavior of one is not identical for another and so is the scope for the value judgment. Each sponsor has their own good and bad but the one to find and certify it has to be neutral and unbiased (Weger, 2008). Thus, FIFAs association with a brand is for commercial benefits for a betterment of the game only where the ethical part of the business needs to be dealt by the government and statutory bodies in play. When the statutory bodies are determining the role of a sponsor, the body of FIFA should not be dragged into it. So the Corporate governance of FIFA is based on betterment of football and football fans alone which is not liable for the financial or business functioning of a sponsor till the time there is no official complain or a case in the court of law that have kept it impending for justice (Roberts, 2001).

RECOMMENDATIONS

FIFA has been involved in scandals and allegations for corrupt practices that apply for the reformation of principles and practices. The role of the board and the chairman must be clearly defined. The Board is collectively responsible for long-term success of a company. There must be an engagement with stakeholders so as to prioritize the needs. There must be the demonstration of transparency and accountability. The competitive and collaborative relationships assumed must form an explicit part of a business. Since the company is not a corporation, stakeholder engagement is necessary (BloombergView.com, 2015).

Best reform practices must be included in the practice. There is a need for ethical practice and conform to integrity. The best practices must be implemented for offering and accepting gifts that may be termed as bribe and corruption. There is a need to implement and promote ethics. The discrimination fights must be put to an end. E-learning tools must be provided for compliance through training. The football group in Brazil raised social implication due to non-transparency. The tickets for matches were increased from 120 dollars to 150 dollars that were considered as an unethical practice. Such practices for personal benefit must be avoided by FIFA that would help in forming good corporate governance (Ipsnews.net, 2015)

There is a greater need for compliance and control. The FIFA development programs must establish a stringent control as well as disclosure of funds. The compensation for strengthening the role of committees must be added to the practice. The sufficient resources must be discharged as required by the committees.  There is a need for direct election for Audit and Compliance Committee. There is a need for improvement in both technical and football panels of advisory process. The decision making process for a website, the publication of documents are needed by the board. A clear transparency must be made for the same. The eroded community support must be repaired.

FIFA suffered a crisis when John Delaney got paid off when his team was dumped out of the World Cup (Giles Mole, 2015). Anti-bribery practices must be brought into action so that corruption is eroded. It was also reported that a former President of the Federation was found guilty of money laundering worth 100 million pounds. He also faced charges for falsifying public documents, tax evasion and forgery (Mail Online, 2015).

There is a need for zero tolerance of harassment and discrimination. The avoidance of conflict of interest is necessary so that organizational goals are achieved. There needs to be a fight against drugs and doping. The prohibitions of manipulation of a result of matches are extremely necessary. There needs to be fair play where decisions must be practiced with respect to conventions and rules. The legal and institutional arrangements must be made transparent and visible. The social, environmental and economic interests must be confided by. The employees morale must be lifted that would bring about an increase in quality of products and services. If the company has good social performance, corporate financial performance will also be achieved. (Zeidan and Fauser, 2015)

Hence when the company is sponsoring, the FIFA would accept the money till the time the money do not have any stain associated with it. The moment a clot appears the FIFA is not liable to come out of it as the game depends on it. Till the time the sponsor is not changed the same sponsor continues to work. These policies of governance give both adequate spaces to work in the mutually agreeable manner for the betterment of football as well as business ethics and humanity.

 

REFERENCES

BloombergView.com, (2015). FIFA's Corporate Sponsors Abet Soccer's Corruption. [online] Available at: http://www.bloombergview.com/articles/2015-05-27/fifa-s-corporate-sponsors-abet-soccer-s-corruption [Accessed 16 Aug. 2015].

FIFA.com, (2015). About FIFA: Organisation - FIFA.com. [online] Available at: http://www.fifa.com/about-fifa/index.html [Accessed 16 Aug. 2015].

Giles Mole, R. (2015). Ireland FA were paid €5m by Fifa not to protest Thierry Henry handball: as it happened. [online] Telegraph.co.uk. Available at: http://www.telegraph.co.uk/sport/football/fifa/11650517/Fifa-corruption-crisis-live.html [Accessed 16 Aug. 2015].

Ipsnews.net, (2015). Will 2014 World Cup Take Football from Brazil’s Masses? | Inter Press Service. [online] Available at: http://www.ipsnews.net/2012/02/will-2014-world-cup-take-football-from-brazils-masses/ [Accessed 16 Aug. 2015].

Mail Online, (2015). Former Brazilian football president facing charges of money laundering. [online] Available at: http://www.dailymail.co.uk/news/article-3106656/Former-Brazil-soccer-boss-probed-money-laundering-source.html [Accessed 16 Aug. 2015].

Morrell, K. (2006). Governance, Ethics and the National Health Service. Public Money and Management, 26(1), pp.55-62.

Reddy, Y. (2009). The ethics of corporate governance. International Journal of Law and Management, 51(1), pp.17-26.

Roberts, J. (2001). Corporate Governance and the Ethics of Narcissus. Business Ethics Quarterly, 11(1), p.109.

Weger, F. (2008). The jurisprudence of the FIFA Dispute Resolution Chamber. The Hague: T.M.C. Asser.

Wieland, J. (2001). The Ethics of Governance. Business Ethics Quarterly, 11(1), p.73.

Zeidan, O. and Fauser, S. (2015). Corporate governance and corporate social responsibility – the case of FIFA. Problems and Perspectives in Management, [online] 13(2), pp.183-192. Available at: http://businessperspectives.org/journals_free/ppm/2015/PPM_2015_02%20cont_Zeidan.pdf [Accessed 16 Aug. 2015].

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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