Rebuilding public trust through the lens of corporate culture: an inevitable necessity to sustain business success in Australia
| DOI | https://doi.org/10.1108/JMLC-07-2021-0067 |
| Published date | 15 October 2021 |
| Date | 15 October 2021 |
| Pages | 280-296 |
| Subject Matter | Accounting & finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
| Author | Afroza Begum |
Rebuilding public trust through
the lens of corporate culture: an
inevitable necessity to sustain
business success in Australia
Afroza Begum
School of Law, University of Wollongong, Wollongong, Australia
Abstract
Purpose –This paper aims to promotecorporate culture (CC) of compliance to ensure responsible business
by motivating self-feltand self-imposed strategies by corporations in Australia.It argues that the way “legal
compliance”is pursued in Australia may develop undesirable features within corporate internal affairs
ranging from adverse reactions to resentment rationalising or concealing of misconduct. This study
showcases that the integrationof corporation and ethical values in the compliance governance is inevitableto
sustain productiveCC and public trust in businesses.
Design/methodology/approach –This research is based on existing primary and secondary legal
resources and different reports, including the Royal Commission’s Report 2019 and public submissions. It
attempts to establisha claim that a self-felt and self-motivated approachto legal compliance contemplated by
commitment and devotion to the company, and its consumers instead of external control can achieve
consistentand positive outcomes that benefit both the company and itsstakeholders.
Findings –While the sanction-deterrence based legal directives provide a strong and sophisticated
foundation for detecting and punishing inappropriate culture and have traditionally been effective in
fostering compliance, the inclusion of ethical values in the regulatory approach and self-led corporate
strategiesare required to stimulate sustained compliance,accountability and public trust.
Practical implications –There has been a dearth of intellectual inquiries (to the best of the author’s
knowledge) about the role of CC and self-imposed corporate strategies in ensuring legal compliance. This
paper will contribute to filling this gap in the legal literature and the wider academic deliberation on the
standardand effectiveness of CC.
Originality/value –This research is the author’s original workand has not been submitted elsewhere for
publication.
Keywords Australia, Corporate culture, Regulatory approach, Revisited
Paper type Research paper
1. Introduction
Indisputably, the magnitude of unethical conduct in business has generated an
unprecedented level of mistrust and frustration among the Australian public about the
credibility and integrity of large corporations. The ensuing tragedy not only offends
consumers’convictions and business ethics but also deeply distresses the livelihood of
almost everyone in an integrated and interconnected social fabric. Reinforcement of this is
the commencement of a range of important inquiries, including the Royal Commission into
Misconduct in the Banking, Superannuation and Financial Services Industry. The Royal
Commission’sfinal report 2019 highlighted dishonesty, greed and an unchallenged internal
culture which prioritiseprofit over stakeholders, the corresponding legal complexity and the
regulator’s passivity as dominant factors leading to such a situation. Endorsement of more
JMLC
25,2
280
Journalof Money Laundering
Control
Vol.25 No. 2, 2022
pp. 280-296
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-07-2021-0067
The current issue and full text archive of this journal is available on Emerald Insight at:
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stringent regulatory requirements and enforcement mechanisms with special focus on
accountability and transparency aspects by further empowering ASIC and APRA, and the
fundamental changes in the internal culture to promote compliance are the key
recommendations of the final report.This paper focuses on corporate culture and how it can
be effectively usedto rebuild public trust in business in Australia.
Corporate culture (CC) embraces a set of values, ethics and attitude that shape and showcase a
corporation’s performance and working environment towards its stakeholders (Ma and Mar quis,
2016). It is not only about endorsing relevant policies to reinforce deterrence and compliance but
also sustaining an atmosphere that ensures long-term good outcomes for corporations. Corporate
culture of compliance (CCC) dominates contemporary legal and judicial mandates across nations;
an inevitable interconnectedness is believed to exist between CCC and responsible business. Quite
consistently, Australia has developed relevant laws and regulations integrating appropriate
structure, procedures and remedial mechanisms to promote CCC. A fundamental shift has also
occurred in the judicial approach; criminal sanctions and notable penalties have progressively
been imposed for the failure of developing and maintaining CCC.
This paper argues that CC has become a dominant force to guide legal and judicial
dictates in Australia and the way “legal compliance”is pursued may develop undesirable
features within corporate internal affairs ranging from adverse reactions to resentment
rationalising or concealingof misconduct. This study critically evaluates the legal approach
to CC and examines how CC evolved in the Australian legal context with special focus on
factors directing judges to assess criminal liabilities and corresponding penalties for
business. It concludes that while deterrence-based legal directives have been traditionally
effective in fostering compliance, the inclusion of some ethical approaches and self-
attributed obligation and consequent self-ledcorporate strategies are required to promote a
more logistic andcomplete regime for CCC.
The paper proceeds as follows. Section 2 examines the significanceand relevance of CC
in the contemporary business. Section 3 focuses on the evolution of CC and its required
elements in the legal regime of Australia. Section 4 evaluates how CC has influenced the
judicial commands and determination of corporate liabilities. The major findings and
recommendations of Royal Commissions are briefly sketched in Section 5. Section 6
critically analyses the Australian legal and judicial approaches to CC with special focus on
the recent regulatory development after the Royal Commission, whereas Section 7 is a
conclusion.
2. Defining corporate culture and its significance in business
CC denotes specific policies, rules and distinctive patterns of conducts prevalent within a
body corporate in which relevant activitiesare performed [1] It symbolises and features the
functioning of a group or organisation towards insiders and outsiders (American Heritage
Publishing Company, 1969). By mandatingan active organisational engagement with legal
and regulatory requirements, it supportsthe promotion of appropriate structures, programs
and procedures of a corporation (Collins English Dictionary, 2000). Manifested by a
commitment to an ethical framework, CC also reflects unique ethos of a corporation that
mandates loyalty, accountability and compliance and stimulates good outcomes for the
employees and consumers(Shahzad, 2014).
The genuine necessity of nurturing a CC in business cannot be gainsaid. CC has been a
powerful determinant of a responsible business through displaying its business prospects
and conduct to relevant participants. The performance of a corporation more recently is
judged through the lens of its CC (DeStefano, 2013–2014). Consequently, CC has become a
productive asset of a business, and legal and judicial directives have been consistently
Rebuilding
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