Instruction file: Case analysis-Section 2
Casefile: Aids and Needles Case
Example Essay: CBA Case HD

AIDS and Needles
Becton Dickinson, one of the largest manufacturers of medical supplies, dominates
the US market in disposable syringes and needles. In 2005, a nurse, Maryann Rockwood
(a fictional name), used a Becton Dickinson 5cc syringe and needle to draw blood from a
patient known to be infected with HIV (Human immunodeficiency virus). Ms. Rockwood
worked in a clinic that served AIDS patients, and she drew blood from these patients
several times a day. After drawing the blood on this particular day, she transferred the
HIV-contaminated blood to a sterile test tube by sticking the needle through the rubber
stopper of the test tube, which she was holding with her other hand. She accidentally
pricked her finger with the contaminated needle. She is now HIV positive.

A few years earlier, in 2000, Becton Dickinson had acquired exclusive rights to a patent
for a new syringe that had a moveable protective sleeve around it. The plastic tube around
the syringe could slide down to safely cover the needle. The Becton Dickinson 5cc
syringe used by Maryann Rockwood in 2005, however, did not yet have such a protective
guard built into it. The AIDS epidemic has posed peculiarly acute dilemmas for health
workers, including doctors and nurses. Doctors performing surgery on AIDS patients can
easily prick their fingers with a scalpel, needle, sharp instrument, or even bone fragment
and can become infected with the virus. The greatest risk is to nurses, who, after routinely
removing an intravenous system, drawing blood, or delivering an injection to an AIDS
patient, can easily stick themselves with the needle they were using. Needlestick injuries
occur frequently in large hospitals and account for about 80 percent of reported
occupational exposures to HIV among health care workers. It was conservatively
estimated in 2005 that about 64 health care workers were then being infected with HIV
each year as a result of needlestick injuries.

Although the fear of HIV had heightened concerns over needlestick injuries, HIV was not
the only risk posed by needlestick injuries. Hepatitis B can also be contracted through an
accidental needlestick. In 2000, the Centre for Disease Control (CDC) estimated, on the
basis of hospital reports, that each year at least 12,000 health care workers are exposed to
blood contaminated with the Hepatitis B virus, and of these 250 die as a consequence.
Due to underreporting, however, the actual numbers may be higher. In addition to
Hepatitis B, needlestick injuries can also transmit numerous other viral, bacterial, fungal,
and parasitic infections, as well as toxic drugs or other agents that are delivered through a
syringe and needle. The total statistics on needlestick injuries in 2005 are disturbing,
although the exact incidence of contamination is unclear. It was estimated that each year,
in the United States alone, between 800,000 and 1 million needlestick injuries occurred in
hospitals – of these, between 60,000 and 300,000 resulted in Hepatitis B infection. By one
estimate, the risk of contracting HIV from a known contaminated needle could be as high
as 1 in 1000, and the risk of contracting Hepatitis B, a serious and often life-threatening
condition, could be as high as 1 in 6. These estimates would imply that as many as 600 to
1000 health care workers were at risk of contracting HIV and as many as 100,000 were at
risk of contracting Hepatitis B.

Several agencies stepped in to set guidelines for nurses, including the American Nursing
Association, the CDC, the Environmental Protection Agency (EPA), and the Food and
Drug Administration (FAD), who all developed such guidelines. The most comprehensive
guidelines were issued by the Occupational Safety and Health Administration (OSHA),
who on December 6, 2001, required hospitals and other employers of health workers to
(a) make sharps containers (safe needle containers) accessible to workers, (b) prohibit the
practice of recapping needles by holding the cap in one hand and inserting the needle with

the other, and (c) provide information and training on needlestick prevention to
employees.

The usefulness of these guidelines was controversial. Nurses work in high-stress
emergency situations requiring quick action, and they are often pressed for time both
because of the large number of patients they must care for and the highly variable needs
and demands of these patients. In such workplace environments, it is difficult to adhere to
the guidelines recommended by the agencies. For example, a high-risk source of needle
sticks is the technique of replacing the cap on a needle (after it has been used) by holding
the cap in one hand and inserting the needle into the cap with the other hand. OSHA
guidelines specifically warned against this two-handed technique of recapping and instead
required that the cap be placed on a stable surface and the nurse use a one-handed
spearing technique to replace the cap. (Note that recapping the needles in this more time
consuming way presented no risk of needlestick injury to the user). As noted above
however, nurses are often pressed for time (and are keenly aware of the added danger of
walking around with an uncapped needles) and tend to take the ‘two-handed recapping
shortcut’ when no suitable surface is readily available for the safer one-handed capping
technique. This fact is known to Hospital administrators, who regularly warn against such
practices, and offer ongoing training and retraining opportunities to their nursing staff.

Several analysts suggested that the peculiar features of the nurse’s work environment
made it unlikely that needlesticks would be prevented through mere guidelines alone: The
problem was not the worker, but the design of the needle and syringe. Experts on
needlestick injuries argued that, rather than trying to teach health care workers to use a
hazardous device safely, the focus should be on the hazardous product design and that a
whole new array of devices in which safety is an integral part of the design was required.
Regulators also urged manufacturers to provide the health care worker with devices in
which safety was built into the design.

The risks of contracting life-threatening diseases by the use of needles and syringes in
health care settings had been well documented since the early 1980s. Well over half of all
the needles and syringes used by U.S. health care workers since 1980 were being
manufactured by Becton Dickinson. Despite the emerging crisis, however, Becton
Dickinson decided not to modify its syringes, although it did include in each box of
needled syringes an insert warning of the danger of needlesticks and of the dangers of
two-handed recapping. On December 23, 2000, the U.S. Patent office issued patent
number 4,631,057 to Charles B. Mitchell for a syringe with a tube surrounding the body
of the syringe that could be pulled down to cover and protect the needle on the syringe. At
the time, at least four other patents for needle-shielding devices existed. As Mitchell
noted in his patent application, those devices all suffered from serious drawbacks. One of
them would not lock the protective cover over the exposed needle, one was extremely
complex, another was much longer than a standard syringe and difficult to use, and a
fourth was designed primarily for use on animals.

It was Mitchell’s assessment that his invention was the only effective, easily usable, and
easily manufactured device capable of protecting users from needlesticks, particularly in
emergency periods or other times of high stress. Unlike other syringe designs, Mitchell’s
was shaped and sized like a standard syringe so nurses already familiar with standard
syringe design would have no difficulty adapting to it. Shortly after Mitchell patented his
syringe, Becton Dickinson purchased from him an exclusive license to manufacture it. A
few months later, Becton Dickinson began field tests of early models of the syringe using
a 3cc model. Nurses and hospital personnel were enthusiastic when shown the product.

However, they warned that if the company priced the product too high, hospitals, with
pressures on their budgets rising, could not buy the safety syringes. With concerns about
HIV rising fast, the company decided to market the product.

In 2001, with the field tests completed, Becton Dickinson had to decide which syringes
would be marketed with the protective sleeves. Sleeves could be put on all of the major
syringe sizes, including 1cc, 3cc, 5cc, and 10cc syringes. However, the company decided
to market only a 3cc version of the protective sleeve. The 3cc syringes account for about
half of all syringes used, although the larger sizes-5cc and 10cc syringes-are preferred by
nurses when drawing blood. This 3cc syringe was marketed in 2002 under the
trademarked name Safety-Lok Syringe. It was promoted as a device that “virtually
eliminates needlesticks.” The 3cc safety syringe with the protective sleeve was sold in
2001 to hospitals and doctors’ offices for between 50 and 75 cents. By 2003, the company
had dropped the price to 26 cents per unit. At the time, a regular syringe without any
protective device was priced at 8 cents per unit and cost 4 cents to make. Information
about the cost of manufacturing the new safety syringe is unavailable but is estimated at
between 13 and 20 cents each. The difference between the price of a standard syringe and
the price of the safety syringe was an obstacle for customers. To switch to the new safety
syringe would increase the hospital’s costs for 3cc syringes by a factor of three. An
equally important impediment to adoption was the fact that the syringe was available in
only one 3cc size, and it was perceived to be of limited application. Hospitals are
reluctant to adopt and adapt to a product that is not available for the whole range of
applications the hospital must confront. In particular, hospitals often needed the larger 5cc
and 10cc sizes to draw blood, and Becton Dickinson had not made these available with a
sleeve.

For 5 years, Becton Dickinson manufactured only 3cc safety syringes. During that period,
Becton Dickinson did not license its new safety syringe technology to another
manufacturer that might have produced a full range of syringe sizes. Most hospitals and
clinics, including the medical facility where Maryann Rockwood worked at drawing
blood from many patients with Hepatitis B or HIV, did not stock the Becton Dickinson
safety syringe. Most nurses in the United States continued to use unprotected syringes.
Maryann Rockwood sued Becton Dickinson, alleging that, because it alone had an
exclusive right to Mitchell’s patented design, the company had a duty to provide the
safety syringe in all its sizes, and that by withholding other sizes from the market it had
contributed to her injury. The case was settled out of court.

Velasquez, M.G. 2006. Business Ethics: Concepts and cases (6th ed.). Sydney:
Pearson. pp. 292-296.

Live Case Analysis 2 Guideline (30marks)

Task: Write the Analysis with1750(Minimum)- 2000 words (Maximum), NO 10% Leeway.
Please question the questions Q1-5 below. There is the guideline what I want to write in your
questions. Please copy the questions before you answer the questions. There are words limit in
different questions. There are rubrics below each question or each part. Please the follow the
rubrics and avoid the common issues.

THE CASE is in other file. (Aids and Needles Case)
NOTE: NOTE: You are not required to define any of the ethical theories in your report. You
are required, however, to fully reference the case facts you use in your report.
NOTE: STUDENTS ARE NOT EXPECTED TO PROVIDE REFERENCING IN THIS ASSIGNMENT.

Case Facts: (Please make sure you can answer “TRUE” to all of the following statements)

Question 1: Describe the facts that underpinned the ethical dilemma in the case.
480 words approximately – be sure to include only that information that is directly relevant to the ethical
dilemma. The inclusion of information that is not relevant to the ethical dilemma, no matter how interesting,
will not attract marks. No introduction, contents page or executive summary is required.

That what I want you to be included.
1. The case facts describe the organisation/industry that the ethical dilemma relates to.
2. The case facts inform the reader of the period of time that the case happened.
3. The case facts are presented in chronological order that are easy for the reader to follow.
4. The case facts include all of the information needed to convince the reader that there is an ethical dilemma (i.e.
there is a forced choice between two exact alternative actions, both of which will result in punishment for the
decision-maker specifically).
5. The Case Facts section includes NO information that occurs after the ethical dilemma point in time.

Case Issues:

Question 2: Who was the decision- maker in the case, and what conflicting demands did they have to
accommodate?
120 words approximately – be sure to identify the decision-maker that has the initial ethical dilemma in the
case, and to detail the competing pressures you believe they faced at the time of their decision.

That what I want you to be included.

Question Answer
Who is the decision maker?

What competing demands do they face at
the point of the Ethical Dilemma?

Rubric for QUESTION 1& 2 (3 marks for total):
The Case Facts & Case Issues:

3 marks- The Case Facts section will present an accurate representation of the case with no irrelevant
information included. The decision- maker will be identified accurately.

Which common issues you cannot get the full marks? Please avoid it.
Case Facts:
□ The Case Facts section was incomplete and did not support the Ethical Dilemma sufficiently well
□ The Case Facts section was poorly written and confusing to read
□ The Case Facts section was insufficiently referenced (and therefore unconvincing to read)

Case Issues:
□ The Case Issues section did not identify the decision-maker in the case (*if there is no specific name available, then
the position that they held needs to be identified – e.g. CEO, CFO, employee etc.)
□ The Case Issues section did not describe the competing demands faced by the decision-maker

Ethical Dilemma:

Question 3: What was the initial ethical dilemma faced by the decision- maker in this case?
80 words approximately – be sure to accurately define and justify the ethical dilemma. Make sure it is
expressed as two exactly opposite alternatives, and explain how each alternative is undesirable for the
decision-maker specifically (i.e. how do you expect they will face punishment for their decisions?)

That what I want you to be included.

What is the punishment for the
Two exactly opposite statements! decision-maker specifically?

****(Don’t miss that) The Ethical Dilemma identified in my analysis is the first forced choice between two
undesirable alternatives.

Rubric for QUESTION 3 (3 marks for total):
Ethical Dilemma & Punishments
3 marks- An accurate ethical dilemma will be expressed in the correct format, and relevant punishments
linked directly to the decision- maker.

Which common issues you cannot get the full marks? Please avoid it.
□ The Ethical Dilemma was illogical
□ The Ethical Dilemma was NOT expressed as two exactly opposite statements
□ The punishments associated with the Ethical Dilemma were not linked to the decision-maker specifically
Four Concepts Usages

Question 4: Using the Utilitarian, Kantian, Rights, and Distributive Justice approaches to ethical decision-
making, provide an analysis of the ethical dilemma. (16 marks for total)

1120 words approximately – to answer this question well, you need to introduce each of the four theories in
turn (i.e. each theory should have its own section). Ideally, you will apply the steps of each theory to the case
as you identify and define them. As a guide, you should allocate approximately 395 words to Utilitarianism,
325 words to Kantianism, 200 words to Rights, and 200 words to Justice.

A. Utilitarianism: (Please make sure you can answer “TRUE” to all of the following statements)
You should allocate approximately 395 words to Utilitarianism

That what I want you to be included.
1. The ethical dilemma headings used in the Utilitarian analysis are expressed in exactly the same manner as they
were previously in the assignment.
2. The consequences listed are expressed as specifically as possible – vague expression and non-sequences are
avoided at all times.
3. The list of consequences are comprehensive, and would convince any reader that represent enough information to
determine “the greatest good for the greatest number”.
4. The explanation of “the greatest good for the greatest number” is clearly written so that the reader fully
understands your logic.
5. I have linked the “the greatest good for the greatest number” explanation back to the Ethical Dilemma specifically.
6. The conclusion to this section states which Ethical Dilemma alternative must be chosen according to
Utilitarianism. There is no discussion about the penalties attached to this choice.

Rubric for QUESTION 4A (5 marks):
Application of Utilitarianism
5 marks- The student will demonstrate a detailed understanding of the ethical theory under review through a
logical and defensible resolution of the ethical Dilemma.

Which common issues you cannot get the full marks? Please avoid it.
□ The list of consequences was illogical and/or poorly expressed
□ The list of consequences was incomplete/far too brief to be useful to the reader (*more problematic if the
assignment is under the word count)
□ The list included non-sequences
□ The justification of the Greatest Good was poorly explained
□ The link back to the Ethical Dilemma was not present

B. Kantianism:
325 words to Kantianism

That what I want you to be included.
What is the nature of the ethical dilemma? That is,
what does it concern specifically?

E.g. the engineers in the Ford Case had the Ethical
Dilemma: “to inform the public about their safety
concerns”, or “Not to….” – this decision relates
specifically to public autonomy (and not safety –
as there were no Pintos for sale at the point of the
ED).

To whom, therefore, does the decision-maker owe
their primary duty in this case?

What are the maxims underpinning the Ethical
Dilemma/Primary Duty?

A)

B)

****(Don’t miss that) The conclusion to this section states which Ethical Dilemma alternative must be chosen
according to Kantianism. There is no discussion about the penalties attached to this choice.

Rubric for QUESTION 4B (5 marks):
Application of Kantianism
5 marks- The student will demonstrate a detailed understanding of the ethical theory under review through a
logical and defensible resolution of the ethical Dilemma.

Which common issues you cannot get the full marks? Please avoid it.
□The party to whom the decision-maker owes their primary duty was not identified accurately
□ The maxims included consequential considerations
□ The Universalization test was not applied accurately
□ The Respect for Persons test was not applied accurately
□ The Respect for Autonomy test was not applied accurately
□ The link back to the Ethical Dilemma was not present

C. Rights: (Please make sure you can answer “TRUE” to all of the following statements)
200 words to Rights

That what I want you to be included.
1. All of the relevant “Rights at Play” and their attached obligations are included in my list.
2. I have included more than just the two Rights I believe clash in my analysis.
3. I have justified that there is a violation of a Right from evidence in my Case Facts section.
4. I have clearly explained how the clash of Rights is resolved using the Hierarchy of Rights concept.
5. I have linked the resolution of the clash of Rights back to the Ethical Dilemma specifically.
6. The conclusion to this section states which Ethical Dilemma alternative must be chosen according to Rights. There
is no discussion about the penalties attached to this choice.

Rubric for QUESTION 4C (5 marks):
Application of Rights
5 marks- The student will demonstrate a detailed understanding of the ethical theory under review through a
logical and defensible resolution of the ethical Dilemma.

Which common issues you cannot get the full marks? Please avoid it.
□ The list of relevant “Rights at Play” was incomplete (*i.e. relevant stakeholders were not included in the analysis)
□ The list of relevant “Rights at Play” did not include the attached obligations
□ The “Clash of Rights” was not correctly identified
□ The resolution of the Clash of Rights was poorly explained
□ The link back to the Ethical Dilemma was not present

D. Distributive Justice:
200 words to Justice

That what I want you to be included.
List all of the potential worst-off parties at the point of the
Ethical Dilemma. Describe their worst position at the point
of the Ethical Dilemma but not past it.

You should borrow from your list of parties in your
Utilitarian section here – consistency in your representation
of relevant parties will make your work look comprehensive.

Who is the very worst-off party on your list?

I recommend that you justify your claim using Rights theory.

****(Don’t miss that) 1. The analysis of the outcomes for the very worst-off party focuses ONLY on their
worst-of position – all other considerations are not mentioned at all.
****(Don’t miss that) 2. The conclusion to this section states which Ethical Dilemma alternative must be
chosen according to Distributive Justice. There is no discussion about the penalties attached to this choice.

Rubric for QUESTION 4D (5 marks):
Application of Justice
5 marks- The student will demonstrate a detailed understanding of the ethical theory under review through a
logical and defensible resolution of the ethical Dilemma.

Which common issues you cannot get the full marks? Please avoid it.
□ The list of potential “worst-off parties” was incomplete (*includes relying on consequences)
□ The selected “worst-off party” was not logically justified
□ The outcomes for the “worst-off party” included reference to consequences
□ The link back to the Ethical Dilemma was not present

Final Recommendation:
(Please make sure you can answer “TRUE” to all of the following statements)

Question 5: Present and justify the final recommendation you would have made to the decision- maker in this
case had they asked you for advice on how to resolve their initial ethical dilemma.

200 words approximately – identify and justify the final recommendation would you have made given the
opportunity to consult with the decision-maker before they made their decision. You must explain how the
decision-maker could avoid the punishment(s) that you identified in Question 3.

That what I want you to be included.
1. The Final Recommendation specifically states which Ethical Dilemma alternative you would recommend
OVERALL to the decision-maker (had you had the opportunity to do so at the time of the decision).
2. The Final Recommendation provides at least one strategy that could assist the decision-maker in avoiding the
punishment(s) you identified earlier in your work.
3. The Final Recommendation does not provide ANY additional information other than that required in (1) and (2)
above.

Rubric for QUESTION 5 (3 marks):
Final Recommendation
3 marks- The final recommendation will resolve the ethical dilemma logically and defensibly and provide
strategies for dealing with dissenting groups to the decision- maker.

Which common issues you cannot get the full marks? Please avoid it.
□ The Ethical Dilemma was not resolved specifically
□ The punishment associated with the Ethical Dilemma alternative is not dealt with specifically

Format: It is recommended that you use headings to guide your answer, as it will keep both you and the marker ‘on-
track’.

References: Your reference list is not included in your word-count. however, you should provide references for the
case facts you include in your analysis (i.e. newspapers, Internet sites, periodicals etc).

Rubric for format (1 mark)
Expression, spelling & Grammar, Page number, Double line spacing. Within the words limit.
1 mark- The analysis will confirm to the presentation and Harvard referencing standards sets in the School’s
referencing and essay presentation guidelines.

Which common issues you cannot get the full marks? Please avoid it.
□The text is not double, or 1.5 line spaced
□ Incorrect or inaccurate referencing standards applied in the text AND/OR the final reference list
□ Exceeded the word limit

1

Ethical Analysis of The Commonwealth Bank Money Laundering Case

Case Facts

Commonwealth Bank of Australia (CBA), founded in 1911, is one of Australia’s leading

providers of ‘integrated financial services, including retail, premium, business and

institutional banking, funds management, superannuation, insurance, investment and

share-broking products and services’ (Commonwealth Bank of Australia 2018). In May 2012,

CBA introduced Intelligent Deposit Machines (IDMs) which accept deposits by both cash and

cheque (Ockenden & Parry 2017). Once deposited, funds are available for immediate

transfer to other accounts domestically and internationally (Chief Executive Officer of The

Australian Transaction Reports and Analysis Centre v Commonwealth Bank of Australia

Limited ACN [2017] FCA, para. 1). IDMs can accept up to 200 notes per deposit (up to

$20,000 per cash transaction), and there are no limits on the number of IDM transactions a

customer can make per day (AUSTRAC v CBA [2017] FCA, para. 2). IDMs allow for

anonymous cash deposits, as a card from any financial institution can be used; if a non-CBA

card is used, the details of the cardholder are unknown (Norton 2017; AUSTRAC v CBA

[2017] FCA, para. 3). Since their introduction in 2012, over $1 billion has been transferred

through IDMs (Ockenden & Parry 2017).

Under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, s. 81, “The

Act”, CBA has a joint Anti-Money Laundering and Counter-Terrorism Financing program,

with procedures it failed to comply with from the beginning of IDM introduction to the

market in 2012 (AUSTRAC v CBA [2017] FCA, para. 5). The private sector has considerable

responsibility in the fight against criminal financing activities by monitoring and providing

intelligence to regulators (Norton 2017). Both prior and during the IDM rollout, CBA failed to

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carry out money laundering and terrorism financing risk assessment in response to the

suspicious rise in cash deposits through IDMs, and ignored alerts raised by internal

transaction monitoring systems (AUSTRAC v CBA [2017] FCA, para 6). All businesses with

obligations under The Act must be enrolled on The Australian Transaction Reports and

Analysis Centre’s (AUSTRAC) Reporting Entities Roll (AUSTRAC 2018). CBA is therefore

required to report to AUSTRAC any transaction involving a transfer or $10,000 or more

within 10 business days (AUSTRAC v CBA [2017] FCA, para. 9). CBA failed to report 53,506

transactions (94% of all threshold transactions (TTRs)) with a total value of around $624.7

million, to AUSTRAC on time between 2012 and 2015 (AUSTRAC v CBA [2017] FCA, para. 10).

CBA claim this was due to a technical issue caused by a software update (Yeates 2017).

1,640 of the late TTRS were found to be related to money laundering syndicates under

investigation by the Australian Federal Police, with six of the late TTRs related to customers

who had been evaluated by CBA as potential terrorism financing risks (AUSTRAC v CBA

[2017] FCA, para. 10).

In the syndicates identified between late 2014 and April 2016, several arrests were made

against money launderers, with two individuals sentenced to jail-terms in May 2015 for

their involvement in the first syndicate (AUSTRAC v CBA [2017] FCA, para. 16-34). CBA

became aware of suspicious activities associated with the first money laundering syndicate

in April 2015 (AUSTRAC v CBA [2017] FCA, para. 16). In transactions connected to this

syndicate, on 92 occasions CBA failed to comply with regulatory obligations to provide a

suspicious matter report (SMR) to AUSTRAC either on time or at all, as required by s. 41 of

The Act, nor did they monitor suspicious customers (AUSTRAC v CBA [2017] FCA, para. 13,

19). Where alerts were raised, CBA only partially disclosed their suspicions to AUSTRAC

(AUSTRAC v CBA [2017] FCA, para. 12).

3

Ethical Issues

The ethical dilemma occurs after the money laundering syndicate court cases which saw the

conviction of two individuals, which would result in a request for further information from

AUSTRAC. The CBA board of directors are the party faced with the ethical dilemma in this

case, as they have knowledge regarding suspected money laundering transactions,

compliance failures, and can make business decisions on CBA’s behalf. At the time of the

dilemma, the board of directors are faced with several competing demands and pressures.

They are aware of CBA’s system failings, and their own job security is therefore at risk. They

must comply with reporting obligations to AUSTRAC so as not to face legal ramification from

a breach of The Act and receive a civil penalty. As a firm, CBA also have responsibility to act

in the interests of shareholders, both keeping them informed and maintaining profitability,

which partially relies upon maintaining a good reputation. There is pressure to consider

public welfare in relation to financial crime.

Ethical Dilemma

The ethical dilemma in this case is:

“To fully disclose money laundering information to AUSTRAC”

or

“Not to fully disclose money laundering information to AUSTRAC”

If the board of directors fully discloses money laundering information, it is reasonably

foreseeable that they will receive fines for monitoring and reporting failures as well as

failing to establish sufficient risk assessment procedures, as required by The Act. This will

create reputation damage and a loss of market share. Key executives will lose their jobs. If

4

the board does not fully disclose money laundering information, they will receive a

significantly larger fine through a civil lawsuit from AUSTRAC when exposed for non-

compliance under The Act. CBA’s reputation will be severely damaged reducing market

share. Key executives involved in the decision-making process with lose their jobs.

Utilitarianism Analysis

The stakeholders likely to be affected directly and indirectly by the ethical dilemma in this

case are: The Commonwealth Bank’s board of directors, shareholders, employees, money

launderers, law enforcement agencies, the Australian public, AUSTRAC, competitors and

customers. Both long-term and short-term consequences of the ethical dilemma will be

considered in the analysis.

Reasonably foreseeable consequences of fully disclosing details of money laundering

information to AUSTRAC:

• In the short-term, the board of director’s must arrange payment of fines for failing to

establish sufficient risk assessment and monitoring procedures as required by The

Act. As the board’s reputation will be damaged due to incompetency, key executives

will lose their jobs. Some customers will switch banks, reducing profits in the short-

term.

• Customers will view CBA as less competent, creating dissatisfaction.

• Competitors will gain some customers from CBA’s loss; their market share will grow.

• Shareholders will be dissatisfied with CBA’s incompetency. Share prices will fall in

the short-term and their profits will reduce.

• Individual employees involved in human-errors will be disciplined.

• Known money launderers will be prosecuted by law enforcement agencies.

5

Reasonably foreseeable consequences of not fully disclosing details of money laundering

information to AUSTRAC:

• For the board of directors, the consequences of not offering full disclosure is that in

the short-term they will feel they have not upheld their regulatory duty and are

aiding money launderers. They will feel relief that their system failures are not

exposed. In the long-term, once exposed by investigation for not offering full

disclosure, key executives will suffer jobs loss due to deceitful behaviour and non-

compliance. CBA will receive a large fine due to breaching The Act, which the board

must manage. CBA’s reputation will be severely damaged. Many customers will

switch banks, reducing profits.

• Customers will view CBA as untrustworthy and incompetent, creating significant

dissatisfaction.

• Competitors will be disadvantaged as CBA is not operating with the same regulations

as them. In the long-term, once CBA is exposed, a royal commission will result in

investigation of the entire financial sector. Competitor’s will gain a significant

number of customers from CBA’s loss.

• Shareholders would not have access to all information they would want when

making investment decisions, creating dissatisfaction once CBA is exposed. CBA’s

share price will reduce when exposed, and therefore shareholder profits will reduce.

• Employees will be dissatisfied as they are working for an employer who is not

following regulatory obligations as required by law. Once exposed, some employees

will be laid off as CBA must make cuts due to substantial fines.

6

• Not having full information will mean that AUSTRAC will be unable to regulate the

industry effectively as it’s autonomy is being ignored. In the long-term this will also

damage their reputation as regulators.

• Law enforcement agencies will have diminished capacity to investigate illegal

activity.

• The Australian public will be exposed to serious and perpetual financial crime. This

will create lost proceeds to crime within the economy.

The utilitarianism analysis concludes that the decision which creates the greatest good for

the greatest number in this case would be to fully disclose money laundering information to

AUSTRAC. While there is financial and reputational damage for either decision, it is

significantly worse for the board if they do not offer full disclosure. Further, the Australian

Public is indirectly disadvantaged when AUSTRAC and law enforcement agencies have

diminished capacity to perform their duties, this outweighs the minimal short-term benefits

to stakeholders. Many of the short-term benefits of not fully disclosing information are

negligible once the inevitable exposure of CBA’s non-compliance occurs.

Kantian Analysis

The primary duty in this case could be owed to either AUSTRAC as a regulator, or CBA’s

shareholders. As CBA operates with reporting regulations under The Act, they have

mandatory enrolment with AUSTRAC. In all decisions relating to disclosure of money

laundering information, the primary duty must be to AUSTRAC so that they are able to

regulate the industry. Under the assumption that there is no prima facie case, the maxims

for review are:

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“To always ignore autonomy”

or

“To never ignore autonomy”

Next, the Categorial Imperative must be applied to each maxim to determine if it passes as

an ethical law.

“To always ignore autonomy”.

1. Universalisable = No

The outcome would be that everyone would always ignore the autonomy of others. The

logical end point of which would be that all decisions are made based on deception,

coercion or manipulation. This is a self-defeating outcome.

2. Respect for rational beings = No

The sole intent of the decision-maker is to deny AUSTRAC’s right to autonomy to avoid

punishments. This is a selfish intent.

3. Respect for Autonomy = No

By always ignoring autonomy, the intent of the decision-maker is to deny AUSTRAC’s ability

to make free and informed choices. This is disrespectful of their autonomy.

The maxim fails all three Categorical Imperative tests; therefore, it is unethical.

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“To never ignore autonomy”.

1. Universalisable = Yes

The outcome would be everyone would always respect the autonomy of others. The logical

end point being that all decisions made are free of deception, coercion or manipulation. This

is a self-fulfilling outcome.

2. Respect for rational beings = Yes

By never ignoring autonomy, the decision-makers intent is to enable AUSTRAC to make free

and informed choices, despite punishments. This is a selfless intent.

3. Respect for autonomy = Yes

By never ignoring autonomy, the intent of the decision-maker is to respect AUSTRAC’s

ability to make free and informed decisions. This is inherently respectful of their autonomy.

This maxim passes all three Categorical Imperative tests; therefore, it is ethical.

The maxim “to never ignore autonomy” can be considered an acceptable ethical law. If

everyone must never ignore autonomy, the board of directors therefore must, regardless of

any consequences, respect the autonomy of AUSTRAC so that it can perform its regulatory

duties. Therefore, Kantian analysis recommends the ethical decision to fully disclose money

laundering

information to AUSTRAC.

Ethical Rights Analysis

The first stage of an ethical rights analysis is determining which rights are at play at the

point of the ethical dilemma. The following rights are relevant:

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• CBA board of director’s negative right to make business decisions, which obligates all

other rational beings not to prevent the board from making business decisions.

• AUSTRAC’s negative right to autonomy, which obligates all other rational beings to

refrain from acting deceitful, manipulative or coercive towards them.

• Shareholder’s negative right to autonomy.

• Law enforcement’s agencies negative right to autonomy.

There is a clash of rights between the board of director’s negative right to make business

decisions and AUSTRAC’s negative right to autonomy. This is the case as the board of

director’s is seriously considering not fully disclosing money laundering information to

AUSTRAC. According to the Hierarchy of Rights, autonomy is the more basic right, and

therefore must prevail. Without universal respect for the right to autonomy, the right to

make business decisions cannot be fulfilled. By not fully disclosing all known information

regarding money laundering transactions, the board are acting deceitful and ignoring

AUSTRAC’s right to autonomy and impeding its ability to regulate the financial industry.

Therefore, rights analysis concludes the ethical decision is to fully disclose money laundering

information to AUSTRAC.

Distributive Justice Analysis

Distributive Justice analysis begins with going behind the ‘Veil of Ignorance’ and identifying

the potential worst off parties affected by the ethical dilemma. The potential worst off

parties at the time of the ethical dilemma could be:

• The board of directors, as they are faced with a forced choice with undesirable

consequences.

• AUSTRAC, as their negative right to autonomy is being violated.

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• The shareholders, as their negative right to autonomy is being violated.

• Australian Federal Police, as their negative right to autonomy is being violated.

• The Australian public, as they are being exposed to perpetual financial crime.

At the point of the ethical dilemma, AUSTRAC is the worst off as their negative right to

autonomy is being violated. While other party’s autonomy is also being violated, the board’s

primary duty is to AUSTRAC, so it’s autonomy is priority in this decision. The board of

directors must therefore choose the outcome which best serves AUSTRAC. The alternative

outcomes are:

• To fully disclose money laundering information to AUSTRAC would have the outcome

that all autonomy would be respected.

• To not fully disclose money laundering information to AUSTRAC would have the

outcome that all autonomy would be ignored.

The only outcome that improves the worst off’s position is to fully disclose money

laundering information to AUSTRAC.

Final Recommendation

The case surrounds the primary duty owed to AUSTRAC and it’s right to autonomy,

necessary to regulate the financial industry. Based upon the above analysis, all four ethical

models arrive at the same conclusion. Therefore, it is recommended that the only ethically

justifiable decision is for the board of director’s to fully disclose money laundering

information to AUSTRAC. To minimise the punishments associated with this decision, the

board should consult with their lawyers to prepare for the inevitable lawsuit due to

improper risk assessment procedures and reporting failures, a breach of The Act. They

should collect all information detailing how and why systematic failures occurred in the risk

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assessment, monitoring and reporting processes to minimise fines. The board should

immediately release a PR statement explaining details of the failures and plans to establish

better risk assessment and reporting procedures adhering to anti-money laundering laws.

This would minimise reputation damage and loss of market share that would arise from

coverage in the media. The head of the board should resign to minimise overall job loss

within the board.

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Reference List

Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth)

AUSTRAC 2013, Enrolment and registration, viewed 1 May 2018,

.

Chief Executive Officer of The Australian Transaction Reports and Analysis Centre v

Commonwealth Bank of Australia Limited (2017) FDA.

Norton, S 2017, ‘Lessons from the CBA money-laundering scandal’, The Strategist, 15

September, viewed 2 May 2018,

laundering-scandal/>.

Parry, Y & Ockenden, W 2017, ‘Commonwealth Bank: How smart ATMs and a coding error

caused a massive mistake’, ABC News, 8 August, viewed 26 April 2018,

error-caused-mistake/8781066>.

Yeates, C 2017, ‘’Mistakes can be made’: CBA blames software for scandal’, The Sydney

Morning Herald, 6 August, viewed 1 May 2018,

blames-software-for-scandal-20170806-gxqiao.html>.