Australian Case Study in Corporate Governance – Hih Insurance

Based on the above problems of JB Hi-Fi, the company should make some adjustments to the board composition. In many situations, non-executive directors serves mainly the managers to increase their power. People that sit on a board do necessarilyhave some kind of personal or professional ties, since they are part of the same rather small social group, the business elite. Hence, the challenge is hence to create organisational structures that allow an efficient control despite these social ties. The only solution to solve the problem is transparency, for example, each director has to openly declare his or her ties. However this is not legally enforced or controlled, it depends entirely on the integrity and business ethics of the director. Despite of that, the efficiency of control mechanisms can still be enhanced by the existence of a self-imposed “ethical code” among the business elite, and a social control among these elite guaranteeing the observation of this code. As a result, JB Hi-Fi should fully acknowledge the need for directors and executives to observe the highest ethical standards of corporate behaviour and assist them in applying the Code of Conduct in

Date back to 1960, a Hungarian immigrant Larry Adler founded an insurance company named FAI Insurance. After he dead in November 1988, his son Rodney Adler was inherited the company become Executive Chief by the board of FAI Insurance. After struggling in the stock market crash 1987, in September 1998 HIH Insurance has takeover bid $280 million cash and shares of FAI Insurance without due diligence. After that, HIH sold out FAI’s assets, several companies and one hotel in New York about $450 million. At that time, Adler became a director of HIH. However, after a magnate loose in both London and US insurance, HIH almost collapse in March 2001. In that situation, HIH try to sell FAI business to get much-needed cash. It’s sold $320 million to

The word “fraud” was magnified in the business world around the end of 2001 and the beginning of 2002. No one had seen anything like it. Enron, one of the country’s largest energy companies, went bankrupt and took down with it Arthur Andersen, one of the five largest audit and accounting firms in the world. Enron was followed by other accounting scandals such as WorldCom, Tyco, Freddie Mac, and HealthSouth, yet Enron will always be remembered as one of the worst corporate accounting scandals of all time. Enron’s collapse was brought upon by the greed of its corporate hierarchy and how it preyed upon its faithful stockholders and employees who invested so much of their time and money into the company. Enron seemed to portray that the goal of corporate America was to drive up stock prices and get to the peak of the financial mountain by any means necessary. The “Conspiracy of Fools” is a tale of power, crony capitalism, and company greed that lead Enron down the dark road of corporate America.

Between the years 2000 and 2002 there were over a dozen corporate scandals involving unethical corporate governance practices. The allegations ranged from faulty revenue reporting and falsifying financial records, to the shredding and destruction of financial documents (Patsuris, 2002). Most notably, are the cases involving Enron and Arthur Andersen. The allegations of the Enron scandal went public in October 2001. They included, hiding debt and boosting profits to the tune of more than one billion dollars. They were also accused of bribing foreign governments to win contacts and manipulating both the California and Texas power markets (Patsuris, 2002). Following these allegations, Arthur Andersen was investigated for, allegedly,

Phenomenal growth of interest in corporate governance has emerged in recent years. The body of literature on the subject has grown markedly in response to successive waves of large corporate failures. Furthermore, there have been numerous attempts to define what constitutes ‘good corporate governance’ and to provide guidelines in order to enhance the quality of corporate governance.

While they have arrangement and discharging control over the directors of the enterprise, shareholders in expansive organizations, for example, the criminogenic Shell, Exxon, Occidental Petroleum, Union Carbide, Dow Chemical, Ford Motors, La Roche-Hoffman, BHP, A.H. Robins, General Electric, Johns-Manville, James Hardie, all enterprises whose disregard and willful dismissal of surely understood norms of conduct has brought about shocking mischief, have minimal impetus to guarantee that these supervisors carry on legitimately. This happens because financial specialists who don't lawfully own the property of the company used to do any harm, they have no individual legitimate obligation regarding any such damages brought about by the misapplication of that property. The rich shareholders who are continually telling the riches less and poor people to be responsible and in charge of the route, in which they act and live, are, in law, unreliable for the (regularly detestable) behavior of their companies. It deteriorates the

The audit world was transformed more than ten years ago due to a series of accounting scandals. This change took place when The Sarbanes–Oxley Act of 2002, otherwise known as SOX, was passed affecting not only business entities but also the firms that audit those companies (Thomas). One of the companies whose fraud was unmasked by the passage of SOX was HealthSouth Corporation. A company in the healthcare industry who had overstated about $2.7 billion dollars in earnings since 1996. The company’s CEO, Richard Scrushy, was the first to be tried under SOX for misrepresenting and signing off on misleading financial statements(Accounting Fraud at HealthSouth).

In the August 2015, most of the Australian business media reported that the board of Federation Centre (“FDC”) sacked Steven Sewell as a Chief Executive Officer (CEO) and then replaced him with Angus McNaughton as a new CEO. This removal subsequently surprised investors and markets because it occurred just two months after the completion of the merger between FDC and Novion Property Group (“Novion”). Moreover, there is no further explanation from the board of FDC about the reason of removal Steven Sewell. Consequently, the shares of the FDC declined 6% since the replacement.

Mr Groves’ corporate governance practices were poor, and is currently in legal proceedings regarding interparty transactions, this was certainly news worthy, and damaged the company’s reputation and slowed investor confidence. Additionally, the price paid to companies was deemed to be above market norms, siphoning more money from the companies depleted coffers.

The first section of this essay focuses on the possible causes of corporate failures including dominant CEO, poor strategy decision and the failure of internal control. Secondly, it discusses how the third edition of corporate governance principles and recommendations could be applied to prevent the causes of the failure. The 1st, 2nd, and 7th principles along with specific recommendations will be mentioned in this section. However, the context is concerned solely with the causes stemming from Dick Smith itself.

The breakdown of Dick Smith Electronics has aroused wide concerns in Australia since it brought losses to the related parties at different levels. This essay focuses on analyzing how the company could have possibly avoided the failure if it had applied the third edition of ASX Corporate Governance Principles more effectively.

The Governance and Nominating Committee is required to monitor and set guidelines relating to the Boards access to information and management. In the Bombardier executive environment these guidelines are challenging to monitor and control due to the family control of the Bombardier and the lack of truly independent board members. It is further complicated by having members of the family holding other executive and c-suite positions through the organization.

There is no clear framework of the rules that would cover the contingencies of a ruling to pierce the corporate veil Idoport Pty Ltd v National Australia Bank Ltd. The corporate Veil usually protects owners and shareholders from being held liable for corporate duties. Yet again a decision made by the court to lift that veil and would place the liability on shareholders, owners, administrators, executives and officers of the company without ownership interest. The purpose of this essay is to conduct an analysis on the concept of lifting the corporate veil and to review the different views on its fairness and equitability to present a better understanding of the notion, the methods used was throughout researching the numerous scholars views on the subject, case law and statutes examples, and the evidence provided by the empirical study of Ramsay & Noakes. When we discuss the lifting the corporate veil the first case that pops out is the case of Salomon V A. Salomon & Co Ltd, since the decisions of applying the corporate veil were first formed as a consequence of this case. The idea covers all of company law and distinguishes that a company is a separate legal entity from its members and directors. Furthermore, spencer (2012); have indicated that one of the core principles that followed the decision in Salomon v Salomon was the wide acceptance one man company’s. However In order to form a

This report sets out to review corporate governance at a private company, namely, Paramount Insurance Company. The specific objectives were to identify the relevant codes the organisation follows, why they are important and review the structure, process and

Most of the world has heard of Enron, the American, mega-energy company that “cooked their books” ( ) and cost their investors billions of dollars in lost earnings and retirement funds. While much of the controversy surrounding the Enron scandal focused on the losses of investors, unethical practices of executives and questionable accounting tactics, there were many others within close proximity to the turmoil. It begs the question- who was really at fault and what has been done to prevent it from happening again?