73.2 BACKGROUND TO THE PROBLEMS
73.3 EMERGING PROBLEMS
73.4 RENEWAL INTRODUCED BY TWO WHISTLE-BLOWERS
73.5 WHY BEST PRACTICES CANNOT PREVENT PROBLEMS
In 2004, a group of seven (G7) male directors of the largest bank in Australia provided a high-profile example of men behaving badly to "cause detriment to the corporation" in the words of Section 182(1)(b) of Australian Corporation Law (ACL 2001). They illustrated the irrelevance of the so-called best practices in corporate governance.
The National Australia Bank (NAB) Annual Report stated for the fiscal year ending September 2003 that it was ranked among the top 30 most profitable financial services organizations in the world and conformed to the highest standards of corporate governance. As the bank was listed in the United States, it had to comply with the Sarbanes-Oxley Act (SOX) and have a "financial expert" on its board.
In March 2004, a report by the Australian Prudential and Regulatory Authority (APRA 2004 ) was made public about an $A360 million foreign exchange (FX or forex) loss announced by the bank in January of that year. The report by the banking regulator revealed how the so-called best practices of corporate governance had proven to be impotent in permitting the directors to discover, let alone prevent, fraud. It also illustrated how so-called ...