SELECT 2 AUSTRALIAN COMPANIES THAT HAVE EXPERIENCED RECENT CORPORATE GOVERNANCE FAILURES. RESEARCH THE FACTS OF THE FAILURE AND WRITE A BRIEF COMMENTARY. EXAMPLES INCLUDE: -ABC LEARNING -ALLCO FINANCE...

The paper discusses about the two Australian companies that have experienced recent
corporate governance failures.
Gay and Sinnet (2000) define corporate governance as the system by which companies are
governed and controlled. Whereas, Woodward, Bird and Sievers (2001, 498) define corporate
governance as a “catch all phrase used to refer to management issues, incorporations and the
mechanisms by which corporate management can be supervised and made accountable to its
members, employees, creditors and the community”. The Australian Prudential and
Regulatory Authority (APRA) have used the services of Corporate Governance International
Pty Ltd since 1994 to provide it with rating and analysis of large regulated financial
institutions listed on the Australian Stock Exchange. APRA also uses a “PAIRS” risk rating
system to assess the strengths and weaknesses of boards. (APRA, 2002)
Corporate Governance Failure of NAB (National Australia Bank)
The National Australia Bank failed in internal governance procedures due to the lacking
management supervision, poor adherence to risk management systems and controls. This fact
was recognized in the year 2004 and was reported in the Annual report of the company which
stated that due to the failure of corporate governance of the company, it generated poor
results and the reputation got affected adversely due to which it showed insufficient
accountability and lack of clear cultural framework.
In January 2004 it came to light that unauthorised trading by NAB foreign currency traders
(three in Melbourne and one in London) resulted in projected losses of AUD360 million. The
losses on currency options were caused by the traders positioning the...