Introduction
Huang (2021) defines cooperate governance as a system of rules, processes and practices that direct and control organizational operations. A vital goal of any cooperate governance is supporting more robust growth and a more inclusive society by building an environment of trust, accountability and transparency (Grafton, 2019). Currently, the allegory of heroic business no longer has much purchase, and most professional business organizations do not have a habitual affinity to be naughty. Nevertheless, regulations are essential to control business organizations’ behaviours and restrict action as they carry out their business task (Addink, 2019). Behaviour and culture are the main factors that are crucial in affecting the success of any cooperate governance. Australia is one of the largest market-oriented economies, and facing the effects of globalization, the importance of effective cooperative governance is growing (Zaman, Jain, Samara, & Jamali, 2022). Therefore, the paper is a business report for Crown Hotels and Resorts explaining Australia’s most recent governance failure.
Executive summary
Australia companies are established under Corporation Acts that entail common laws and various rules that regulate the internal affairs of companies. Corporate governance failure includes a general failure of the entire set of regulations, internal governance, markets and stakeholders (Gerged, 2021). In other words, it is the simple failure of organizational leadership and its rules to ensure an organization remains transparent, disciplined, independent, fair and accountable for its actions. Crown Resort become a significant description of corporate governance failure in Australia in several ways (Crofts & van Rijswijk, 2023). First, Crown needed to implement systems essential to detecting and deterring malicious transactions. Secondly, the Crown’s corporate governance failed to minimize risk and harm related to gambling activities. For this reason, standards have been eroded over decades in Crown Resort. Moreover, Crown demonstrated that the transparency and integrity of Australian corporate governance had been diminished (Correa-Garcia, Garcia-Benau, & Garcia-Meca, 2020). Besides, an inquiry into the selection of the board member revealed that the board and other executive staff needed to be better team players and were not carrying out their obligation effectively. The primary recommendation is to reform the Crown’s regulations and overhaul its board. Failure to oversee corporate governance policy results in a lack of risk management that eventually leads to adverse environmental impacts, poor decisions and investment as the significant implication.
Lack of legal compliance and a poor risk culture result in legal, commercial or environmental harm (Setzer & Higham, 2022). Even though Crown appeared to be committed to its ethical behaviours and code of conduct, the company still felt legal impacts due to the failure of its corporate governance. Crown’s ethical and legal failure, especially in its business dealing in China, led to the arrest of its executive staff (Nazliben, Renneboog, & Uduwalage, 2023). Indeed, ethical conduct and corporate culture can be a complex subjects to merge. However, the two are critical to an organization’s success legally. Having a poor policy exposed the Crown to lawsuits, damaging its reputation and causing a loss of capital investment.
Corporate governance failure devastates an organization’s market and the national economy. Crown is the most extreme recent example representing the existential threat of bad corporate governance to companies’ commercial, Perth Casino Royal Commission. (2022). Crown deviates from the defied strategy, which opens the way for financial difficulties and fraud. The Crown board failed to set, communicate and monitor the risk appetite of the hotel. Moreover, Crown Hotel facilitated money laundering in its controlled accounts, entering into commercial relationships with organized crime groups. For this reason, staff welfare was disregarded, leading to a loss of public confidence and trust. Crown hotels and resorts lack risk management, raising the probability of poor decisions and investments with a significant commercial impact. Moreover, an existing conflict of interest deteriorates the general public’s trust, making the hotel vulnerable to litigation. The serious systematic no-compliance, petitions of breaches and record of culpa among senior executive indicates a conflict of interest exists between Crown employers, the management and clients
Corporate governance failures have a significant impact on environmental sustainability. Hartcher (2021) articulated that environmental issues have become the prominent parameter firms use to gain a competitive advantage. Due to poor corporate governance, Crown Hotel failed in strategic decisions on social and environmental investment (Lin, Chen, & Xie, 2020). Moreover, crown Hotel lacks a history of environmental investment like pollution control and compliance with environmental regulations.
The Crown appeared to have violated the three governance factors in various ways, leading to corporate governance failure. Accountable business ethics is the critical problem facing the crown hotel, as there were no documented values, culture and integrity beyond compliance. Ethics entails the implementation of appropriate business policies and practices concerning disputably divisive themes. In the case of Crown Hotel, corporate governance fails to deter insider trading, discrimination, bribery and fiduciary responsibilities (Finnane, 2022). Widely, Crown governance failed to outline acceptable behaviours and clearly distinguish right and wrong. Organizational values, individual codes of conduct, legal values and public interest were not a matter of interest in the grown hotel’s governance.
Board composition is another factor of governance that Crown Hotel failed to comply with. Several suspicious activities among board members that are appropriate are a clear reflection of the incompetent board (Bergin, 2021). The lack of an experienced, knowledgeable board with attitudes and beliefs is the primary source of poor decision-making in Crown Hotel. Moreover, the hotel luck a diverse board of different backgrounds and demographics, making it fail to cultivate a wide range of demographic factors. Moreover, the Crown’s board composition was poor since it failed in an oversight capacity aspect. A good board composition uses various tools and knowledge to monitor and influence administration outcomes (Kyere & Ausloos, 2021). In the case of a crown hotel, the board did not have a program or tool for monitoring transactions to identify suspicious activities appropriate for the hotel’s complexity.
Lastly, crown hotel violated the risk assessment and security factor of governance. Ideally, there is various overwhelming evidence to support the civil penalty action for the hotel. First, the hotel failed to meet the existing anti-money laundering activities and could not mitigate the risk of their products and services being used for terrorism financing (Hartcher, 2021). Also, the Crown make its businesses and the general Australia financial system vulnerable to criminal exploitation since it lacks a counter-terrorism financial obligation. At the same time, the hotel board fail to carry out customer due diligence, even on some very high-risk customers that endanger the life of all other stakeholders.
Internal stakeholders of the Crown decided to make considerable modifications in response to the allegation of corporate governance failure. First, the company replaced the entire board, including senior executive staff, after the allegation (Ekardt, 2019). The main objective of the changes made is to eliminate an existing blemished risk system, a proclivity for misconduct and a desire for profit that prevailed over other ethical obligations. Moreover, the changes appeared essential since the previous board spearheaded the existing poor governance culture with no ethical and moral considerations. Despite the positive impact of the board renewal, Crown has also experienced a meaningful change in governance practices to eliminate an arrogant ignorant to compliant risk and regulations. At the same time, Crown ensured the new board composition was balanced for greater diversity (Bhaumik, Driffield, Gaur, Mickiewicz, & Vaaler, 2019). Preferably, when all board members have the same academic achievement and experience, it becomes difficult to find diverse opinions critical to rigorously challenging the company’s strategies.
Organizational reforms essential for corporate governance failure have been a matter of curiosity for decades. To ensure transparency, an organization should create a plan on what to be shared with stakeholders and how often it should be communicated. Frequent communications ensure openness and willingness to share accurate, easier understanding and clear information leading to a solidified business reputation and trust (Butzbach & Rotondo, 2020). Secondly, bests practices of corporate governance should be internalized to ensure accountability in future. There is a need to instil a culture of being accountable for every activity for all members to act ethically, lawfully and responsibly. Furthermore, executive staff and board members should lead by example living organizational values to aim for long-term value creation. At the same time, policies and procedures relating to board operations, stakeholders’ rights, and response to risk should be documented. The documented policies and procedures should be easily accessible to all stakeholders since they confirm compliance laws (Matuszak, Różańska, & Macuda, 2019). Finally, organizations should define proactive approaches to mitigate the risk before they happen. In other words, it is best to avoid the storm entirely rather than trying to weather the storm. Technology investment should be prioritized for waste management and preventing adverse environmental impacts. Commonly, the universe is experiencing an actual transition from an industrial society to an informational knowledge society and information transitions are essential.
Conclusively, a vital goal of any cooperate governance is supporting stronger growth and a more inclusive society by building an environment of trust, accountability and transparency. Australia is one of the largest market-oriented economies, and facing the effects of globalization, the importance of effective cooperative governance is growing. Crown Resort become a major description of corporate governance failure in Australia in several ways. Crown’s corporate governance failed to minimize risk and harm related to gambling activities. Lack of legal compliance and a poor risk culture result in legal, commercial or environmental harm (Huang, 2021). After the allegation, the company replaced the entire board, including senior executive staff. The Crown appeared to have violated the three governance factors in various ways, leading to corporate governance failure. Ideally, there is various overwhelming evidence to support the civil penalty action for the hotel. Organizational reforms essential for corporate governance failure have been a matter of curiosity for decades (Solomon, 2020). Frequent communications ensure openness and willingness to share accurate, easier understanding and clear information leading to a solidified business reputation and trust. Policies and procedures relating to board operations, stakeholders’ rights, and response to risk should be documented.
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