GMUL5063 ETHICS, LAW AND CORPORATE SOCIAL RESPONSIBILITY

Discussion on Company Law

Formation of Company
Lifting the veil of incorporation
Case: ASPATRA SDN. BHD. & ORS. v. BANK BUMIPUTRA (M) BHD. & ANOR [1987]
CLJ Rep 50; [1987] 2 CLJ 377.
Case: BANK BUMIPUTRA (M) BHD. & ANOR. v. LORRAIN ESME OSMAN [1986] CLJ
Rep 294; [1986] 1 CLJ 196.
Companys Management: Duties and Liabilities of Company Directors and Other
Officers
1. Managing a company is similar to managing a country where employees should be
recognized as having the same civil rights as that of a citizen. Do you agree or disagree
with this statement? Provide examples.
2. Companies should involve workers in the decision-making processes. What do you think
about this statement? If YES, then what is the purpose of having a manager? If NOT, give
reasons.
3. As a worker in an organization, what should be your responsibilities in order for your
company to flourish but at the same time your welfare is taken off. Discuss with
appropriate examples.
4. You are a managing company. You are facing unrealistic or excessive demands from
employees union that might affect your companys profit and efficiency. What will you
do? Discuss with specific examples.
5. Companies that invest in their human capital, develop it, and reward people for
performance, make more money than those who place less emphasize on human capital.
Is it true? Explain with appropriate reasoning.
White Collar Crime

1. Explain what is fraud and what is abuse? What are the differences and similarities
between them? Explain with appropriate examples.
2. You knew that your best friend in your company has been committing fraud and abuse for
quite some time and you feel that you need to stop him from continuing doing so. What
steps will you take to do that? Explain.
3. The responsibility to stamp out fraud should be shared by all members of the
organization. What is meant by this statement? Explain with relevant examples.
4. Case 1:
Mary Smith (not real name), a financial manager for a leading international company in
Johannesburg, and a 50-years-old mother of three, was earning a R16000 monthly salary.
As it happened, Smith developed a gambling addiction that allegedly led to her stealing
millions from her company over 3 years, and which ultimately saw her shoot herself
when her secret was exposed.
She began by forging cheques, initially for small amounts, later for increasingly larger
amounts. Since she was solely responsible for the creditors function, she simply
destroyed the cheques when they were returned from the bank. But once she found the
way to steal, she literally couldnt stop. It no longer was a need for money; it became a
R32-million compulsion!
Smiths fraud was uncovered after a customer of Smiths company saw her being treated
as a most favoured client at casinos a status reserved for those who played with
hundreds of thousands of rands at a sitting. He phoned Smiths Managing Director who
looked into Smiths situation and noticed that her income simply did not match the
amounts she was gambling.
When the investigation started, she committed suicide in her luxury home in
Hartbeespoort dam, bringing an end to an astounding tale of fraud. What had started
embezzlement that had gone undetected for 3 years.(Ernst & Young, 2003)
5. Case 2: PP v. TOH CHUN TOH GORDON & ANOR [2012] 10 CLJ 890
Corporate Governance

1. Explain what defines good corporate governance and explain how it differs from
corporate management. Give examples to illustrate your answer.
2. The responsibility for corporate governance lies with the board of directors. Explain this
statement. Provide examples in your explanation.

Whistle Blowing
1. Case 1
Jane worked as a legal adviser in the foreign exchange division of a major bank. In that
capacity, she from time to time rejected foreign exchange transactions which clearly
contravened the foreign exchange regulations that banks are subjects to. One day in a
meeting she realized that a number of transactions that she had rejected had been
approved by the Financial Directors of the bank.
Very upset by this news, she immediately brought these contraventions of the foreign
exchange regulations to the attention of the compliance officer of the Bank. He promised
to look into the matter.
A few weeks later, she inquired from the compliance officer what his investigations had
revealed. He confirmed that the transactions indeed constituted a contravention of foreign
exchange regulations, but asked her simply to accept these transactions as part of the way
in which the bank did business. She learned that the CEO of the bank had also approved
of the transactions.
She took the matter further by contacting other senior managers in the bank. Their
reactions were all similar: Do not rock the boat. Simply accept the culture of the bank.
Following her lack of success, she decided to contact the Minister of Finance in order to
bring these contraventions to his attention.
The Financial Director was outraged when he learned about her intention to report the
incidents to the Minister of Finance. He viewed it as a breach of trust and a breach of the
secrecy provisions that she had signed in her employment contract. Soon afterwards she

was transferred to another section. The transfer was an effective dismissal as no post
existed for her in the new section.
Suffering from the effects of stress, Jane left the bank 3 months later on the basis of
redundancy and with 3 months salary. She had to sign a secrecy undertaking and
received a letter from the bank stating that she had voluntary resigned.
2. What are the similarities and differences between whistle-blowing and gossip?
3. Whistle blowing is considered an act of disloyalty to the organization, colleagues and
superiors. Do you agree with this statement?
4. Whistle-blowing is the act of reporting wrongdoings in an organization. However, on the
other hand, some people say that whistle-blowing can cause havoc in organizations and can
ruin the lives of whistle-blowers. How do you explain these two statements?