Swaziland Railway Scandal Case Study

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1.4. Parallels between the Swaziland Railway Scandal, the CTA scandal and the Enron Scandal
Lack of sound leadership by the boards of directors. According to the King code 111 and the Sarnanese Oxley there is a need for Ethical leadership and corporate citizenship by a company. Also 1) the board should provide effective leadership based on ethical foundation according to Jackson and Stent (2010) the board of directors is prepared to implement the above mentioned principle, it must direct the strategy and operations of the business towards creating a business that is sustainable. Furthermore, according to Jackson and Stent such a strategy should take into cognisance the long-terms and short-terms impact of the strategy on three key aspects,
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Ineffective audit committee in the Enron and case and no audit committees in the Swaziland railway case and CTA case. According to the King 111 report and the Sarbanese Oxley Act 1) The board should ensure that the company has an effective and independent audit committee The (IOD: 2009) stressed that good corporate governance best practices dictate that a company should have an audit committee. Thus, in line with this principle, the board should approve the terms of reference of the audit committee. 2) The audit committee members should be suitably skilled and experienced non-executive directors Furthermore, the (IOD: 2009) contends that all members of the audit committee should be independent non-executive directors and there should be at least three members. The audit committee should collectively have sufficient financial knowledge of financial risks, financial sustainability reporting and internal controls. 3) The audit committee should oversee integrated reporting. The board of a company may delegate its responsibility for reporting and internal controls to the audit committee. Jackson and Stent (2010) noted that the audit committee will make recommendations to the board which will, after evaluating such recommendations, approve or reject them. One of the responsibilities of the audit committee is to monitor the integrity and completeness of the company’s financial reporting. This includes evaluating judgements and reporting decisions, such as changes in accounting…show more content…
Lack of truthfulness by managements on all sides. According to the King 111 report and the Sarbanese Oxley Act, 1) the board should ensure that the company is, and is seen to be a responsible corporate citizen. According to the (IOD: 2009) the success of the company can be measured using various yardsticks that include financial performance as well as the impact of the company on the economy, society and the environment. Thus, according to the King III the company should protect, enhance and, invest in the welfare of the economy, society and the environment. The King III emphasised the fact that being a good citizen for the company imply formulation of an ethical relationship of responsibility between the company and the society within which it operates. Thus while it can be argued that companies have rights, they have legal and moral obligations to with regards to their social and natural
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