Rabobank Group

A customer sells greeting cards door-to-door for charity. But in actuality he does this primarily for his own financial gain. Is it ethically responsible for Rabobank to assist this customer?

The case
The entrepreneur in question has been a Rabobank customer for several years. The bank has not received any negative information concerning his ethics. One of his business activities involves selling greeting cards door-to-door for charity. While this is a completely legal activity, it has been revealed that in practice only ten percent of the proceeds actually go to charities. The remainder goes to the entrepreneur and the door-to-door salesperson. This while the people who buy the cards think their money will go to the good cause.

The Ethics Committee’s advice
This leans towards fraud. The Ethics Committee rules that doing business with these types of customers could damage Rabobank’s reputation. It consequently issues a negative recommendation concerning this customer relationship. As a general rule the committee thinks it is acceptable for Rabobank to assist such businesses. The related issue entails determining where to draw the line: what percentage of a charitable donation should actually go to the charity? In order to make an independent assessment possible for all the involved parties, it is advisable for charities to obtain a CBF Seal of Approval issued by the Dutch Central Bureau on Fundraising (CBF). The committee furthermore considers a business’ transparency vis-à-vis both the charity and the giver as a key criterion for the customer relationship.

A retail customer wishes to take out a loan. The bank is aware that the company where he is employed is struggling to survive. Is the bank allowed to utilise this information when deciding whether to grant the customer the requested loan?

The case
Income is a key factor in a bank’s decision whether or not to grant loans to customers. In this case, the customer’s income is sufficient for the loan. The bank, however, is aware that his employer – which is one of the bank’s customers – is experiencing difficulties. The retail customer is not aware of this. Rabobank wonders whether it is allowed to use this information.

The Ethics Committee’s advice
The Rabobank Group’s Code of Conduct states that the bank must protect the confidentiality of customer information. This means the bank may not use business information obtained internally for purposes other than those for which it was provided. The bank must respect Chinese Walls. The Ethics Committee consequently finds that it is ethically unacceptable for the bank to use internally obtained business information in assessing the retail customer’s loan application. The bank can, however, speak with the customer about his or her financial future within the context of duty of care.

Large numbers of children work in the textile industry in Asian countries. Is it advisable for Rabobank to provide financing to a clothing wholesaler that has activities in these countries?

The case
A clothing wholesaler is a customer of Rabobank. The company purchases its products in a large number of Asian countries where child labour is commonplace. It is unclear whether the clothing purchased by the wholesaler has in fact been made by children. The local member Rabobank wonders: can we continue the relationship with this customer?

The Ethics Committee’s advice
Rabobank has adopted the guidelines of the United Nations’ International Labour Organisation (ILO). Rabobank consequently opposes child labour. The reality in practice is, however, that child labour constitutes one of the few sources of income for poor population groups. Safe labour by young people should be possible providing the employer furnishes education and training. The Ethics Committee advises the local member bank to inform its customer that Rabobank opposes child labour. It also recommends having the customer confirm that the production operations meet the standards of the ILO. Providing that labour is involved in which the children receive sufficient opportunities for education, the committee can agree to the situation depending on the specific labour and conditions.

A local member Rabobank refuses an elderly woman’s request to transfer power of attorney because the bank thinks she is not of sufficiently sound mind. Is this ethically responsible?

The case
An elderly woman and her brother report to a local member Rabobank. The bank is requested to give the brother power of attorney for his sister’s account. Nothing seems to be out of the ordinary as the sister agrees to this and is willing to sign the documents. The bank, however, nonetheless decides to decline the request. It does provide permission for limited monthly withdrawals for household expenses. In the bank’s opinion, during the consultation the woman did not appear to be of sufficiently sound mind to enable power of attorney to be transferred legally.

The Ethics Committee’s advice
The committee fully supports the bank’s decision. It is the committee’s judgement that the bank clearly acted in the customer’s interest. The brother disagrees: he appeals the decision and files a lawsuit. During the hearing, the woman is revealed to be too confused to be able to give informed consent. The court consequently rules in favour of the local member Rabobank. 

One of the church’s main activities involves the laying on of hands. This is why a local member Rabobank has misgivings about whether this foundation’s application for financing should be approved. Is this concern justified?

The case
A new church denomination is planning to build a church building. The foundation applies to the local member Rabobank for financing. The bank has reservations regarding whether or not it should actually provide the financing. The misgivings are not because it is not possible financially, but rather because the church practices healing by the laying on of hands, the medical effect of which is doubtful. The local member bank submits the case to the Ethics Committee.

The Ethics Committee’s advice
The committee has no objections to the financing on moral grounds. Healing rituals are practiced within a number of religious movements. It is the individual responsibility of the churchgoer to assess the chances of healing through the laying on of hands. The committee is of the opinion that the bank does not assume this responsibility by providing financing.

A local member Rabobank wants to know whether it should conduct business with a Used Products shop, which is in fact a private pawn shop. Consumers can pawn goods at this shop at high costs in order to be able to receive cash money quickly.

The case
Most customers of the pawn shop are under financial pressure and are unable to obtain a loan from a bank. They consequently pawn jewellery and other valuable goods in exchange for cash money. They can then buy back their items within one or two months. If the owners do not repurchase the goods within this period, the shop sells them. The customer pays 20% interest per four weeks for this service, which equals annual interest of 260%. The pawn shops do not call this interest, but instead refers to it as saving or storage costs that also include labour costs. The bank wonders whether it should do business with this company.

The Ethics Committee’s advice
Help with debt problems is on the political agenda. While the lending regulations are becoming increasingly more stringent, these businesses can nonetheless loan money at vastly inflated rates of interest. Pawn shops are apparently a last resort for some consumers. They help people to obtain financing on the one hand, but on the other hand they cause people to run a high risk of getting into deeper financial problems. The Ethics Committee is of the opinion that it is appropriate for Rabobank to have a customer relationship with the pawn shop providing its economic activities meet all the legal requirements and the shop takes measures to protect customers against themselves.

An entrepreneur plans to make a living selling erotica on the internet. Is it ethically responsible for the local member Rabobank to conduct business with this company?

The case
The company in question is planning to market virtual erotica. It could, however, be difficult to gain and maintain a clear picture of the activities of customers who operate in this field. The activities can remain wholly or partially hidden in the virtual grey area. The local member Rabobank asks the Ethics Committee for advice.

The Ethics Committee’s advice
The Ethics Committee has in recent years regularly been presented with issues concerning conducting business on the internet. The commercial development of internet leads to specific ethical dilemmas, particularly in the case of virtual erotica. Illegal practices in this field, such as child pornography, women trafficking and forced labour are absolutely unacceptable to Rabobank. We do not, however, by definition exclude companies that are active in the field of virtual erotica. Local member Rabobanks must always thoroughly research the activities of the related entrepreneur.