[Anonymous]

We have a board member who is a prominent orthodontist. He has been giving the bank employees a discount on services for themselves and their immediate children. He recently gave a substantial discount to an employee that is having some widely-known financial difficulties. The usual discount is greater than the $100 limit we have set for “accepting something of value” under certain conditions. We have been treating this as an exception to this rule because the discount is available to all employees. I hate for this employee to not get the large discount, but it seems it would not qualify for the exception since it is not consistent with the discount other employees are getting. Before I tell the director/employee they can’t do this, I want to make sure there isn’t something in the Bank Bribery Act/regulation that I am missing.

[rcooper]

Could this larger discount be based on a family or personal relationship where the circumstances make it clear that it is that relationship rather than the business of the bank that is the motivating factors? If so, seems it would be acceptable.

https://www.fdic.gov/regulations/laws/rules/5000-2300.html

https://www.occ.gov/publications/publications-by-type/comptrollers-handbook/_pdf/m-ia.pdf, p. 41-42.

[Anonymous]

No, the basis of the deep discount is the director trying to be kind to an employee who has had some personal financial struggles that are widely known throughout the bank.

[kowsley]

This is a tough situation. Was the employee fully versed in the code of conduct and the limit of $100? Did the employee fully disclose to the bank the discount provided by the board member? The FDIC link Robin posted in the above post discusses the following:

The code of conduct should provide that, if a bank official is offered or receives something of value from a customer beyond what is authorized in the bank’s code of conduct or written policy, the bank official must disclose that fact to an appropriately designated official of the bank. The insured state nonmember bank should keep contemporaneous written reports of such disclosures. An effective reporting and review mechanism should serve to prevent situations that might otherwise lead to implications of corrupt intent or breach of trust and should enable the insured state nonmember bank to better protect itself from self-dealing. However, a bank official’s full disclosure evidences good faith when such disclosure is made in the context of properly exercised supervision and control.

In my opinion, if the employee disclosed the discount and the bank doesn’t feel that it has threatened the integrity of the bank in any way then it wouldn’t violate the Bank Bribery Act because of the above statement. However, if the “Code of Conduct” is a policy established by the Board of Directors then it may warrant an approval of the exception by the Board. At a minimum, it is important that the exception is well documented and truly an exception.

[Anonymous]

Thanks, kowsley for your reply. Yes, the employee was fully versed in the code of conduct, as was the director. The (non-officer) employee actually followed policy and disclosed the discount through the proper channels. We would love for the director to be able to give this employee such a deep discount because most agree it would be a struggle for the employee to pay for the orthodontics treatment. Given the employees position and the full disclosure of information we do not believe the integrity of the bank would be compromised.

[Author]

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