Top executive can no longer hide behind the board after Hamers’ ruling

“I swear – or promise – within the limits of my position, which I hold at any time in the banking industry, that I will perform my position with integrity and due diligence.”

This is how the professional oath that bank employees have taken since 2015. At present, 66,000 employees in the sector have already done so. This includes Ralph Hamers, who was ING’s CEO from 2013 to 2020.

The oath is not only intended to prevent a bank employee from committing fraud. For top executives and supervisory directors, the oath goes much further, according to a ruling by the appeals committee for disciplinary law at banks on Thursday.

Top executives, such as board members and supervisory directors, cannot hide behind the collective decision-making of the body in which they sit. They are also individually approachable.

This follows from the ruling of the Banking Disciplinary Appeals Committee in the case of former ING CEO Hamers and two former supervisory directors of the bank, ex-Shell boss Jeroen van der Veer and Henk Breukink, member of the remuneration committee. . The three were reprimanded on Thursday for their part in the riot surrounding Ralph Hamers’ salary increase. The requirement of a professional ban was not imposed.

Read also: Ralph Hamers: ‘This should never have happened’

The salary riot took place more than five years ago, in March 2018. At the time, ING wanted to give its chairman of the board a salary increase: from 2 to more than 3 million euros.

That plus of 1 million led to a lot of commotion. “Outrageous”, “old-fashioned grabbing”, was the message in The Hague. Shortly afterwards, ING quickly withdrew the plan. The riot gave Hamers an image of a greedy top executive.

In August 2022, the Banking Disciplinary Committee, which supervises the rules of conduct and the banker’s oath, stated that the proposed salary increase had “not contributed to social confidence” in the banking sector. But the committee did not see any individual behavior that violated the code of conduct. The Bank Disciplinary Prosecutor appealed.

The appeals committee fell on Thursday a harsher judgement about Hamers, Van der Veer and Breuking. “The chairman of the board and supervisory directors have not acted with due care, have not weighed up interests sufficiently and have therefore damaged society’s trust in the bank.”

The salary proposal also played a role when ING was the subject of a criminal investigation into facilitating money laundering. Not much later, the bank settled for 775 million euros.

Moral Dilemmas

The appeals committee for the banking sector emphasized on Thursday that the own role of top executives can indeed be tested under disciplinary law.

Disciplinary law at banks ensures that the outside world should have a better understanding of what exactly happens in the boardrooms of the major financial groups. “We never know otherwise,” says professor Mijntje Lückerath-Rovers (Corporate governance, Tilburg University). “It is a black box.” She believes it is important that there is more insight into the moral dilemmas that play a role in the boardroom. “It is important that directors are more transparent about the considerations they make.”

The lawyer for the three former directors is disappointed, he said on Thursday. According to him, as a top executive, Hamers was not responsible for the remuneration proposal. In the Netherlands, the supervisory directors determine the salary of the management board. Professor Lückerath dismisses that. “I think that is a very formal position. These kinds of things are done in mutual consultation.”

Hamers would never have complained about the level of his salary, it was always said. Whether this is really the case, the appeals committee has not been able to determine. In a statement on the website of Tuchtrecht Banken, she writes that the three men in the disciplinary proceedings did not want to provide information about the content of their conversations. The Committee believes that Hamers cs invoke the confidential nature of these conversations ‘on improper grounds’.