Personal relationship affecting professional judgement
Sam was a branch manager of a bank and had known George for over twenty years. George was a director of a karaoke lounge and, through Sam's assistance, had borrowed a loan of $20 million from Sam's bank several years ago. Sam gave his application the green light, even though his business was rated a little risky according to the bank's loan policy.
George handled the repayments but when the economy worsened he found it impossible to honour even the interest of the last three installments. Afterwards, Sam was instructed by the credit control department to examine George's financial position and make a recommendation to the bank. Sam found that George's situation was really bad and the bank should call back the loan immediately. George begged Sam not to do so or he would face bankruptcy. Sam felt uneasy but agreed to help in the end.
Sam might breach his bank's internal policy on credit control by abusing his authority to make a favourable recommendation disregarding the real state of George's business. Sam should not allow his personal relationship with George to affect his professional judgement. Rather, he should declare their relationship to the senior management before making a recommendation. To safeguard his own interests, he should keep the management well informed of the matter and abide by their subsequent decisions.
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