CBB15999: Applied Business Ethics Report on Trustco Group Holdings

This report provides an in-depth analysis of the business ethics of Trustco Group Holdings. It begins with an introduction to business ethics and the company's background, including its financial service offerings in banking, insurance, and investments. The core of the report involves an ethics audit and analysis, identifying key ethical challenges such as issues with financial reporting, conflict of interest, and the lack of a comprehensive, documented code of ethics. The report examines the company's current ethical standards, highlighting areas of concern and the impact of the absence of a formal code. It concludes with recommendations for strengthening ethical practices, emphasizing the need for transparency, accountability, and a robust code of conduct to mitigate risks and improve stakeholder relations. The report underscores the importance of ethical considerations in financial operations and corporate governance for sustainable business practices.

Applied Business
Ethics
Running head: Advance Business Ethics 0
Student’s Name
Address

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Contents
Introduction......................................................................................................................................2
Background of the company............................................................................................................2
Ethics audit and analysis..................................................................................................................3
Conclusion.......................................................................................................................................7
Reference.........................................................................................................................................8

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Introduction
Every business work to earn profit as the same lead to its commercial motive. However,
these businesses work in an open environment where they affect many of the factors as well as
get the effect from other elements. In such a situation it becomes the duty of businesses to work
responsibly and sustainably while pursuing these activities. Here the role of business ethics
becomes important. Here to state that business ethics is nothing but a form of applied ethics that
guide the behavior of the business. In other words, this can be stated that business ethics are
important as they prevent businesses by adopting malpractices and provide safeguard to the
stakeholder of the business. The purpose of this report is to develop an understanding on the
subject of business ethics. To meet this purpose, the report will address different aspects related
to topics such as the background of the company, industry of the same, ethical challenges and
current code of ethics in the context of one local business. The business selected for the
discussion here is Trustco Group Holdings (herein after referred as Trustco or the company).
Background of the company
Trustco Group Holdings is a financial service provider that primarily deals in banking,
insurance and lending business in addition to other investments of educational and property
business. This segment can be understood as a traditional mainstay of the group where it has
huge commercial operations. In conjunction with this, the company also provides shared services
that offer administrative and support services. To make the operations of the company, this can
be stated that the company has three major business segments a follows:-
 Banking and finance

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 Insurance and investment and
 Resources
The company has received several awards for its good performance over the periods that include
Gold award, PMR award, Deloitte’s Annual Best Company, and many others.
Ethics audit and analysis
As mentioned above, every business has certain ethical standards and codes that
providence guidance to the managers and employees of the business. Nevertheless, only
developments of these standards are not enough but every business must adhere to the same.
Ethics audit and analysis is an important tool to check whether an entity is following the goals
and values that have been set up by it in the social sphere (forumias.com, 2020).
If to discuss the results of an ethical audit conducted of Trustcom this is to state that the
company is doing well. It can be reflected from the fact that it has received the title of a large
size company in the Deloitte Best Company survey in 2019 (deloitte.com, 2019). The award has
been granted based on the attraction index as well as the engagement index. Attraction index
considered four dimensions such as accomplishment and growth, values and culture, fairness and
integrity and care and feedback. It shows that in these sectors, the company is doing well. The
company has set up some standards about these aspects and seems fulfilling them appropriately.
However, it does not mean that the company did not contain any ethical challenges. An ethics
audit has identified some of the areas where the ethics of the company seems to be in a
questionable state. The very first ethical challenge that found is the company's practice where the
same failed to reimburse certain legal practitioners. In addition to the legal practitioners, several
firms are also ready to take action against the company. Another issue is also there where a

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company's actions found prejudicial to the clients of legal practitioners. These ethical challenges
are very latest and are being monitored by the Law Society of Namibia (lawsocietynamibia.org,
2018).
Apart from the above, another ethical challenge that the company is facing is related to
the financial reporting of the company. It has been alleged that the company includes unallowed
incomes in its income headlines that make the investors and shareholders confused. The
accounting policies of the company under the leadership of its CEO Quinton Van Rooyen always
been in controversy. For instance in last year, the company has waived a loan worth R1 billion,
due to the same profits of the company has shown high but the company has not paid any
dividend (prnewswire.com, 2020). The incident has put a negative impact on the investors where
they believe that the company is facing a cash crunch. This is not the only concern that has been
detected in financial reporting of the company but in addition to this, other accounting moves
also raised concern where the company has decided to reclassify some of its property and it was
believed that as per Namibia’s property market the reclassification was highly overvalued
(Thompson, 2020). This overvaluation of the property is certainly an ethical issue, which gives a
false implication to the stakeholders regarding the strong financial status of the company and
influences their investment decision up to a significant level.
Issues with the financial decision and representation by the company are not new and
have been in news since 2017 where the company did not auction its non-performing loans and
even bought them back. The company has moved its property from "level 2 non-financial assets”
to “level 3 non-financial assets” in the financial statement of 2017. The company is contentiously
revaluating the assets and therefore in books, profits are showing good but in actual the situation
is not as strong as it seems, as they are not creating any real value for the shareholder. Trustco’s

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subsidiary Legal Shield Holdings has announced a deal with Conduit Capital which would allow
the company to gain an asset by the mean of using “overvalued” shares of Legal Shield Holdings
(Joubert, 2020). In this deal, Riskowitz was a common stakeholder in Conduit Capital and
Trustco. In addition to this, the fund manager of Riskowitz has the position of CEO in Conduit
Capital. For this reason, the transaction seems to be affected by a conflict of interest. These are
some of the main ethical challenges that the company has. These issues are majorly related to the
financial and corporate governance aspects of the company.
Now after the identification of ethical challenges, the code of ethics of the company is
required to have a look upon, which shows values and intention of the same. Here to state that
the company does not have a combined code of ethics but the website of the same reflects a
certain point regarding the same. In other words, this is to state that it has developed its code of
conduct but the same is not documented at a place. If to discuss the provisions made by the
company in its direction this is to state that the same believes in taking care of all the
stakeholders. As per these provisions, management and board of the company believe in
maintaining transparency in their dealings to achieve growth and vision. The company has
developed subcommittees to support the board in the execution of responsibilities. Further, it
believes in exercising effective control as well as maintaining group legitimacy (tgh.na, 2020).
As mentioned above, the company does not have a documented code of ethics, it is
affecting the manner of working of the company. Due to the lack of code of ethics, management
of the company is not able to understand the required behavior. The Board of the company is
aware of the fact that they need to be ethical in their dealings but are not able to adopt the right
actions. For instance, the CEO of the company recently answered many of the media questions
where he made it clear that the company does not pursue any unethical. Nevertheless, the

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situations are being repeated where actions of the company are in question due to a lack of
proper justification and transparency. The CEO stated that the company has done everything
according to the applicable laws. The Code of ethics/conduct made it easy for business managers
to make easy and clear choices.
If to discuss the impact of lack of a clear code of ethics on the business selected hereby,
this is to state that the due to the same company usually fails to provide disclosures related to
financial aspects on time which further creates issues. If a code was there it is was expected to
make timely disclosures to investors regarding financial decisions. Further, as the company did
not make the payment of legal practitioners, the issues would not have been there in the presence
of code of ethics as a code contains the idol manner of working even with those where the other
person is on the mistake as it identifies virtues irrespective of other aspects. The company did not
only overvalue its assets but also failed to provide a return on investment to the investors. This
action lack virtue of fairness and integrity of actions and again it is a direct impact of the absence
of code of ethics. Similarly, due to the lack of code of ethics, the company has failed to pay
enough attention to the conflict of interest while dealing with Conduit Capital. If a code would
have been there, it is expected that the company would not have pursued a conflict of interest.
The company is not lacking ethics in any other area as no case related to a privacy
breach, underpayment of wages or employee dissatisfaction, sustainability failure have been
reported. The ethics audit conducted over Trustco Group Holdings stated that the same is lacking
economic concern in its dealing (tgh.na, 2019). These are the financial measures, which are
crucial for the health of this company. Fairness, transparency, management of conflict of interest
is some of the ethical attributes that the company failed to pursue. In the ethics audit conducted
hereby, the first focus was me to the vision of the company according to that the company

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prefers to be lending providers by offering affordable products and efficient client services. On
the different side mission of the company focus on providing a high return to shareholders with
the highest level of customer advocacy. Further to pursue accountability, responsibility and
ethical behavior are also a part of the company's mission. Here to state that it is a commitment of
the company. Nevertheless, in reality, the company seems to be at a failure by not satisfying the
dividend need and need for true and fair reporting.
Conclusion
To conclude this report, this is to state that for nonfinancial aspects such as sustainability and
environment, the company is doing well but when it comes to financial aspects it lacks ethics due
to the absence of a documented code of ethics able to regulate decisions and choices. By
developing a code of conduct, company can make the responsibilities of executives clear in
addition to providing prescription over idol behavior and decisions in respect to financial aspects.

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Reference
deloitte.com. (2019). Deloitte Namibia Best Company Survey 2019 Winners. Retrieved From:
https://www2.deloitte.com/na/en/pages/human-capital/articles/Deloitte-Namibia-Best-
Company-Survey-Awards-2019.html
forumias.com. (2020). What do you mean by ethics audit? Is it different from a financial audit?
Retrieved From: https://forumias.com/portal/what-do-you-mean-by-ethics-audit-is-it-
different-from-a-financial-audit-2/
Joubert, F.(2020) If you missed the warnings signs on Steinhoff - don't miss them on this
company. Retrieved From: https://fspinvest.co.za/articles/investing/if-you-missed-the-
warnings-signs-on-steinhoff-don-apstrphe-t-miss-them-on-this-company-8157.html
lawsocietynamibia.org. (2018). LSN response to statements made against legal practitioners by
Trustco Group Holdings. Retrieved From:
http://www.lawsocietynamibia.org/content/news/press-statements-2018/press-release-lsn-
response-to-statements-made-against-legal-practitioners-by-trustco-group-holdings
prnewswire.com. (2020). Trustco Group Holdings' Dr Quinton Van Rooyen Responds To Media
Questions. Retrieved From: https://www.prnewswire.com/news-releases/trustco-group-
holdings-dr-quinton-van-rooyen-responds-to-media-questions-301009652.html
tgh.na. (2019) Integrated 2019 Annual Report. Retrieved From:
https://www.tgh.na/wp-content/uploads/2019/07/TBN_FIN_IAR-2019.pdf

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tgh.na. (2020). Governance Overview And Focus. Retrieved From:
https://www.tgh.na/governance-and-sustainability/overview-and-focus/
Thompson, A. (2020) A controversial JSE-listed company plans a new city outside Windhoek –
and blames criticism on a 'cabal'. Retrieved From:
https://www.businessinsider.co.za/trustco-2020-2