Thank you to share your anecdata. If I might speculate... perhaps the person's background check showed a previous trust issue. Example: Recently (last 3-5 years) convicted of theft. Or dismissed from a job for theft. If the person was convicted of something unrelated to trust -- had a fight at a bar or drink driving -- it could be overlooked. (Or more charitably, if the trust issue [theft] was related to a drug addiction many years ago, and the person had received treatment, it could be overlooked.)
I agree: Many items in the background check are ridiculous. Many years ago, I worked at a company where many of the Big Shots were regular, recreational cocaine users (confirmed by juniors who went bar hopping with them once a week). All new employees were required to pass drug tests. It was absurd. In that era, even marijuana was enough to have a job offer withdrawn.