Sunday, August 9, 2009

Conflicts of interest

A conflict of interest involves a conflict between a person’s duty and the persons own personal or private interests. A conflict of interest can be an actual conflict or can be perceived or a potential conflict.

A conflict of interest is not necessarily unethical or wrong. However, it is how the conflict is identified and dealt with that is important.

An example of a potential conflict of interest is a board member’s family computer company being given the contract to supply the organisation with new computers and file server. The conflict would not be handled properly if the board member did not advise the board of his interest in the computer company and arranged for no other quotes to be obtained. The conflict would be handled appropriately if the board member advised the rest of the board of his interest in the computer company and whenever the potential contract was discussed and the contract awarded, the board member removed himself from the discussions.

So what should be done to avoid conflicts of interest?

  • A conflict of interest register should be maintained and should be completed by all board members for any potential conflicts of interest;
  • If a conflict of interest arises or potentially arises, the board needs to be advised immediately;
  • Any discussions or other dealings with the issue that resulted in the conflict of interest should exclude that board member, including not being provided any documents such a board papers or copies of tenders received relating to the matter;
  • Do not be involved in any discussions regarding the issues, including leaving the room during any board meetings when the matter is discussed;
  • Do not place yourself in a position that may result in a conflict of interest, eg. accepting a gift from a supplier or contractor or being able to use confidential information for personal gain.

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