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Introduction to Conflict of Interest Management

What is conflict of interest?

In most countries there are increasing expectations from ordinary citizens, business leaders and civil society that governments should deliver higher standards of integrity in the civil service, public institutions, public services, government-controlled corporations, and government itself. In this context, conflict of interest in its various forms should become a significant consideration in the day to day work of those who occupy any position of trust. This Toolkit is intended to help to make those expectations a practical reality. Conflicts of interest in the public sector are particularly important because, if they are not recognised and controlled appropriately, they can undermine the fundamental integrity of officials, decisions, agencies, and governments. “Integrity” is used in the public sector to refer to the proper use of funds, resources, assets, and powers, for the official purposes for which they are intended to be used.

In this sense the opposite of “integrity” is “corruption”, or “abuse”. Conflict of interest is both a straightforward and a complex matter: in principle easy to define – in the public sector a conflict of interest arises “when a public official has private-capacity interests which could improperly influence the performance of their official duties and responsibilities.”* Establishing effective policy frameworks to control conflicts can be a complex task. To resolve a specific conflict, it is necessary to establish relevant facts, apply the relevant law and policy, and distinguish between “actual”, “apparent”, “real”, and “potential” conflict situations. This requires technical skill and an understanding of the many issues which are usually involved. Most people are uncertain about this area of public sector ethics, partly because the language itself can be confusing. “Having an interest” in, for example, the outcome of a decision is not the same as being “interested” in the outcome, i.e. curious. If officials could gain something personally from their decision they can be said to “have an interest” in it.

A “conflict of interest” therefore involves a conflict between officials’ personal interests (what they could gain, not necessarily financially) and their duty as a civil servant and is to be avoided as far as is reasonably possible. In general, the appearance of a conflict of interest is also to be avoided, to minimise the risk to the organisation’s reputation (and officials’ personal reputation) for integrity. As perceived conflicts of interest could be similarly harmful to the trust in public decision making, managers should also consider perception when they decide on specific cases. There are costs attached to such avoidance, and costs in preventing, assessing and managing such risks. There are also costs involved in any actual harm that does in fact result from a particular conflict situation. As in most areas of public management, a realistic, contextually-appropriate and proportional response to each case is required.

Importance of conflict of interest management in the public sector

New forms of partnership between government and the private sector and increasing engagement by governments with civil society, mean that conflicts of interest take new forms, presenting new challenges to policymakers and public managers. Conflict-of-interest situations cannot be avoided by simply prohibiting all private-capacity interests on the part of public officials: instead, public officials must take personal responsibility for identifying and resolving problem situations, and public institutions must provide realistic policy frameworks, set enforceable compliance standards, and establish effective management systems. They must also provide training, and ensure that officials actually comply with the letter and the spirit of such standards. This Toolkit, and the OECD Guidelines for Managing Conflict of Interest on which it is based, take the position that a conflict of interest is not necessarily corruption, which is understood as “actual abuse of public office for private advantage”. But a conflict does have the potential for corrupt conduct. Conflicts between private interests and public duties of public officials must therefore be correctly identified, appropriately managed, and effectively resolved.

Left unresolved, a conflict of interest can result in corrupt conduct, abuse of public office, misconduct, breach of trust, or unlawful action. More importantly, public confidence in the integrity of public institutions can also be seriously damaged. The main focus of the Toolkit is on the actions of individuals, which can either compromise or reinforce the integrity of whole institutions. Where the focus is on systems, the Toolkit encourages users to consider specific tools as part of an “integrity system” which strengthens reliable government and public management. Some tools may be used for more than one purpose, supporting both individual and systemic integrity.

This Toolkit is intended to provide generic examples of practical ideas and instruments for policy makers and managers to develop, adapt, and apply as suitable in their own political and administrative context. As a guide for users, each Tool specification contains a link to the relevant section(s) of the Guidelines, and the key ideas in the Guidelines are similarly cross-referenced to the Toolkit elements.

The Role Of The Public Official 

Notes: It is important to recognise that the term “public official” is being used here generically to refer to public servants, civil servants, public employees, or elected officials, or any other kind of official who performs public functions or duties on behalf of the State, a government, or a government organisation, where the exercise of lawful power is involved. A public official can be concerned with the exercise of entrusted official power, with direct or indirect consequences for citizens. The functional responsibilities of public officials should therefore be the primary focus of:

? The organisation’s conflict-of-interest policy.

? The relevant code of ethics/code of conduct, and

? The organisation’s transparency and accountability mechanisms.

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