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10 key elements that should be included in all Conflict of Interests policies

November 2, 2021

You only have to turn on the news to witness the almost daily reporting of conflict of interest instances. Senior executives, politicians, Board Members and public servants are regularly finding themselves in difficult situations by not appropriately managing an actual, perceived or potential conflict of interest.

The potential costs of failing to properly manage conflicts of interest can be financially devastating. But it can also be costly in terms of the staff time involved in responding to investigations by regulators, anti-corruption agencies and Ombudsmen. And, not to mention, the irreparable damage to the agency’s and individuals’ reputations.

Decisions tainted by a conflict of interest - big or small - eat away at integrity, expose us to accusations of unfairness (or worse) and risk outcomes which are not in the public interest. All employees need to be alert to the dangers and be supported to avoid and manage such conflicts.

So, how can we develop and encourage the right frameworks and skills to avoid or manage conflicts, and support each other in achieving transparent, impartial decision making?

We asked our experts to describe what an effective Conflict of Interests Policy and Framework should include.

They provided this checklist of the key elements and management strategies:

  1. Conflicts of Interests Register: Every agency needs to have a Conflicts of Interests Register, preferably on the agency intranet, and determine which business unit or position is responsible for the Register.
  2. Staff induction and further training: New employees should be obliged to complete an induction session and other relevant mandatory training modules within a specified time after their appointment.
  3. Staff Disclosures: When a person is first appointed to the agency or assigned to projects with a significant potential for conflicts of interest, they must be required to disclose actual, reasonably perceivable, and potential conflicts of interest within a specified time and record them in the Conflicts Register. Those conflicts and the effectiveness of adopted management strategies should be regularly reviewed.
  4. Content of declarations: The Policy should identify what type of matters need to be disclosed depending on what would constitute a conflict of interests in particular roles within the agency and their responsibilities (e.g. senior executives, managers or subject matter experts).
  5. ‘Private interests: Private interests’ needs to be defined to include definitions of ‘family’, ‘close friends’, ‘close personal relationships’, and ‘business associates’.
  6. Categorisation of pecuniary v non-pecuniary; direct v non-direct interests: Conflicts of interest are usually categorised as either pecuniary or non-pecuniary interests. The difference between the two has implications for how the interests are managed. An alternative approach is to distinguish between direct and indirect interests. The difference between these two is the degree of control the individual concerned has over the interest.
  7. Stakeholder Contacts Register: Where relevant to the work employees or contractors etc. perform, they should be required to record each occasion they contact specified stakeholders in a social setting. This is especially relevant for Councillors and staff in dealing with property developers.
  8. Awareness of possible conflicts of interest: Managers should compare the information about previous employment in the CV’s of successful applicants for positions with the content of the declarations of interests made by those individuals. Where position holders perform particularly sensitive roles, it may be appropriate for managers to access, or seek consent to access, the social media accounts of successful applicants to identify any social contacts of the individual that need to be disclosed in the Conflicts Register.
  9. Sign-off on conflicts of interest: Before signing off on initial, bi-annual and any specific project declarations, relevant managers should ensure that any information they are personally aware of relating to the staff member that could involve a conflict of interests has been disclosed by that staff member.
  10. Management strategies
    • Restrictions on direct involvement in specified projects, activities, decision-making
    • Restrictions on access to certain information
    • Directions not to disclose certain information or discuss certain projects, activities or decisions
    • directions to disclose (in the Stakeholder Contacts Register) and contact with specified individuals or staff of specified organisations in a social setting
    • Requests or directions to sell, assign, etc., a ‘direct’ pecuniary interest within specified periods
    • Transfer of employees to other positions within the agency at the same grade and requiring similar expertise
    • Termination of employment

Ensuring a complete and comprehensive COI policy

The above elements are strongly recommended to be included as part of your Conflict of Interest policy and framework. However, they act as minimum requirements only and should be augmented by further items that directly apply to your specific work environment.  Conflict of Interest policies should also be regularly reviewed to ensure their relevance in changing environments.

At Centium, we have extensive experience in managing, advising and reviewing Conflict of Interest frameworks and investigations. Our team of experts includes a prior NSW Ombudsman of 25 years.

We can help review your Conflict of Interest policy and related procedures and reporting, undertake audits of registers, employment, induction and training programs, as well as deliver training to new and existing staff.

For more information around conflict of interest policies and investigations, view our ethical conduct & investigation services. For a confidential discussion or further assistance in reviewing your existing framework or further guidance, please get in touch.

View the full checklist in PDF format.

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