Conflicts of interest
A conflict of interest occurs when the private interests of a public official come into conflict with their duty to act in the public interest. Conflicts of interest are particularly relevant where the public official has a decision-making role.
The need to manage conflicts of interest is based on two propositions. One is that people in public positions must avoid situations in which private interests can affect their public duties. The other is that situations where there is the appearance of a conflict must also be avoided, if only because protestations of innocence and integrity may be impossible to judge.
Conflicts of interest are not wrong in themselves and can happen without anyone being at fault. However, it is vital that they are disclosed and managed effectively so that public officials perform their duties in a fair and unbiased way.
Personal interests that can give rise to conflicts may be pecuniary, involving an actual or potential financial gain, or non-pecuniary without any financial element.Â Â
In some circumstances the failure to disclose a conflict of interest in accordance with public sector policy may constitute corrupt conduct as defined in the Independent Commission Against Corruption Act 1988.
A risk assessment of conflicts of interest is likely to identify some or all of the following corruption risks:
- An employee not disclosing a private interest and favouring that interest when making decisions.
- An employee exercising their public duties in such a way as to benefit a business interest, property interest or prevent that interest from being adversely affected.
- An employee exercising their public duties in such a way as to benefit a relative, close associate or secondary employer or prevent adverse outcomes.
- An employee exercising their public duties in such a way as to benefit a future employer or potential future employer or prevent them from being adversely affected.
- An employee exercising their public duties in such a way as to adversely affect a person or group that they dislike or are prejudiced against. A person dealing with a public official deliberately cultivating a private connection with the public official (such as a friendship, secondary employment or the offer of future employment) in an attempt to get the public official to perform their public duties partially.
Managing corruption risks
As a minimum your agency should:
- Introduce policy and procedures for conflicts of interest that contain elements listed in the ICAC's Managing Conflicts of Interest in the Public Sector Toolkit.
- Include in the policy sanctions for any breach of the policy and procedures. Â
- Review the policy every two years.
- Refer to conflicts of interest in all corporate documents such as codes of conduct.
- Train all relevant employees in the policy and procedures to ensure they are aware of their accountabilities.
- Include conflicts of interest as a risk to be assessed in the agency's internal audit and corruption risk management processes.
Risk management strategiesFollowing your corruption risk assessment of conflicts of interest in your agency you should also consider these risk management strategies:
- Including information on processes for managing conflicts of interest in documents aimed at external stakeholders (such as a statement of business ethics, client service charter).
- Ensuring employees complete a statement of private interests (such as secondary employment, business dealings, property, shares) on commencement, annually or at another appropriate time.
- Putting processes in place to ensure that statements of interest are updated at regular intervals.
- Formally recording arrangements for addressing each conflict so that the agency can demonstrate how each conflict of interest was managed.
|Case study 1: Cover-up of an assault|
In 2006 the ICAC investigated the alleged cover up of an assault on an inmate at a NSW correctional centre. The officer accused of the cover-up had been with the relevant department for many years and was acting deputy governor at the time. Deputy governors are responsible for reviewing footage and reports of videotaped incidents, such as the use of force on inmates.
TheÂ ICAC found that:
TheÂ ICAC found that the officer had engaged in corrupt conduct by deleting the video evidence of him hitting the inmate, or at least ensuring that the evidence was deleted. As the relevant department's code of conduct contained only minimal instruction on handling conflicts of interest, the ICAC recommended that it develop a separate policy and procedures on conflicts of interest and link it to a formal instruction issued for the purpose of ensuring compliance.
|Case study 2: Unmanaged conflict of interest|
|TheÂ ICAC investigated allegations about a public official who was involved in assessing tenders for the renovation of a public housing site. During the tender period the official's wife engaged the parent company of the successful tenderer to renovate a property owned by the couple.Â Â |
The investigation found that the company had undercharged the official's wife for the home renovations although there was no evidence that this was the result of any corrupt arrangement.
TheÂ ICAC found that the official failed to declare the conflict of interest in accordance with the relevant departmental code of conduct. The recommendation was made that the department consider taking disciplinary action.
Frequently asked questions
How do I know when I have a conflict of interest?Â Â Â Â
|Just because you have a personal interest outside work does not mean you will have a conflict. If something arises at work that is related to that interest then you may have a conflict. It is not wrong to have interests but if they conflict with your work they should be managed according to your agency's policy.Â|
Why should I give personal information about my interests to anyone?Â Â Â Â Â
|Managing conflicts of interest is important because the public has entrusted you and others with powers and resources and expects you to carry out your duties without bias. If your agency requires disclosure it will be obliged to keep that information confidential and secure.|
Can't I just avoid all conflicts of interest?Â
|You can certainly try to avoid conflicts of interest where possible, but they can't always be avoided.|
Isn't it better to keep quiet about conflicts of interest?
|No, it is better if conflicts of interest are effectively managed. Conflicts kept to yourself or behind closed doors are more likely to attract suspicion and allegations of misconduct.|
Does a public official still have to disclose a conflict of interest if there is no financial benefit or loss involved?Â
Yes, conflicts of interest can be caused by a range of private interests that are wider than financial concerns. Personal relationships and associations can also lead to conflicts of interest. Â
What do conflicts of interest have to do with corruption?Â
|Benefiting a private interest is a possible motivation for corrupt conduct. If someone fails to identify and declare a conflict of interest, or the agency fails to manage a declared interest, this provides an opportunity for the official to favour their private interest. If the private interest then actually compromises the proper performance of the official's public duties then the conduct moves beyond a conflict of interest and becomes corrupt conduct.|
- Managing conflicts of interest in the public sector - Guidelines, ICAC and Crime and Misconduct Commission (Queensland), Sydney and Brisbane, 2004
- Managing conflicts of interest in the public sector - Toolkit, ICAC and Crime and Misconduct Commission (Queensland), Sydney and Brisbane, 2004
- Corruption risks in NSW development approval processes - Position paper, September 2007. Chapters 3, 5 and 8.
- Conflict of Interest in the Public Sector, Victorian Ombudsman, 2008
- Conflict of interests fact sheet No 3, NSW Ombudsman's Office, July 2003
- Managing Conflicts of Interest in the Public Sector, Organisation for Economic Cooperation and Development, 2003.
Local government resources
- Local Government Act 1993, Chapter 14
- Pecuniary Interest Guidelines, Department of Local Government, Sydney, June 2006
- Model Code of Conduct for Local Councils in NSW, Section 6
- Guidelines for the Model Code of Conduct for Local Councils in NSW, Department of Local Government, Sydney, December 2004, Section 7.2.
Relevant ICAC investigations
- Bankstown and Strathfield councils - corrupt manipulation of contract procurement (Operation Torrens) (November 2007)
- RailCorp - corrupt conduct associated with air-conditioning contracts (Operation Persis) (June 2007)
- Roads and Traffic Authority and RailCorp - investigation into defrauding the RTA and RailCorp in relation to provision of traffic management services (Operation Quilla) (December 2006)
- Department of Corrective Services - alleged cover-up of an assault on an inmate at Parramatta Correctional Centre (Operation Inca) (June 2006)
- Department of Housing - conflicts of interest involving T. Jeevarajah (May 2003).
- The NSW Ombudsman, www.ombo.nsw.gov.au
- Crime and Misconduct Commission, www.cmc.qld.gov.au
- Organisation for Economic Cooperation and Development, www.oecd.org
- NSW Department of Local Government, www.dlg.nsw.gov.au
Related topics on the ICAC website
- Post-separation employment
- Secondary employment
- Gifts and benefits
- Supervision of staff
- Recruitment and selection
- Disposal of goods and property
- Regulatory functions
- Confidential information
Tips and tools
Use thisÂ Policy Development Guide and ChecklistÂ when developing or evaluating organisational policies.