WHAT IS A CONFLICT OF INTEREST?

A conflict of interest involves a conflict between the duties and the private interest of a person, in which
the person’s private-capacity interest could improperly influence the performance of his/sher
professional or formal duties and responsibilities.

According to the Organisation for Economic Cooperation and Development (the OECD 1 ) Toolkit to
manage conflicts of interest in regard to public officials, a conflict of interest involves “a conflict between
the public duty and the private interest of a public official, in which the official’s private-capacity interest
could improperly influence the performance of their official duties and responsibilities”.

A conflict of interest in the instance of a public official therefore involves a conflict between the personal
interests (as a citizen of the country) and the person’s duties as a civil servant. Note that the gain or
benefit to the person who is conflicted does not necessarily have to be financial. For more information
refer to https://www.oecd.org/publications/managing-conflict-of-interest-in-the-public-sector.

WHAT IS A CONFLICT OF DUTY?

A conflict of duty occurs when a person is required to fulfil two or more roles that may be in conflict with
each other. It can be an actual, potential or a perceived conflict of duty.
For example, a director may also hold a position as a public servant, or he/she may be a member of the
board of another public entity or body. A conflict of duty may also arise through a director having official
duties to other government bodies, community and professional associations or non-governmental organisations.

WHAT IS THE LINK BETWEEN CONFLICTS OF INTERESTS AND CORRUPTION?

A conflict of interest is not automatically corruption. Corruption in this context is understood as “actual
abuse of formal duties or public office for private advantage or gain”. However, if the conflict of interest is
left unresolved, it has the potential of resulting in corrupt conduct, abuse of public office, breach of trust
and other unlawful action or inaction.
For example, in a situation where a public official actually abuses his/her power and access to resources
for personal (improper) gain, the official obtains an improper benefit or advantage in his/her capacity
as a private citizen and it is a corrupt act.

ARE THERE DIFFERENT TYPES OF CONFLICTS OF INTERESTS?

The three categories of conflicts of interest and conflicts of duty that we could typically encounter in the
workplace are:

• Potential conflicts of interest or conflicts of duty.
• Perceived conflicts of interest or conflicts of duty.
• Actual conflicts of interest or conflicts of duty. Actual conflicts can be sub-divided into two categories,
  namely, conflict that can be managed and conflict that is fundamental and must therefore be
  stopped.

We will discuss each of these three types of conflicts in turn.

What is a potential conflict of interest?

A potential conflict exists when an employee has personal interests that are not material or relevant at
the moment, but it is reasonably foreseeable that these personal interests could become relevant
(actual) interests in future. Such a conflict has to be declared by the employee in accordance to
organisational policy and the appropriate manager or risk officer must take a decision if the employee
may proceed with the activity or interest that is a potential conflict.

What is a perceived conflict of interest?

A perceived conflict of interest is one in which a reasonable person would think (makes a fair inference)
that the employee or official’s judgment is likely to be compromised. A perceived conflict of interest
involves a situation that may develop into an actual conflict of interest. The intensity of the conflict of
interest is of such a nature that it requires investigation. A senior manager or risk officer can determine
whether or not the organisation has the appetite to tolerate the risk. Where the determination has been
established, it must be shared with the employee.

What are manageable, actual conflicts of interest?

This is the situation where an employee has existing private interests that are relevant (will interfere with
his/her objectivity and impartiality). In this case, the intensity of the conflict of interest is such that the
conflict of interest can be managed responsibly by recusal or non-involvement in the decision-making
process.

What are fundamental, actual conflicts of interest?

In this situation, an employee has existing private interests that are relevant. This means that the conflict
will interfere with his/her objectivity and impartiality in the performance of his/her duties. The intensity of
the conflict of interest is such that it cannot be managed in a responsible way and the conflict must be
disposed of or the activity must be ceased. The matter should also be referred to the legal department
for an assessment if it falls within the ambit of the Prevention and Combating of Corruption Activities Act
12 of 2004, and therefore constitutes corruption.

WHY ARE CONFLICTS OF INTEREST POTENTIALLY SUCH A BIG ISSUE?

Conflicts of interest that go unnoticed and that are therefore not managed appropriately, can undermine
the integrity of an employer and by implication the reputation of the organsiation. Even a perceived
conflict of interest could be similarly harmful to the trust stakeholders put in the decision-making process.
In the case of public servants, both citizens and the state (as the ultimate employer of public officials) are
entitled to trust that officials will provide a “professional” service, unaffected by personal or private
interests. When trust is violated, the good name of the institution is damaged. It is imperative that there
is no improper connection between an official’s formal functions and his/her private interests.
Transparency in making the official’s relevant “private-capacity interests” known to the organisation, and,
for high-level officials, to the public at large, will protect and improve trust.

HOW CAN CONFLICT OF INTEREST BE MANAGED?

Conflicts between private interests and formal duties of employees must be correctly identified,
appropriately managed and effectively resolved.

Most organisations therefore has implemented a conflict of interest policy that places an onus on
employees to annually disclose their interests. The identification and management of conflicts should be
subjected to regular reviews as circumstances can change.

Compliance with a conflict of interest policy will enhance professionalism, increase transparency and
help ensure confidence by all stakeholders in the organisation.

By Dr Janette Minnaar, Founder of ProEthics, Janette@proethics.co.za, www.proethics.co.za
August 2020