Tom Jarmyn

Conflict of Interest - What about duties?

One of the problems with many of the conflict of interest codes is that they do not speak of or consider duties.  For the purposes of my discussions a duty is an implicit or explicit obligation that is owed to a third party.  A duty has a specific and determinable beginning, its terms can be objectively determined by a third party and it may or may not have an ending.  An interest is a direct gain or benefit for a person or organization.  The interest may be actual or perceived by a third party.

Rather than engaging in this separation duties are subsumed into the general category of 'interests'.  The problem is that this places implicit or explicit obligations that a person owes to a third party on the same level as the personal interest that is referred to in the MacDonald definition.

Frankly resolution of a conflict between a matter of personal interest and a specific duty should be fairly easy if they are considered as separate items - performance of the duty trumps the interest.  The more difficult issues relate to conflicts between duties (which duty is fulfilled and which one is abandoned) and conflicts between interests (which interest prevails).  Coming up with principled answers to these questions can be very difficult.

The failure to think in terms of duties when drafting conflict of interest codes leads to a failure to establish a hierarchy of duties and interests for individuals who are subject to the code.  For example it would be very easy to start a conflict of interest code with the following statement:

Each individual who is subject to this Code has a positive duty to ensure that the best interests of Organization are the paramount consideration when taking any action; making any decision; dealing with subordinates, customers or stakeholders; or entering into any transaction.

You will note that I use the word 'paramount' as opposed to 'only'.  The reason for this is that individuals can often have other duties (statutory obligations, professional reporting etc.) that may also have to be considered.  Any code has to keep a place for the consideration of other duties to third parties.

Conflict of Interest Defined

We all have a number of interests of varying importance at any one time.  Each of us also has a number of duties and obligations that we owe to others at any one time.  The relationship between our various interests, duties and obligations forms the basis for assessing whether an individual is in a conflict of interests.  A broad definition must deal with situations that range from professional to employment to fiduciary.

Michael MacDonald at UBC has defined a conflict of interest as a "situation in which a person, such as a public official, an employee, or a professional, has a private or personal interest sufficient to appear to influence the objective exercise of his or her official duties." This definition has a number of key elements:

1. The person has a defined status of employee, professional or public official with official duties
2. The person has a private or personal interest
3. The private or personal interest is sufficiently important
4. That it could appear to a third party ('objective exercise")
5. That the private or personal interest influences performance of official duties

MacDonald only sees three key elements in his definition and roles items 2 and 3 and 4 and 5 together into single key elements.  For the purposes of my analysis I will keep them separate as I think that the gradation of interest by importance and the requirement to consider the fact situation from the perspective of an objective third party is important.

In subsequent posts I will consider the application of this definition.