2 Conflict of Interest - Divided Loyalties

8/13/2019 2 Conflict of Interest - Divided Loyalties

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D I V I D E D L O Y A L T I E S

Conflict of Interest


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What is a fiduciary position?

Being entrusted with powers, opportunities or assets.

None of these given to him for his own advantage butto be mana ed for the benefit of others.

Difficult to ascertain how conscientiously thoseresponsibilities have been discharged.

osition of trust, therefore trustworthy manner of

acting e!pected.


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"!ample #

osition$ %ervices &anager of the firm 'esponsibility$ %ell a one(year old car no longer

needed by the firm, decide what price we will accept

for the car. roblem$ )I need a vehicle* why don+t I buy this one

for myself?

Issues$


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Not always so clear...

What creates the ethical problem referred to asconflict of interest?

interest and official responsibility.

No matter what the final choice is, the person+sposition remains conflicted.

%trong reasons to avoid it.


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Common situations

C" rents his house to the company. Whodetermines how much the rent is?

ne or more directors rent their houses to the

company 'elative of C"/director/ban0 manager or a

company one of them is interested in gets a loanfrom the ban0.

'eal estate firm partner does ..


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Common %ituations

Credit manager in a ban0 gets Christmas present,nice wristwatch, from a customer

Departmental head in insurance company has his

s s er n e epar men 1usband and wife wor0ing in same ban0 as 2& and

32& respectively

Close relations of employees of oil mar0etingcompany own their customer petrol stations.


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But where+s the problem?

4ou undertoo0 to dedicate your best efforts toadvancing the best interests of the company. -hat+s

commit the company to some things.

If you use these powers for your own benefit atcompany cost, you+re defrauding us 5ust the same as

if you were ta0ing money from the till.


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When is it wrong to ta0e care of Number #?

When one tries to supplement legitimateand above(board earnings by e!ercising

the powers entrusted to one for protectingand advancing the company+s interests inone+s own favour and to the company+s

detriment.


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What e!actly is wrong with CI?

#. "rosion of one+s ability to lead and inspiresubordinates.

6. Impossible to guarantee unbiased 5udgment once

+one s own n eres s a s a e.7. %ubordinates are caught in the middle and thus put

in a very difficult situation.

8. thers will also be careless about being in thisposition.


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If impossible to avoid, mitigate$

#. Disclose the situation to the others.6. Dis9ualify oneself from participating in decisions

relating to the matter with regard to which one has

a con ct o nterest. Never forget that the best case is to avoid

being in such a position. Even the mitigating

steps can end up biasing the ones to tae thedecisions.


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!as he in a situation of"OI#!as he in a situation of"OI#

!ou$d he benefitpersona$$%#!ou$d he benefitpersona$$%#

If yes, did he ta0e steps tomitigate it?

1ow effective would those

If yes, how?

If no, defend your

-om/Dic0/1arry

steps be? What would be the possible

impact of his actions?

If no, e!plain why you

thin0 not? Would your e!planation

convince the common manon the street?

position.


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:earning oints

Avoid situations invo$ving "onf$ict of

Interest. If this seems impossible, weigh the dangers

vs. the reasons and be sure it+s necessary.

#. Disclose the situation to the others.

6. Dis9ualify yourself from participating indecisions relating to that matter.

you can t avo t, ta e steps to m n m ;edangers$

2 Conflict of Interest - Divided Loyalties

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