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Conflict of Interest

July 14, 2012

When I was drawing up my will recently, I had to consider some issues that I had never thought about before.  I wanted to keep it a simple as possible.  This meant that all my property and posessions should be sold, with the proceeds to be distributed among the beneficiaries.  But then I remembered that I had some things that should be kept in the family.  My executor could select them, but then she would have to purchase them from my estate.  I realized then that I’d put her into a conflict of interest position.  Although I trusted her to do the right thing, I didn’t want to place her in that position.  I decided instead to list those things explicitly in my will with instructions that they be given to her to distribute to family members.

Since that one was easy to recognize, maybe there were other conflicts of interest in the world around that I should pay attention to.  Many activities seemed suspicious to me.  Are these really conflicts of interest, or are they something else?

  • Private companies that operate prisons in the US receive billions of dollars in payments from the government and spend millions of dollars to lobby the government.
  • Closer to home, some business owners have private boxes at sporting events.  They invite elected officials to share the box at a game, as an opportunity to talk with them.
  • Some city politicians own real estate in an area that the city may designate for deveopment.  This one makes the news regularly.  The politician opts out of the decision-making body.
  • When I purchased a house, someone told me that I could save some money if I used the same lawyer who was acting for the seller.  That’s clearly a conflict of interest.  I understand that lawyers refuse to act for both parties.
  • A salesman working for a vendor takes a potential purchaser out to lunch.  This happened regularly at work.  It was only a free lunch.
  • I’ve read a number of articles about drug trials conducted by a drug company or sponsored by them.  Certainly, the researcher would be motivated to demonstrate the effectiveness of the new drug.  This attitude introduces a bias into their work.  It gets even worse when the drug company only publishes favourable results and suppresses neutral or unfavourable results.
  • I frequently hear about government programs that provide funding to local agencies, particularly from politicians who are always present for photo opportunities.  Are these programs only intended to provide publicity for politicians?  I know that there are local agencies that submit grant proposals and that they want to provide vital services to the community.  Where are their allegiances?

Which do we have here?  Are these true conflicts of interest, or just lobbying?

What is a conflict of interest.  Wikipedia has a good definition, one that I can’t improve upon.  It’s one person acting on behalf of two people with different interests.  One of these could be the person themself.  Having a conflict of interest doesn’t mean that trust has been abused; often the conflict is only a potential one.  Conflicting benefits to each group are also involved.

So, what is lobbying?  To me, it’s contact that attempts to influence decisions.  It can cause a conflict of interest if the lobbyist offers personal gifts or donations to a group such as a political party.

And, what is a benefit?  It’s a reward, which can be monetary or simply increased prestige.  The work you do contributes to the success of your company.  That’s why they pay you a salary.  They can also reward you with a bonus, by honouring you, or with a promotion.  Rewards are normal things for effort or good decisions.  In isolation, they are not a conflict of interest.

It’s always possible to enrich yourself at your employer’s expense.  Most people don’t do this because they are too honest or too principled.  This would be at least a potential conflict of interest.  You might abuse the benefits of your position, by ordering expensive orange juice for example.  If you are in line for a promotion, you might spread nasty rumours about the other candidate.  You might even help yourself to money that belongs to the company.

Here’s big one: bribery!  It’s payment to obtain a favour, one that’s contrary to the organization’s policy, of course.  This would be an indisputable conflict of interest.

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