Case Study: Perceived Conflicts of Interests

Perceived conflicts of interests can be uniquely challenging. However, as recent events show (in the sense of how not to do it), there are ways of managing and potential issues.

________________________________________________________________________________________________

________________________________________________________________________________________________

Background

There has been a lot in the news recently about the £5 million reportedly gifted to Nigel Farage personally. People have noted the donor’s business interests and that the policies set out by Nigel Farage’s organisation post-donation would benefit the donor’s business interests. The key element to this is that the gift was not declared. Therefore some are suggesting the gift may have had influence on policy decisions.

Nigel Farage suggests the gift did not need to be declared. This is because when he received it he was not an MP nor seeking to become one. However, some suggest the gift may have influenced his decision to stand as a candidate in Clacton.

This is an interesting case study on the management of interests and conflicts of interests, and a real example of how and why good conflicts of interests systems matter.

In my view Nigel Farage and/or his organisation should have declared the interest as soon as reasonable to do so. This would have been at the time he decided to stand as a candidate for election. It is telling that the argument is the gift did not have to be declared. I think a sensible person would have erred on the side of caution and been open about this.

________________________________________________________________________________________________

________________________________________________________________________________________________

Why Do Perceived Conflicts Of Interests Matter?

There are three main reasons:

1. declaring actual or potential interests protects you. If organisations and regulators or standards bodies are aware of any interest then they can be your shield. You can safely say “I was open about this, decision makers are aware, and they have reviewed the interest and made their decision”. That is a shield.
2. Perception matters. Perceived conflicts of interests can be toxic. Anything that suggests you have tried to hide or under-report an interest could easily have people questioning your motives, standards or behaviour.
3. Reacting to issues like undeclared interests takes time, effort and attention. I have worked with clients who have had to react to problems caused by either a failure to declare, or a failure to manage conflicts of interests. I have seen first-hand executive teams distracted from running and growing their organisation to deal with the fallout of situations like these. That distraction along wit the reputational risks of the situation weaken organisations from within and without.

• You can read more about conflicts of interests here

What to do about Perceived Conflicts of Interests

Avoiding issues like these is relatively simple.

• If in doubt, declare. Be up front about any interests so they can be managed from a place of relative safety for you personally.
• Organisations must ensure they have the right policies and procedures for the declaration and management of interests and conflicts of interests.
• Keep auditable records. That way any interested party, be it the media, regulators or other stakeholders can be a key line of defence rather than a potential threat.

No matter what level you are at if people perceive you may be acting in your narrow interest rather than wider common interests then there will be issues of trust. I am also mindful in the context of the events that prompted this article of the old governance saying: “the fish rots from the head”.

________________________________________________________________________________________________

________________________________________________________________________________________________