Conflicts of Interests and Whistleblowing

Conflicts of interests and whistleblowing and linked because every organisation has a dual responsibility: to identify and manage conflicts of interests while fostering an environment that encourages whistleblowing. While having interests is normal, compliance with counter fraud and bribery legislation requires organisations to be resilient in managing these interests.

At times, interests may be brought to light not by the involved parties but by whistleblowers. When individuals step forward to blow the whistle, they bring attention to potential wrongdoing. However, the media is replete with stories of whistleblowers facing repercussions for their courageous actions.

Contents

• What Are Conflicts of Interests?

• What is Whistleblowing?

• Examples of Conflicts of Interests and Whistleblowing

• Whistleblowing About Conflicts of Interests

• Impartiality is the Key

• Documented Processes and Policies

• Conclusion

What Are Conflicts of Interests?

Conflicts of interests arise when a person has an interest that could interfere with their ability to act properly and professionally. For example:

• a buyer for a business has a personal relationship with a potential supplier. This could lead them to award contracts to the supplier rather than get best value for money

• if a senior manager has a family member working at the same firm they may be tempted to promote them in preference to other, more deserving colleagues

• a supplier regularly gives gifts to a senior manager at a company, which could influence that manager when they make buying decisions

You can learn more about conflicts of interests with this introduction.

What is Whistleblowing?

Whistleblowing happens when a person, acting in good faith, raises concerns about wrongdoing to their employer or an outside agency. They do not have to be right, but they must have a reasonable suspicion.

Typically whistleblowing happens because people either are not confident to discuss the issue with their immediate colleagues or line manager, or because the concerns are potentially very serious.

You can get a deeper understanding of whistleblowing from this introductory article.

Examples of Conflicts of Interests and Whistleblowing

The true challenge arises when a high-ranking figure, perhaps a Board member, becomes the subject of a whistleblowing allegation. Given their accountability for effective governance, the very act of whistleblowing can introduce a conflict of interest for these senior managers. Two recent examples highlight this challenge.

A year ago, the Chief Executive of Barclays attempted to identify a whistleblower who had raised concerns about the appointment of a senior manager overseeing its New York operations. The concern was that the Chief Executive had a conflict of interest and needed to maintain an appropriate distance from the investigation. The result was a loss of over £1 million for the Chief Executive, and increased scrutiny over the bank’s handling of whistleblowing.

More recently, an independent review revealed that the Governing Body of Crawley Clinical Commissioning Group bullied their Head of Governance to protect their Chair, who had breached a conflict of interest rule. This involvement constituted bullying behavior.

The question that arises is how organisations can effectively handle whistleblowing concerns, especially when they involve senior figures with relationships with the organisation’s executives or Board.

The temptation to interfere or maintain oversight of investigations is understandable. However, both conflicts of interests and whistleblowing demand an organisation’s response to be resilient to challenge.

Whistleblowing About Conflicts of Interests

Whistleblowers may raise concerns about conflicts of interests, or possible fraud and bribery. This is one of the main routes that this unprofessional, and possibly illegal, behaviour can come to a company’s attention.

If people have not declared conflicts of interests in line with company policy, then colleagues may notice unusual or inappropriate behaviour. These colleagues may then feel that action is necessary.

Employees should understand when and how to raise concerns about actual or potential conflicts arising from work activities when they discover them.

Impartiality is the Key

To navigate this delicate balance, it is crucial to have the right person managing both conflicts of interests and whistleblowing allegations. A member of the Board, ideally a non-executive director, can serve as a champion for both functions. However, they must not actively participate or report ongoing investigation details to the Board, ensuring the independence and robustness of the systems.

Documented Processes and Policies

Clear documentation of processes and policies for both conflicts of interests and whistleblowing is essential. These documents should articulate the expected standards of behavior at all levels within the organisation. To underscore the significance of these governance functions, comprehensive training for all personnel is indispensable.

Learn more about the importance of robust policies here.

Conclusion

In conclusion, the interrelationship between conflicts of interests and whistleblowing requires a meticulous and impartial approach. By assigning responsibility to the right individuals, maintaining independence in investigations, and ensuring comprehensive policies, organisations can navigate this intricate landscape with resilience and integrity.