Conflict of Interest among board/committee members

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A conflict of interest occurs where the private or business interests of individual management committee members are likely to be advanced through their role, activity or access to information as a management committee member.

Incorporated organisation committee members have a duty to avoid conflict of interest and are re-quired to place self-interest and the interest of other individuals, agencies or organisations second to the interest of the particular agency of which they are a committee member.

This point has implications for committee members who personally or professionally receive services or benefits from, or are party to con-tracted arrangements with, the agency.  Service-users, parents or family members of service-users, members of staff in the agency or other service providers, and suppliers of goods and services to the agency are examples of potential conflict of interest.

It is wise to emphasise at this point that the manner and procedure of handling a conflict of interest should always be recorded in the committee minutes… whether as a direct meeting minute or in written reports to committee which must be attached to the minutes for inclusion in the official minute book.

This recording procedure is both a responsibility and a measure of safety against accusation or misinterpretation of committee decisions or of an individual committee member’s handling of such conflict of interest.

A procedure to deal with conflict of interest

Where any board/committee member is aware that an item of business or discussion may place her/himself or another committee member in a position of real or likely conflict of interest, it is wise to bring the matter to the attention of the meeting (or the Chairperson or President if a meeting is not in session) for an opinion or ruling. In dealing with the conflict of interest the following steps should be taken:

Identify the conflict of interest.

It is important to establish whether a conflict of interest exists. If there is any doubt about the existence of a conflict of interest, then legal advice should be taken personally by the committee member involved. If in doubt, always favour the proposition that a conflict of interest does exist, as this is the safer course to adopt.

Once a conflict of interest has been established, it should be openly declared by the committee member immediately at the meeting in which s/he is participating. When the conflict of interest has been declared, the committee member involved should either:

  • leave the room while discussion continues or until the matter being discussed is resolved; or
  • cease to participate in the discussion and certainly not vote on the issue at hand.

The fact that the conflict of interest has been raised, discussed and determined; and the committee member involved has either left the room or refrained from participating in the discussion or decision should be recorded in the minutes of that meeting.

The time of the committee member’s leaving and re-entering the room or refraining from and then re-joining the meeting’s procedure should also be entered into the minutes.

Retention of a committee member’s discretion

Retention of a committee member’s discretion is a different issue altogether. A committee member must always act in the interests of the agency/legal entity in which s/he is acting at a particular point in time. Under no circumstance whatsoever should a committee member vote contrary to the interests of the agency because that committee member represents some form of outside interest. Such outside interest includes that of being an employee or committee member of another organisation.

Position of trust

Committee members are in a position of trust and therefore have what is known in legal terms as a fiduciary relationship with the agency as a incorporated organisation/legal entity. This means that committee members are under a legal obligation to exercise their powers in the best interests of the agency at all times, and to act in good faith.

The ethical responsibilities of committee members

The ethical responsibilities of a committee member can be summed up in the phrase ‘there is no right way to do a wrong thing’.  Ethics relate to ‘how’ as well as ‘what’ is done, and the behaviour of committee members needs to reflect both personal and business ethics.

Openness, honesty and trust are three of the major factors in ethical responsibility, together with consistency of attitude and behaviour.

Please leave your comments to discuss conflict of interest and how it affects your organisation.