Managing conflict of interest

Managing Conflict of Interest

By Prof. Waswa Balunywa

By Prof. Waswa Balunywa 2

Paper Format

• The challenge• Cases: International and Local• What is COI?• Managing COI• Is Management of COI good for business• Conditions of successful management of COI


The Challenges

• You do it , you are doomed• You don’ t do it you are doomedA challenge of good governance


Why the Challenges?

• Public sector use funds for the general public in form of taxes.

• There is need for accountability• Accountability demands transparency• Transparency demands competition• Competition creates equity


Challenges of Good Governance

Good governance requires:-• Transparency• Competition• Accountability• Participation• EquityMore urgent in public sector


Cases

International cases:• Enron• Lesson of the Baring Bank, Singapore• Arthur Andersen• World comFrench President giving job to his son


World Com


Local Cases

• A director supplying goods to a company where he is in position to influence decision.

• Government officer supplies goods to their own department.

• Sitting on a Committee to interview your blood relations


Levels of Governance

National levelThe state of governance of national affairs

Corporate OrganizationsThe state of governance in corporate affairs especially business organizations.


What is COI?

• Is when public officers are using public assets for private gain

• Taking advantage of position or knowledge to influence an outcome that is beneficial to you.

• Abuse of office.• COI is a governance matter• COI is an issue of corruption.


Major Areas of COI

• Conduct of public officials• Conduct of trustees• Conduct of Management of public limited

companies• Public procurement practices• Management of public finances


Consequences of COI

• Enrichment of individuals• Diversion of resources to private use• Public not getting benefits intended for it• Reduces competition• Reduces equity• Reduces levels of service• May kill organizations


Managing COI

COI is a governance matter and has to be managed not fought.

Managed through:• Preventing it from occurring• Enforcing Rules of Behaviour• Establishing code of conduct for public officers• Legislate framework e.g. Leadership code


Managing COI- Cont’d

• Establish offices of obudsman e.g. IGG• Restriction of post employment of retired

public officers.


Enforcement of Rules

• Asset Registrar for Leaders• Protect whistle blowers• Courts• IGGs


In Corporations

Preventive Measures:• Establish code of conduct• Legislation on Directorship• Accounting standards• Strengthening audit


Enforcement

• Empower enforcement agencies• Educate public about benefits• Ability to see through decision• No politicization


Challenges of Managing COI

At national level:• Lack of political will• Lack of agreement by key players on principles

and practices of COI• Cultural issues• Tribes and religions• Weaknesses in enforcement• Backward economy


Challenges of Managing COI- Cont’d

• Lack of strong Institutions– Accountants Regulatory Body– Stock exchange Rules and Regulations– IGG’s office: leadership Code


Challenges of Enforcement at corporate Level

• Weak economy• Absence of formal management culture • Domination of economy by unlisted

companies• Inability to professionalize management and

entrepreneurship• Business and ethics issues


Is Management of COI Good for Business?

Yes it is:• Promotes equity• Encourages joint stock business• Encourages professionalism in business and

management• Strengthens business and the economy


Conditions of Successful Management of COI

• Effective political leadership• Strong legal framework• An independent press• Professional issues in Management,

Entrepreneurship, Accountancy, Audit• Clear rules on the duties of politicians and officials• Accountability at all levels in government• Enforceable laws• Strong institutions


End Note

• How are you faring as an individual?

Education

Managing conflict of interest