Foreword

Managing conflict-of-interest issues in the public sector involves more than consideration of the law. The ethics of the situation must also be considered.

The standard for assessing whether a conflict of interest exists in the public sector is not financial loss to the public entity concerned. It concerns the potential for public money, resources, or time being used by someone to advance their own private interests.

In this regard, the rules and expectations for handling conflicts of interest differ between the public and private sectors.

The existence of a conflict of interest does not necessarily mean that the person concerned has done anything wrong. What it does is create an issue that needs to be managed carefully by the public entity.

In the public sector, simply declaring a conflict of interest may not be enough. Once a conflict of interest has been identified or disclosed, the entity may need to take steps to remove both the perception and the actuality of any potential for taxpayers’ funds to be used for private gain.

The findings of my inquiry into how the Christchurch Polytechnic Institute of Technology (CPIT) managed conflicts of interest regarding the Computing Offered On-Line (COOL) programme emphasise the need for public entities to carefully consider the ethical dimensions of conflicts of interest.

I wish to thank CPIT, Brylton Software Limited, Mr Richard Belton, and Ms Vicki Buck for their co-operation throughout the inquiry.

K B Brady
Controller and Auditor-General

25 November 2004