Part 5: Policies and procedures for managing conflicts of interest

Managing conflicts of interest: A guide for the public sector.

Policies and procedures

5.1
All public organisations should establish policies and procedures as a tool for helping them and their employees and office holders identify and deal with conflicts of interest.

5.2
Managing conflicts of interest can never be as simple as creating and enforcing a set of rules. Nevertheless, robust policies and procedures are a useful starting point. They are where people should look first when they are working out whether they have a conflict of interest and what they need do to about it.

5.3
Policies and procedures can provide clear rules for simple and predictable situations, and establish a process for dealing with the more difficult ones. They help reaffirm the public organisation's commitment to the principles associated with managing conflicts of interest, and encourage organisational transparency.

Focus on the public organisation's particular circumstances

5.4
In preparing its policies and procedures, a public organisation needs to take into account the nature of its own particular structure, functions and activities, and any applicable statutory requirements. It needs to consider what its operations are, what fields it operates in, and what sorts of problems or risks might typically arise. For example, does the public organisation do a lot of:

  • procurement and contracting;
  • allocating grants;
  • public consultation; or
  • quasi-judicial or regulatory decision-making?

5.5
A blanket policy or process will not necessarily work well for all these functions.

5.6
The public organisation might need to think carefully about who a policy should apply to. Some parts of the policy might be relevant only for board members or certain employees, such as those involved in any of the functions listed above. Some parts might not need to apply to all staff. It might also be prudent to require certain types of contractors or consultants to comply with the policy, even though they are not employees.

5.7
Some situations will be foreseeable and the answer straightforward. For those situations, clear rules could be established in a policy. For example, a public organisation might, depending on the nature of its operations, prohibit employees and office holders from:

  • being involved in a decision to appoint or employ a relative;
  • conducting business on behalf of the organisation with a relative's company;
  • owning shares in or working for particular types of organisation that have dealings with or are in competition with the public organisation;
  • making submissions in a public consultation process (on matters that directly relate to the organisation's work);
  • deliberating on a public consultation process where the employee or office holder has made a personal submission;
  • accepting gifts in connection with their official role; or
  • influencing or participating in a decision to award grants or contracts where the employee or office holder is connected to a person or organisation that submitted an application or tender.

Periodic declarations of interests

5.8
One method many public organisations use is to require employees or office holders to regularly (for example, yearly) complete and submit a declaration listing specified personal interests. This is sometimes called an "interests register".10

5.9
A declaration in an interests register is not, in itself, a declaration of a conflict of interest. In most cases, it is simply a declaration that someone has an interest that could give rise to a conflict.

5.10
However, an interests register enables relevant managers to be aware of most relevant ongoing interests, and acts as a reminder to people of the need to be alert for conflicts of interest. The register, if reviewed and updated regularly, helps people to monitor situations that could give rise to a conflict of interest, and to identify conflicts of interest at an early stage.

5.11
Placing interests on record is also consistent with the principle of transparency. An interests register can be used to document any agreed mitigations, especially for predictable situations, so that there is a record, if needed later, that both the individual and the organisation have thought about the risks and taken appropriate steps to manage them.

What to cover in policies and procedures

5.12
Policies and procedures should:11

  • state principles or values that emphasise the organisation's commitment to addressing conflicts of interest and the importance of people in the organisation being alert for such situations;
  • establish rules for the most important and obvious actions that people must or must not take;
  • establish a mechanism (such as an interests register) for recording those types of ongoing interests that can commonly give rise to a conflict of interest and a procedure for putting this into effect and updating it regularly;
  • set out a process for identifying and disclosing instances of conflicts of interest as and when they arise, including a clear explanation of how someone should disclose a conflict of interest and to whom;
  • set out a process for managing conflicts of interest that arise, including who makes decisions and perhaps detailing the principles, criteria, or options that will be considered;
  • provide avenues for training and advice;
  • provide a mechanism for handling complaints or breaches of the policy; and
  • specify the potential consequences of non-compliance.

5.13
However, policies and procedures are not enough and cannot anticipate every situation. Also, the seriousness of some situations will be a question of degree and not amenable to a rule. Policies and procedures might need to allow for some flexibility for judgement in individual cases. A policy should not state or suggest that the specific situations it covers are an exhaustive list. Some situations will need to be the subject of discretionary judgements as and when they arise.

10: See, for example, the interests registers required for Ministers and members of Parliament by the Cabinet Manual and the Standing Orders of the House of Representatives respectively.

11: Some of the publications listed in Appendix 1 contain more detailed guidance on preparing and implementing policies and procedures. See, in particular, the State Services Commission's Model Standards on Conflicts of Interest, the Independent Commission Against Corruption's Managing Conflicts of Interest in the Public Sector in NSW; and the Organisation for Economic Co-operation and Development's Managing Conflict of Interest in the Public Service: A Toolkit.