Conflict of interest: examples of situations

A conflict of interest sometimes lies literally on the surface and is clearly visible to others. However, the most serious problems arise in cases where such a phenomenon is outwardly invisible. If it is not detected in time, it can ultimately greatly damage the reputation of a person or organization.

There are many real-life examples of conflicts of interest. For example, a man is the boss and his son works as his assistant. And even if the latter does his job brilliantly, people will never objectively evaluate such a situation.

What is a conflict of interest and how can it be detected? Let's try to understand this issue using specific examples.

Distribution area

Conflicts of interest are a ubiquitous phenomenon. Similar situations can arise in any area of life. Examples of conflicts of interest often occur between family members and classmates, among employees of the same organization, as well as in communities created by like-minded people. Moreover, their presence does not at all mean that people experience personal hostility towards each other. The most difficult areas in which conflicts of interest occur are the political and public sectors.

Definition of the concept

A similar phenomenon occurs in our lives quite often. It is simply impossible to hide a conflict of interest or quickly exhaust it. That is why a federal law appeared in Russia, which is called “On Combating Corruption.” This document interprets the concept of “conflict of interest” as a situation in which there is an indirect or direct personal interest of a municipal or government employee. At the same time, she is capable of influencing or is already influencing the performance of his official duties. As a rule, examples of conflicts of interest in the state and civil service relate to the receipt of material benefits by employees not only for themselves, but also for those third parties with whom there is a connection in the form of financial obligations.

In a 2009 report, Marilyn Field and Bernard Law pointed out that a conflict of interest is nothing more than a set of obligations that create risks that a secondary interest will directly influence professional actions or judgments regarding the primary interest. In other words, a similar phenomenon can occur in the case of existing personal benefit of a person who participates in the process of making a particular decision. This leads to damage to the interests of the company or society.

Let's look at some clear examples of conflicts of interest:

A pharmaceutical company awards a research grant to a doctor. In this case, the specialist begins to feel obligated to prescribe medications from this particular manufacturer to his patients, despite the availability of better alternatives. In this case, damage to public interests is caused.
A woman who is an employee of the company describes to the boss the merits of her nephew as a candidate for a vacant position. However, she does not mention her family ties with him.
The boss gives the employee the task of finding a supplier for the company. He offers in response an organization in which he himself is the owner of shares.
At the end of the year, the boss gives himself and his team impressive bonuses. Moreover, this is happening against the backdrop of the fact that the company’s owners are facing serious losses.

In most cases, such situations are not a violation of the law. This is why there are so many examples of conflicts of interest in any organization. But the existing problem will certainly call into question the employee’s reputation, reliability and honesty. In the future, this will negatively affect the work of the entire team.

The civil servant used the employer's property for personal purposes

As a general rule, officials do not have the right to use the property of a government agency provided to them for the performance of official duties for personal purposes.
Compliance with this prohibition is one of the official duties of a government agency employee. Despite this ban, the official sent tax returns to friends and relatives from his work computer, for which he was fired. The court, having examined the situation, declared the dismissal legal.

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Signs and forms

The word "conflict" comes to us from Latin. Translated from this language, it means nothing more than “collision.” That is, a certain point comes when two or more members of a community or group begin to make claims on the same object. This leads to the intersection of the areas of interest of all those who are related to this situation.

Conflicts of interest are divided into personal and organizational. In the first case, the performance of official duties by a person comes into clear conflict with his own desires. Examples of conflicts of interest in the service sometimes concern, for example, a situation where, despite the fact that the task will not be completed on time, the employee wants to go home either at the end of the working day or earlier. After all, he has his own plans for the evening.

In the event of an organizational conflict, an entire private enterprise stands up to defend its benefits. In this case, the company takes into account only its own interests and tries to refuse or refuses to cooperate with the state, becoming unable to provide its services impartially. Responsibility for such a situation rests entirely with the manager, because such actions will certainly cause damage to the company as a whole. If damage is caused to structures supported by the state, then in this case the current legislation may come into force.

Similar situations arise in cases where the object of the conflict cannot be divided between the two parties laying claim to it. At the same time, no one wants to make concessions or seek compromises.

What the Ministry of Labor recommends

The methodology of the Ministry of Labor applies to organizations that act as customers under 44-FZ and 223-FZ, and recommends a set of additional measures to prevent bribery, which includes:

Appointment of an employee (or employees) responsible for the implementation of measures, whose responsibilities include the prevention of corruption.
Training an employee on a training course in the field of procurement.
Providing the responsible person with access to information that is relevant to procurement.
Carrying out preventive measures.
Comprehensive data analysis.
Preparation of a competent conclusion and transmission of information to the head of the company and the tender commission.

IMPORTANT!
Not every violation committed during a procurement contains a corruption component.

Conflict resolution

Article number 11 of the federal law, which provides for combating corruption, identifies two subjects of settlement, as well as the prevention of conflicts of interest. One of them is a municipal (civil) employee. The second subject is the employer's representative.

In this regard, municipal and civil servants are vested, according to the law, with two main responsibilities. First of all, they need to take measures to help prevent any situations in which a negative phenomenon may occur. In addition, they must write a conflict of interest notice, an example of which is given below, to their immediate superior. Such a document should indicate not only the existing situation, but also the possibility of its occurrence. Moreover, a civil servant is obliged to take such a step already when he becomes aware of it.

To prevent a conflict of interest, this government representative should not maintain contacts with organizations whose activities are in an area that intersects with his official responsibilities. This does not apply to cases where he is obliged to perform such work.

As for notification of the likely occurrence of a conflict of interest in writing, the degree of personal benefit of an employee, according to current legislation, should be determined only by the official himself. His failure to take measures to resolve such a problem entails his dismissal.

Prevention of corruption under 273-FZ

Based on the provisions of 273-FZ, civil servants are prohibited from:

store funds and valuables in foreign banks;
conduct business, manage foreign companies and receive awards from them;
receive benefits in kind or monetary terms from the performance of their duties, including sponsorship when traveling abroad;
be an attorney and lobby for private interests;
combine work with another position or activity that is subject to payment, exceptions: creativity, science, teaching, if the activity is not carried out on behalf of the authorities;
use proprietary information for your own purposes.

According to Law 273-FZ “On Anti-Corruption”, civil servants are obliged to:

Report income and expenses (including close relatives).
Inform management about inducement to bribe.

Sample notification

How should a civil servant prevent the possibility of a personal problem arising in resolving a particular issue? To do this, he will need to write a notice of conflict of interest, an example of which can be filled out below.

The document must be drawn up in the name of the boss. The following is its title: “Notice of Conflict of Interest.” The text of the document indicates the last name, first name and patronymic of the civil servant, as well as his position. After this, a situation is described that provokes the possibility that a conflict of interest may arise. For example, it may concern the conclusion by an organization of contracts with a supplier company, headed by a close relative of the official. This is followed by the employee’s agreement or disagreement to be present during a meeting of the commission created to resolve this conflict of interest. At the bottom of the notification is the signature of the person who wrote it, as well as his full name and the date the document was compiled.

Let's consider typical situations and examples of conflicts of interest in the Russian civil service.

How to prevent conflicts of interest and resolve already ripe disputes

A conflict of interest or even the risk of its occurrence is very dangerous for the effective operation of a company, says Teymur Kerimov. – You don’t have to sit and wait for a fire to break out and cause losses, you need to start acting immediately.

Individual employee motivation

Kerimov advises minimizing the risk of a conflict of interest through individual motivation of employees. For example, a manager who works with clients is interested in attracting them, and the risk department is interested in building a high-quality portfolio.

To avoid conflicts of interest, recruiters should be interested not only in selling, but also in attracting the highest quality clients, and risk takers should be interested not only in the “quality” of the client, but also in the percentage of approvals, that is, when considering applications, use not a formal approach, but an individual one, - says Kerimov. – In such a situation, the main thing is to provide sellers with a flow of clients, and risk takers with tools and mechanisms that allow them to make quality decisions as quickly as possible.

An internal audit or a methodologist who will monitor violations will help evaluate the effectiveness of the motivation system.

Identifying emerging conflicts

The manager must monitor every stage of the team’s work and regulate emerging conflicts.>

It is important to attract good clients so as not to overload the analysis services with unnecessary work and allow the risk department to weed out only truly unreliable clients.

Smart search for clients for business. Select organizations that benefit from your product or service. Eliminate insolvents.

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Each employee can offer new indicators both for themselves and for colleagues, adds Kerimov. – KPI is a tool that measures performance, but blindly following it can have a negative impact on the final result.

Olga Turenko, a lawyer at the Borodin and Partners law firm, warns that the most dangerous conflict of interest is a latent one, that is, one that occurs hidden. This is why it is important to try to convince employees to voluntarily disclose conflicts.

Drawing up local regulations

Conflicts of interest can be easily prevented using local regulations. They can set out job descriptions for specific employees or a general provision on conflicts of interest for all employees. Turenko advises establishing in the job description the employee’s obligation to report a conflict of interest to his employer under threat of dismissal (Article 81 of the Labor Code of the Russian Federation).

The regulations will make it possible to oblige employees to disclose conflicts of interest, thereby making concealment of a conflict punishable, and the company will be able to manage disclosed conflicts - for example, it will remove a member of the tender committee from voting on the selection of the winner if one of the participating companies belongs to his wife. It is also useful to periodically check for conflicts of interest, says Vladimir Serkin.

The Four Eyes Rule

Victor Mironov, managing director of the Tim consulting group, advises using the “four eyes” rule, popular with his European clients. According to this rule, all important documents must be signed by two managers, one of whom can ask questions about the choice of contractor and justification of the price. The rules and procedures for identifying and verifying counterparties KYC (know your counterparty - “know your counterparties”) will help with this.

Checking counterparties for bankruptcy, arbitration cases and debts. Selection of clients and suppliers.

Try it

It is useful to make sure how long the counterparty has been on the market, what its reputation is, and whether it is connected with any of the company’s managers or employees. For Team clients, contractors are checked using a questionnaire that includes more than 30 points. This allows you to reduce the risks of conflicts of interest, non-fulfillment of contracts and tax claims.

It is impossible to protect yourself 100%, but you can reduce risks as much as possible without creating space for abuses that arise when the decision-making system is uncontrolled and opaque, says Viktor Mironov. – Traffic rules and traffic lights save lives, and following their instructions is not so difficult.

Coordination of behavior options in disputes

Alexander Vysotsky notes several ways to prevent conflicts of interest between co-owners. He advises choosing someone who will set the initial goals for the company, distributing areas of responsibility among the owners, and concluding a written agreement between all owners with their cooperation goals and functions.

In three companies I signed agreements that stated who sets the goals, how cooperation is terminated, and how shares in the company are inherited in the event of the death of one of the owners. “I spent a couple of months getting the consent of the co-owners,” admits Vysotsky.

To avoid conflicts in business, Alexandra Chirikal advises drawing up a corporate agreement, limiting the acquisition of shares in the charter, for example, prohibiting withdrawal from the LLC during the formation of the business, and drawing up a prenuptial agreement.

A corporate agreement helps partners develop clear rules of behavior for a certain period of time and propose in advance agreed upon options for behavior in a controversial situation, for example, establishing the procedure for additional financing for the further development of the company, indicating the percentage that each partner will contribute depending on financial performance indicators. In the event of losses, partners may think about increasing the authorized capital and attracting loans from company members.

It is possible to temporarily prohibit the alienation of shares in the authorized capital in favor of third parties.

A corporate agreement can provide for peaceful ways to resolve contradictions in the event of stalemates and controversial situations, such as inviting an independent negotiator (an expert, possibly a mediator) to resolve the conflict, says Chirikal. – The other extreme would be the use of an option structure, for example, if pre-established targets for the financial performance of an enterprise are not achieved, the obligation to repurchase a share of the company’s authorized capital is assigned.

The mediator advises to prevent conflicts, and if they have already arisen, to turn to professionals and try to resolve the conflict through negotiations or mediation before trial.

Linking bonuses to profits

Giorgio Parola suggests introducing the most transparent motivation system in companies, when an employee understands why he receives bonuses. In addition, the motivation system should be aimed primarily at a priority task - for example, increasing profits.

The motivation system should be as clear as possible,” explains Parola. – It is necessary to avoid complex calculations in which employees do not understand the bonus system. It should also be built on market principles, that is, correspond to the proposals of competitors. You can make a bonus below the market if it is a popular product that is easy to sell. And vice versa, above the market if the product is very difficult to sell.

Relationships with relatives

There are examples and situations of conflict of interest in the public service in the event of an official’s personal benefit. Thus, an employee can be directly involved in resolving personnel issues regarding his relatives. In addition to close people, we can also consider other persons in respect of whom the civil servant is likely to receive benefits. Let's look at examples of conflicts of interest in municipal service:

An employee of a government agency is part of a competition commission that considers candidates for a vacant position in his institution. One of the contenders is his relative.
The duties of a civil servant include the implementation of certain managerial functions or issues of making personnel decisions concerning relatives or other persons close to him.
In such cases, it is mandatory to write a notice about the likelihood of a conflict of interest. In this regard, the employer's representative must remove such an employee from those duties that involve his interaction with close people.

Performing other work subject to payment

An example of a conflict of interest in the public service is a situation when an official, as well as his relatives or other persons close to him, are going to perform or are already performing work for the organization where this employee works, under the terms of a paid civil law or other contract.

In this case, a notice of conflict of interest must also be drawn up. But at the same time, the employer’s representative does not have the right to indicate the impossibility of performing other work by this official.

An example of a conflict of interest in the public service is a situation where an employee, together with his relatives or other persons with whom beneficial interaction is carried out, performs work in a subsidiary, parent or other similar company in relation to which these employees perform managerial functions.

And in this case, a notification must be drawn up to the employer’s representative. In it, the civil servant must indicate the connections that take place between interacting organizations. The employer's representative, in accordance with the law, is recommended to remove the employee from fulfilling his duties in making management decisions in relation to the affiliated company.

An example of a conflict of interest in the civil service can be seen in a slightly different situation. It concerns the performance of work, the customer of which is the body in which the person holds a position. The employer's representative in this case must indicate the emergence of a conflict of interest. If a person does not take any measures to correct the problem, then he should be removed from the position he is replacing.

Ownership of certain securities

Let's consider other cases of conflict of interest. Examples in the service of state or municipal bodies may relate to the ownership by an employee and/or his relatives of securities belonging to this organization. This must also be notified in writing. In this case, the securities must be transferred to trust management. In addition, the issue of their alienation may be considered.

Examples of conflicts of interest may also relate to situations where a civil servant has deposits in banks or other credit institutions in relation to which he exercises managerial functions. In this case, you will also need to write a notice of personal interest addressed to your immediate superior. Until the necessary measures are taken, the employee must be suspended from performing those official duties that relate to working with banks and credit organizations.

Receiving services and gifts

It is also possible that a civil servant or his relatives receive various benefits. These could be discounts and loans, free services, payment of travel expenses, entertainment, etc.

Such gifts, if they are provided by organizations or individuals in relation to which the civil servant currently exercises or previously exercised managerial functions, are subject to a growing conflict of interest. To avoid such a situation, it is recommended to simply not accept these benefits. If the employer’s representative becomes aware of the receipt of gifts by a civil servant, he must assess the connection of what was received with the performance of the official duties assigned to the employee, and, if necessary, take disciplinary action.

Main reasons

Interpersonal conflict - what is it in psychology
? Disagreements can arise for various reasons. There are so many of them that it is impossible to list them all. The most potential ones include:

Along with the received order, there is an opportunity to perform additional work or provide services for which an additional fee is charged;
Personal interest may arise when owning enterprise assets, securities, etc.;
The situation may arise when receiving gifts for services rendered or financial “thanks”;
The situation often arises during litigation, during the division of property, etc.;
Provision of services by former employees of government or other structures;
Exceeding official authority;
Providing services for carrying out various works to people who are related to government officials, without concluding a contract, out of turn, with a reduced cost of goods, etc.;
Failure to comply with job instructions or violation of official duties during the implementation of the subject of the Agreement;
Failure to comply with the law by civil servants, violation of the rights of individual citizens;
Conducting public tenders with companies whose directors are close relatives of government employees. Such tenders are held for the purpose of “laundering” money and opening new financial flows, which may not be subject to taxes;
Unauthorized assistance in resolving any issue for which a fee is charged.

Main reasons for disagreement

The sphere of education

In addition to public service, examples of conflicts of interest can be given in school. This applies to situations where a teacher, in parallel with his work activities, provides paid services.

The legislator seeks to combat such a situation when a teacher teaches a student who is studying at the school that is the place of work of this teacher. As a result of such actions, a conflict of interests arises in education. Examples of the provision of such paid services can be found everywhere. At the same time, some teachers artificially create situations in which the children’s parents or their legal representatives are forced to agree to the provision of tutoring imposed on them. Sometimes colleagues “supply” such students to each other. At the same time, they use the principle “you - to me, and I - to you.”

It is worth understanding that the law does not prohibit the provision of paid educational services. They can be provided by the school on a contractual basis. In this case, the teacher who conducts a regular lesson with the child, according to the curriculum, may well provide paid services. That is, this can be done legally only by being a representative of the contractor when concluding contractual obligations.

In what cases do the services provided by a teacher violate the norms of current legislation? This happens when the following conditions are met:

the service provided by the teacher is informal and paid;
the student is studying in the educational organization where the tutor works;
the provision of a paid service becomes the cause of a conflict of interest for the teacher.

If all the above conditions are met, additional training does not comply with legal requirements and is prohibited. This also applies to those cases when the teacher does not teach a particular student. Indeed, in this case it is impossible to prove the absence of collusion among teaching staff.

A conflict of interest in the field of education is the contradiction that arises between professional responsibilities and a person’s personal benefit. After all, upon arriving at school, a teacher is faced with the possibility of acquiring material or intangible benefits. This is the reason for his failure to fulfill his professional duties or their improper performance.