What is a conflict of interest, who is affected and how to prevent it

Those who follow local government often encounter situations where a person declares a potential or actual conflict of interest. When a deputy does this at a session of, for example, a city council, it is intuitively clear that he or she is abstaining from voting because a decision may be beneficial to him or her. In this case, the deputy announces that he or she will not vote for a particular draft decision. But the concept of conflict of interest applies not only to MPs.

What is a conflict of interest?

The Ministry of Finance of Ukraine defines this situation as follows: it is a situation in which an official, while performing his or her duties, has a private interest that, although not necessarily leading to an unlawful decision or act, is capable of leading to it.

Private interest means any property or non-property interest of a person, including those caused by personal, family, friendly or other off-duty relations with individuals or legal entities, including those arising from membership or activities in public, political, religious or other organizations.

A potential conflict of interest is the presence of a private interest in the area in which a person exercises his/her official or representative powers, which may affect the objectivity or impartiality of his/her decision-making, or the performance or non-performance of actions in the exercise of these powers.

A real conflict of interest is a conflict between a person's private interest and his/her official or representative powers, which affects the objectivity or impartiality of decision-making, or the commission or omission of actions in the exercise of these powers.

A private interest is not limited to financial or material interests or those interests that provide the official with direct personal benefit, including unlawful benefit.

This means that a conflict of interest may be related to legitimate actions of an official as a private person, his/her affiliation with public organizations, family interests, etc., provided that these interests are capable of actually causing an improper influence on the performance of his/her official duties with a certain probability.

Thus, although not every conflict between official duties and private interests can lead to illegal decisions or actions, each conflict of interest can create such a situation if it is not timely and properly declared, assessed and resolved.

In a potential conflict of interest, a person has a private interest in the area in which he or she performs his or her official or representative duties. Such a situation will further affect the objectivity of the person in the exercise of his/her powers.

In the case of a real conflict of interest, a person exercises his or her powers in the area where he or she has a private interest. This causes a contradiction between powers and private interest, which affects the objectivity of actions or decision-making.

The contradiction lies in the fact that, on the one hand, a person has a private interest, and on the other hand, a person authorized to perform the functions of the state or local self-government must perform his or her official duties in the interests of the state and the territorial community, excluding the possibility of any influence of private interest. Therefore, even if a person has a private interest and makes objective and impartial decisions, he or she acts in the context of a real conflict of interest.

What situation is an example of a real conflict of interest?

For example, an official makes a decision on a public tender in which a company owned by his brother participates. If he did not declare this connection, this is a typical example of a real conflict of interest, where a private interest already influences a public decision.

How to resolve a conflict of interest?

Responsibilities of a person in connection with a conflict of interest:

1. Take measures to prevent real and potential conflicts of interest.
2. Notify the immediate supervisor no later than the next business day from the moment when the person learned or should have learned about the existence of a real or potential conflict of interest.
3. Do not take actions or make decisions in the face of a real conflict of interest.
4. Take measures to resolve a real or potential conflict of interest.

The person's immediate supervisor or the head of the body authorized to dismiss or initiate dismissal from office shall

• after receiving a notification of a conflict of interest, make a decision to resolve the conflict of interest of a subordinate within 2 business days. The manager must also notify the relevant subordinate of the decision;
• if he or she becomes aware of a conflict of interest (from other persons, from reports of corruption, from letters of the National Agency for the Prevention of Corruption, etc.), take measures provided for by the Law to prevent and resolve the conflict of interest of the subordinate.

Any measure to resolve a conflict of interest shall be applied exclusively to the person who has the conflict of interest. Such measures may not be applied to other persons, joint work with whom causes a conflict of interest, i.e. subordinates.

External settlement of a conflict of interest shall be carried out by:

1. Removing a person from performing a task, taking actions, making a decision or participating in its adoption in conditions of a real or potential conflict of interest.
2. Application of external control over the person's performance of the relevant task by taking certain actions or making decisions.
3. Restricting a person's access to certain information.
4. Reviewing the scope of a person's official powers.
5. Transfer of a person to another position.
6. Dismissal of a person.

Independent settlement of a conflict of interest.

Persons who have a real or potential conflict of interest may independently take measures to resolve it by eliminating the relevant private interest and provide documents to the immediate supervisor or head of the body whose authority includes dismissal or initiation of dismissal.

What is the difference between a real and a potential conflict of interest?

Areal conflict of interest is when a private interest already influences decision-making. A potential conflict of interest is when such an influence has not yet occurred, but there is a risk that it may arise in the future.

What is the responsibility for a conflict of interest?

Unresolved conflicts of interest are subject to administrative liability, including fines, and in some cases, disciplinary or criminal liability. Repeated violations may result in a ban on holding certain positions.

Ігор Льов