When conflicts of interest don’t stop at one

By Chris Wheeler

Monday January 18, 2021

Chris Wheeler PSM

The underlying principle or concept of ‘conflicts of interests’ is relatively clear and simple: an official’s private interests or private life can not interfere, or appear to interfere, with the official’s duty to put the public interest first, personal interests or preferences cannot be allowed to influence decisions made in a public official capacity.

Conflicts of interest, or perceived conflicts of interest, are a significant issue in public administration because they can call into question the integrity of the actions and decisions of a particular officer or agency even where there is no maladministration. More than in many other areas of public administration, the proper management of conflicts of interest must not only be done but be seen to be done.

While the underlying principle or concept of a ‘conflict of interests’ is relatively clear and simple, in practice implementation often isn’t! This can be particularly the case in the grey areas around the edges where it isn’t 100% clear whether an interest is material either in terms of the nature of the interest or the degree of personal involvement. In terms of degree of involvement where an interest is held by another, an example of a grey area is the nature of a personal relationship — as a relationship develops, at what point does an acquaintance become a friend, a friend become a close friend, a close friendship become an intimate relationship? Depending of course on the particular public duties being performed by the public official concerned, at what point on the continuum could a relationship become an interest that could create an actual, reasonably perceived or potential conflict of interests and need to be disclosed?

Apart from the obvious grey area relating to the nature and degree of an interest, in practice there can be an even bigger grey area when two different conflicts are in play: the first is a substantive conflict between a public duty and a private interest, the second is an implementation conflict between a public duty to recognise and disclose the substantive conflicts of interest and a private interest in either not recognising that such a conflict exists or being unwilling to disclose it.

If a person has a personal or otherwise private interest in a matter, it may well not be in the person’s interests to recognise or identify the existence of such a conflict, as that would mean the person could not be involved in a matter in which they have a personal interest! Professor Kath Hall referred to this issue in a 2006 paper:

“…research in areas of cognitive and social psychology has shown that self-serving cognitive biases (also called egocentric or motivational biases) are a fundamental part of human behaviour and cannot be divorced from the process of rational decision-making”.

“We are generally unaware of the effect of these cognitive biases on our own decision-making. While we may recognise them in general terms, or in the conduct of others, they often go unrecognised in our own daily decisions.”

“Self-serving biases are part of all our behaviour … self-image and self-interest are well-recognised psychological motivators that affect us all.”

“This lack of awareness of self-serving influences can also reduce the possibility for regulating dishonest behaviour.”1

Apart from embarrassment and a desire for privacy, the likelihood of disclosures being made if a second conflict of interest is in play is also affected by a range of cognitive and motivational biases that lead to errors of thinking and distortions of judgement.2

For example:

  • confirmation bias – people seeing want they want to see and disregarding the rest3
  • motivated scepticism – people applying more scepticism to views they don’t like than to those that they do4
  • selective perception – people subconsciously screening or filtering out information that they do not consider important to them
  • selective exposure – people actively searching for information that is consistent with their beliefs rather than information that might contradict those beliefs
  • undesirability bias — when the undesirability of an event or outcome influences a person’s degree of risk aversion, i.e. concerns about the possibility of harmful consequences can increase a person’s desire to be cautious and make very conservative assessments
  • affect influenced bias – people making decisions heavily influenced by their current emotions

Research has shown that people differ in the degree to which they need to have firm answers to questions, and in the degree to which they have an aversion to ambiguity. This is referred to as the ‘need for cognitive closure’. Individuals with a high need for cognitive closure do not expose themselves to information that is incongruent with their beliefs. The impact of the above mentioned cognitive and motivational biases is a tendency for people to:

  • only see what they want to see
  • only look for what they want to find
  • pay more attention to information supporting pre-conceived views
  • are more sceptical of information posing a threat to their interests
  • quickly forget inconvenient information5

This raises an interesting question: What is a public official expected to know about the business or other financial affairs of people with whom they have an intimate, familial or business relationship?

  • Can the official be expected to know about that person’s business and other financial interests (‘actual knowledge’)?
  • Are there circumstances where the public official could reasonably be deemed to be aware of such interests (‘constructive knowledge’)?
  • Is a public official expected to take active steps to become aware of such interests (‘due diligence’)?

Where a second conflict of interests is in play and the likelihood of self-disclosure is low, how can organisations find out about conflicts of interests impacting the integrity of their operations. In practice, the best source of information about undisclosed conflicts by staff are the colleagues of those staff. While it is reasonable to expect staff to report undisclosed interests of colleagues that they become aware of6 the likelihood of such disclosures being made in practice will depend a lot on whether the staff trust management to keep their identity confidential and to act on such disclosures. This emphasises the importance of the effective management of public interest disclosures within organisations.

The next best source of such information is managers. Managers clearly have a greater responsibility to report undisclosed conflicts by staff than the colleagues of those staff.

There are a range of proactive practices an organisational might implement to address conflicts of interests. A conflicts register is not enough, neither is such a register plus a conflicts of interests policy. For an organisation to identify undisclosed conflicts of interests, it needs to have:

  • an appropriate internal reporting policy7 that highlights the importance of reporting the undisclosed conflicts of others,
  • regular awareness raising events or presentations (reminders to staff to disclose actual, reasonably perceived and potential conflicts), and
  • ongoing training on both the conflicts policy and internal reporting policy (at induction and at regular intervals thereafter).

Notes

  1. Prof. Kath Hall “The psychology of corporate dishonesty” (2006) 19 Australian Journal of Corporate Law,  pp.268-282
  2. Over 170 cognitive biases are listed in Wikipedia.
  3. A concept immortalised by Simon and Garfunkel in “The Boxer”.
  4. Psychologist Tom Gilovich argues that when evaluating evidence people ask themselves different questions depending on whether they want to believe the evidence or not. In his view “For desired conclusions, we ask ourselves, “Can I believe this?”, but for unpalatable conclusions we ask, “Must I believe this?”. Gilovich, T. How We Know What Isn’t So: The Fallibility of Human Reason in Everyday Life, The Free Press, 1993.
  5. I am reminded of something I once read: “As things do that are inconvenient, it slipped his mind”.
  6. While such disclosures may sometimes appear to be motivated by malice, they should not be discounted as the information disclosed may well be correct.
  7. Either as a stand-alone policy or as part of an organisation’s code of conduct that addresses the conflicts of interests issue in some detail.

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