Conflict of interest

Introduction

Conflict of interest occurs when actions or decisions that are influenced by, or perceived to be influenced by, personal considerations reflect badly on the Consumers Health Forum of Australia (CHF) and relationships within the organisation, raising ethical and legal issues. This is true of the relationships of all individuals involved in undertaking the work of CHF (i.e. Governing Committee members, members of Subcommittees, Reference Groups, representatives and employees). Hence, it is sometimes the perception of a conflict of interest that may be important, whether or not such conflict actually exists. Such perceptions adversely affect relationships within and outside the organisation.

This policy suggests that:

  1. Action is required when there is an actual conflict of interest or when there may be a perception of conflict
  2. Existing and potential conflicts must be declared
  3. Procedures must be open, accountable and documented.

It should be noted that there are many situations that may involve a conflict of interest. Hence, this document does not attempt to be overly prescriptive or to restrict certain activities, but rather to provide guidance in recognising conflicts and determining appropriate disclosure and other responses.

Context

This policy is informed by ethical principles, as well as legal requirements. This includes the ACTs Associations Incorporation Act 1991 under which CHF is incorporated. This Act requires a member of a committee of an incorporated association, who has a direct or indirect pecuniary interest in the contract or proposed contract to which the association is or may be a party, to disclose the nature and extent of the interest to the committee where this occurs and to disclose the nature and extent of the interest at the next general meeting of the association.

Likewise, it requires that the member of a committee of an incorporated association who has an interest in the contract or proposed contract shall not take part in making decisions with respect to the contract or proposed contract. There are penalties for the breach of these requirements.

Definition

A conflict of interest exists where there is a divergence between the individual interests of a person and their responsibility to CHF, such that an independent observer might reasonably question whether the actions or decisions of that person are influenced by their own interests.

In the end, it all comes down to the issue of our responsibility to CHF, which should not allow any other interest to conflict with that responsibility. It should also be noted that a conflict of interest depends on the situation and not on the character and actions of an individual. Often there will be a conflict between personal considerations and corporate interests. Perceptions and their impact upon relationships are important, whether or not they have in fact affected the decision or action.

Types of interest which might give rise to a situation of conflict include:

  • a direct or indirect financial interest in a decision
  • a non-pecuniary interest, such as a family relationship or personal/emotional relationship/antagonism
  • another affiliation, such as with another employer or association.

While a conflict of interest may arise in any situation, some examples might include:

  • employment issues, including confirmation of appointments, performance reviews and staff developments
  • the allocation of contracts which were not part of an open and independent process
  • nominees/representatives of CHF on other committees
  • holding a directorship of a company, partnership or association
  • participating in outside earning activities
  • utilising information gleaned from participation in CHF activities in financial or personal ways.

Procedures

At all times members of the Governing Committee, its committees, representatives and all conducting the day-to-day work of CHF should be sensitive to the potential for conflicts of interest. Everybody faces these issues and we need to ensure that individual interests do not conflict, or appear to conflict, with the interests of CHF.

Frequently the person who knows most about a potential conflict of interest is the individual concerned. Hence that person has a responsibility to ensure, wherever possible, that no real or perceivable conflict of interest arises in the performance of their duties. If an individual is aware of an interest that might reasonably be seen to conflict with their obligations to CHF, they have an obligation to disclose that conflict. Of course, situations may arise that are not clear cut and those in genuine doubt as to whether a conflict of interest should be declared should err on the side of caution and discuss the situation with an appropriate person. In the case of the Governing Committee this would include a persons peers on the Governing Committee, and in the case of an employee, a colleague.

There may also be situations where an individual is unwilling to disclose the details giving rise to the conflict of interest. In such cases it is sufficient to disclose the fact of the conflict as long as they withdraw from the situation concerned.

Ways of dealing with conflict of interest

For people involved with CHF activities the following might occur and be dealt with in the following manner:


  1. The nominee of an organisation of the Governing Committee is uncomfortable because of discussions at a meeting regarding a financial contract between CHF and that organisation.
    Suggested action:
  • The person concerned should be given the opportunity prior to and during the relevant meeting/s to declare such a potential conflict and to discuss with peers the most appropriate way of dealing with this. Whatever the action, it should be documented. In the case of actions involving committees, it is desirable that such ways of dealing with the conflict of interest are documented in the minutes.
  1. At a meeting of the Governing Committee or Sub-committee, a decision is required as to a representative or appointee to a position where a member of the committee concerned is one of the contenders/applicants.
    Suggested actions:
  • In the case of face to face committee meeting, it is reasonable for the person concerned to declare the interest and to remove themselves physically from the room for the duration of the section of that meeting where this item is being discussed/resolved.
  • In the case of a teleconference it is reasonable that the person concerned discuss the matter with the chair of the committee concerned prior to the teleconference and that they develop a way of declaring an interest to their peers and removing the person from participation in that section of the teleconference. The chair might for example arrange to deal with this matter first or last on the agenda of the teleconference, thus allowing for the person to participate in all other items on the agenda but to drop out for this particular session.
  • In the case of an out-of-session decision of the Governing Committee or other matter where committees do not meet in "real time" to discuss the matter, it is reasonable for the person concerned to document their interest and to note that they abstain from voting on the matter concerned. It is thus reasonable for all voting papers of committees of CHF to have provision for abstention by parties, and for members to be able to attach documentation and/or express the potential or real conflict of interest for the record. It should be noted that such expression may take a variety of formats. For example, a person with a disability who cannot write their concerns/potential conflict may wish to record it on audio tape or the like and deposit this with the secretariat.
  1. A member of a committee of CHF is dissatisfied with a decision, yet they have a direct or indirect interest in that decision.
    Suggested action:
  • It is clearly improper for the person concerned to use their situation/position within the organisation to have any influence upon that decision, save for the general responsibilities which a director may have. It is reasonable for the person concerned to document their concern, but they should remove themselves personally from any further decision making or attempt to utilise internal structure/ procedures. It is however reasonable for the person concerned to appeal against a decision in the same way that anyone else from outside the organisation would do so. In such a case a reasonable course of action would be to write to the Chair of CHF expressing their concerns. The Chair would respond as the situation requires having due regard for the principles of natural justice and ensuring that all procedures are documented.

Shared responsibility

In rare circumstances it may be that someone forgets or omits to declare a conflict or potential conflict of interest. In this case it is important to remember the mutual responsibility which all members of a committee, especially the Governing Committee which has an oversight governance role, have. This responsibility or duty can be seen to extend not just towards CHF, but in an ethical sense to all involved.

In such circumstances it would be reasonable to raise your concerns prior to, or during, the meeting in a sensitive way so as to allow the person concerned to reflect and decide whether they wish to declare a potential conflict based upon such a perception. If he/she does not wish to name such conflict and another person in the committee/organisation has a markedly different perception, it would be reasonable to declare the matter to the Chair of the committee who should deal with it as a procedural matter similar to a "point of order". Inability to resolve the matter should be referred to the Chair of CHF, who may wish to take advice, and make a ruling. Such a ruling should be open to final appeal within the context of a full Governing Committee meeting. It is however to be stressed that a sensitivity to the situation should preclude such procedures being necessary.

In the case of an employee of CHF, it is important that they raise concerns with, and seek guidance from the Executive Director, or a supervisor appointed by the Executive Director.

Conclusion

It should be stressed that potential or real conflicts of interest can occur at any time, and indeed are a normal part of a persons existence within an organisation. Such conflicts are not necessarily a commentary on the individual involved. It is however important that individuals be given the opportunity to be sensitised to, and express, potential or real conflicts of interest.

As an organisation we must be sensitive to the individuals and situations with which we are dealing and seek to learn from such situations. It is to be hoped that collective learning about such conflicts will inform our policy and practice.

With this in mind, members of the Governing Committee, Sub-committees, Reference Groups, representatives and employees are referred to the CHF Code of Conduct and the Client Complaints Procedure.