Examples

Case study one: family connection to a tenderer for a contract

Trevor is a school bursar. As part of his role he runs a tender process for contracts to supply food for the school's canteen.

Trevor's brother-in-law, who he knows well, is the managing director and a significant shareholder of one of the private companies that is tendering for the latest contract.

A conflict of interest exists here. It is not a financial conflict of interest, because Trevor is not involved in the tendering company and is not dependent on his brother-in-law. But the family connection to the company is a reasonably close one, and the decision to be made by the school directly relates to the company. Trevor is likely to have feelings of loyalty to his brother-in-law (or at least this would be a likely perception).

Trevor should tell the school's principal about his personal connection to the tendering company, and the principal should assign the management of this particular tender to someone else. It may also be prudent to take steps to ensure that Trevor does not have access to information about the other tenders, or other confidential information about this particular tender process.

It is relevant to the assessment of this situation that Trevor's relative is in an important role at the tendering company. The answer might be different if the relative was in a much more junior position and was not personally involved in the company's tender, especially if the company was a large one. The answer might also be different if the relative was a distant relative whom Trevor had met only a few times in his life. Assessing the closeness of a personal connection to someone (or the appearance of such closeness) requires careful judgement.

Case study two: employment of a relative

Stephanie is the principal of a secondary school in a small town. She takes a leading role in handling the recruitment of key staff.

A vacancy has arisen for the position of finance manager and Stephanie's husband has expressed an interest in applying for the position.

Stephanie has a conflict of interest here. The school needs to employ staff on merit, and must avoid perceptions of undue influence or preferential treatment in appointment decisions.

Stephanie should advise the chairperson of the school's board about the situation. The board should ensure that this appointment process is handled entirely by others, and that Stephanie has no involvement in the process. Because of Stephanie's own position, the board needs to take extra care to ensure that the process is truly transparent and competitive, so that all suitably qualified people are able to apply and be fairly considered. Similarly, it is important that there can be no reasonable suggestion that Stephanie may have influenced the decision from behind the scenes.

But managing the initial appointment process is not the only type of conflict of interest that needs to be considered carefully by the school. Issues are also likely to arise in the ongoing working relationship, where there are matters that directly affect or involve both Stephanie and her husband.

It is a fact of life that there will be times when two people who are related - or who are in a personal relationship - will work for the same organisation. That is not usually improper in itself. Indeed, it would often be wrong for someone to be disadvantaged simply because of who they are related to, especially in a large school where the two people do not work closely together each day.

However, sometimes - and depending on the nature of the position - appointing someone who is a relative could cause difficulties, even where a fair process has been followed. This is because it can create a risk of a lack of independence, rigour, and professionalism in ongoing decision-making. In a school, it would usually be unwise for relatives to hold two of the most senior positions, or to hold positions that are in a direct reporting relationship.

In Stephanie's husband's situation, the school's board could consider whether it would be able to manage the frequent and significant conflicts of interest that would be likely to arise if Stephanie's husband was appointed. The two roles are senior ones and likely to involve a direct reporting relationship (or at least a lot of working closely together on managing the school's finances).

Case study three: gifts and hospitality

Piri works as the property manager in a large secondary school. As part of his role, he manages the school's contractual relationship with its preferred project manger for large construction projects. The arrangement with this preferred supplier has been in place for several years, and so the school has decided to re-tender the contract. Piri has told the existing provider that he will soon be inviting expressions of interest for a new contract from the existing provider and its main competitors.

Piri has regular relationship management meetings with the existing provider. At a recent meeting, the provider offered to fly him to another city to inspect a newly constructed administration block at a similar sized school. While there, the provider mentioned it would also be able to arrange for Piri to have complimentary corporate box tickets to a rugby test match that happened to be on that night, and to stay on for the weekend in a downtown hotel.

This situation creates risks at any time, but especially given the imminent tender process. Piri might not be seen as impartial if he is involved in choosing the new preferred supplier. A competitor of the existing provider could allege that Piri is being given an inducement or reward in the implicit expectation that he will look more favourably on the existing provider in the coming tender round (or that he will receive further gifts if the existing provider is successful).

Piri should discuss the offer with the school's principal, and carefully consider the school's policy on gifts and hospitality. Given the circumstances, it would not be appropriate to accept the offer of the sports tickets and hotel accommodation. With the offer to be flown to another city to inspect the administration block, careful consideration should be given to whether business reasons can justify the visit. (If it goes ahead, the school might offer to pay half the cost) If other forms of gift or hospitality have already been accepted, the appropriateness of Piri having a role in the coming tender process might need to be reconsidered as well.

This does not mean that gifts must always be refused. It is reasonable to consider the value or nature of the gift and extent of personal benefit (for example, it may be acceptable to accept a gift that is inexpensive and widely distributed). The context and reason or occasion for the gift is relevant, too. For a very large school that operates in a more commercial environment, some types of gift or hospitality may be seen as a necessary element in maintaining relationships with stakeholders and clients. However, in Piri's case, the risk is higher because of the proximity to the coming tender round where a strict and fair process will need to be followed (and because the justification for at least some elements of the offer appears dubious).