Friday, 24 September 2010 1:19 PM

What is a "conflict of interest"?

When the Prime Minister Hon. Danny Philip appointed Hon. Bodo Dettke to the Ministry for Forestry, there were concerns over the appointment due to the possibility of a "conflict of interest." This week, Transparency Solomon Islands (TSI) looks at the term "conflict of interest" and what it means for the nation.

A conflict of interest is a situation in which an individual or group is in a position to exploit or compromise their professional or official role for their own benefit. Specifically, a conflict of interest occurs when a person or organisation holds multiple roles, and interests held in one role have the potential to cause corrupt actions in another role. The term "interest" refers a person being in a position to benefit financially from their involvement with a company or project. A
conflict of interest can exist even if a person does not act in a corrupt manner. A conflict of interest refers to the potential for corrupt motivations.

For example, if a government official, whose role is to regulate mining practices in Solomon Islands, also owns shares in a mining company operating in Solomon Islands, there is potential for them to misuse their position to benefit the mining company. Their motivation for doing this could be that they receive larger dividends from the company. In this situation, the government official has a conflict of interest. Even if they do not act in a corrupt manner, the conflict of interest is still present. It follows that, Hon. Bodo Dettke being appointed to the Ministry of Forestry and also operating a logging company, is in a position to misuse his responsibility as a national leader to further the interests of his logging company, Success Company Ltd.

Conflicts of interest severely undermine government efficiency. If contracts or licences are awarded for corrupt reasons relating to a conflict of interest, then a competitive, capable or hardworking contractor or organisation will miss out. This means that the nation has poorer quality industries and services and the livelihood of the people is negatively affected. In most developed nations, government officials are forbidden from involvement in decisions in which they have a financial interest.

The best way to handle a conflict of interest is to remove it completely. For example, the government official might sell their shares before taking up their official role. If this is not possible, it is important that interests are declared or disclosed by registering assets such as stock, debts, loans and corporate positions held. When a conflict of interest arises, a person must recuse
themselves from that situation or decision. Recusal means that a person does not participate in the decision in any way due to an acknowledged conflict of interest.

What does the law in Solomon Islands say? Section 94 of the Constitution states that leaders and public officials must not place themselves in positions in which they have or could have conflicts of interest or in which the fair exercise of their official duties might be compromised. A leader must not allow his integrity to be called into question. He must not use his office for personal gain or engage in any activity which may create doubt in the public mind as to whether he is carrying out
his official duties with integrity. If necessary, a leader is required to disassociate himself from any enterprise that calls his ability to act impartially into question.

The Leadership Code Commission (LCC) requires that all MPs provide declaration forms regarding their assets and financial interests within three months of taking office and every two years after that. The LCC reviews the declarations and should there be a perceived or actual conflict of interest, they have the power to direct the MP to either divest themselves of that interest or give up their office. The register of leader's assets and financial interests is not publicly available and is only shared for specific purposes as stipulated by Section 8 of the Leadership Code Act 1999. It
seems contradictory that the Constitution forbids a leader from engaging in any activity that may create doubt in the public mind about whether he is carrying out his public duties with integrity, and yet information about the activities and interests of our leaders is withheld from the public.

What does this mean for Solomon Islands? A Minister, who must regularly recuse themselves from decision making due to conflicts of interest, cannot be as productive or effective in their role. Therefore the appointment of a Minister with business and financial interests their own sector is inappropriate. If a Minister with a conflict of interest has been appointed, they must follow best practice through full disclosure and recusal from decisions that have the potential to benefit them personally. TSI urges newly appointed Ministers, MPs and all government officials to begin this new term by observing best practice in relation to conflicts of interest. Let's seize this opportunity for transparency, accountability and good governance to characterise our new government from the very beginning.

For more information, contact Mr Steward Tabo,
Executive Officer Acting, Transparency Solomon Islands
Phone: +677 28319

Disclaimer: The views and opinions expressed in this letter/article are those of Transparency Solomon Islands and do not necessarily reflect the official policy or position of Solomon Times Online.

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