CORE PRINCIPLES FOR MANAGING CONFLICTS OF INTEREST

Source: OECD

Serving the Public Interest

• Public officials should make decisions and provide advice on the basis of the relevant law and policy, and the merits of each case, without regard for personal gains (i.e. be ‘disinterested’. The integrity of official decision-making, in particular in the application of policy to individual cases, should not be prejudiced by the religious, professional, party-political, ethnic family, or other personal preferences or alignments of the decision-maker.
• Public officials should dispose of, or restrict the operation of private interests that could compromise officials decisions in which they participate. Where this is not feasible, a public official should abstain from involvement in official decisions which could be compromised by their private-capacity interests and affiliations.
• Public officials should avoid private-capacity action which could derive an improper advantage from ‘inside information’ obtained in the course of official duties, where the information is not generally available to the public, and are required not to use their position and government resources for private gain.
• Public officials should not seek or accept any form of improper benefit in expectation of influencing the performance or non-performance of official duties or functions.
• Public officials are expected not to take improper advantage of a public office or official position which they held previously, including privileged information obtained in that position, especially when seeking employment or appointment after leaving office.

Supporting Transparency and Scrutiny

• Public officials and public organisations are expected to act in a manner that will bear the closest public scrutiny. This obligation is not fully discharged simply by acting within the letter of the law, it also entails respecting broader public service values, such as disinterestedness, impartiality and integrity.
• Public officials’ private interests and affiliations that could compromise the disinterested performance of public duties should be disclosed appropriately, to enable adequate control and management of a resolution.
• Public organisations and officials should ensure consistency and an appropriate degree of openness in the process of resolving or managing a conflict-of-interest situation.
• Public officials and public organisations should promote scrutiny of their management of conflict of interest situations, within the applicable legal framework.

Promoting individual responsibility and personal example

• Public officials are expected to act at all times so that their integrity serves an example to other public officials and the public.
• Public officials should accept responsibility for arranging their private-capacity affairs, as far as reasonably possible, so as to prevent conflicts of interest arising on appointment to public office and thereafter.
• Public officials should accept responsibility for identifying and resolving conflicts in favour of the public interest when a conflict does arise.
• Public officials and public organisations are expected to demonstrate their commitment to integrity and professionalism through their application of effective Conflict of Interest policy and practice.

Engendering an organisational culture which is intolerant of conflicts of interest

• Public organisations should provide and implement adequate management policies, processes, and practices in the working environment to encourage the effective control and management of conflict of interest situations.
• Organisational practices should encourage public officials to disclose and discuss conflict of interest matters, and provide reasonable measures to protect disclosures from misuse by others.
• Public organisations should create and sustain a culture of open communication and dialogue concerning integrity and its promotion.
• Public organisations should provide guidance and training to promote understanding and dynamic evolution of the public organisation's established rules and practices, and their application to the working environment.

Situation in EU Member States

1. The use of law is the predominant form of regulation. While most Member States have adopted general anti-corruption or anti-fraud laws (which include conflicts of interest provisions), fewer Member States have also adopted specific conflicts of interest laws and regulations. Moreover, only a few Member States have adopted general conflicts of interest laws which apply to all institutions. Instead, most Member States have different and separate rules for the different institutions.
2. In almost all countries, codes of ethics are designed for the individual institutions. Only rarely do they apply to the whole governmental sector.
3. Portugal, United Kingdom and Spain have highly regulated systems. The countries with the lowest number of regulated conflicts of interest issues  are Austria, Denmark and Sweden.
4. Parliaments have a relatively high degree of regulation density with regard to the regulation of declarations of interests and – to a lesser extent – the registers of financial interests.
5.  As to the specific CoI issues, some categories are highly regulated, whereas others are not. Broadly speaking, general ethical principles and obligations are already well regulated. The category of post-employment is the least regulated area among the Member States.
6. Disclosure policies have become one of the most important instruments in conflicts of interest policies. At present, almost all Member States oblige their holders of public office to declare their interests. However, a distinction should be made between (public or confidential) declarations of financial interests, the declaration of additional interests and whether the declarations should (or should not) be stored in a register of interests. However, the content of what actually needs to be declared varies considerably. While Member States, such as Poland, Romania and Bulgaria, have, in the main, very detailed disclosure requirements, others Member States require much less, which may even be on a voluntary basis (Sweden). Other differences concern the degree of openness (public disclosure or internal disclosure) and questions of sanctions if members do not disclose their interests or disclose them too late.
7. In the case of holders of public offices, independent and external control is rare. For the most part, the different institutions (or holders of public offices) control themselves – if at all. Despite the current self-regulation practice, there seems to be a trend towards the establishment of more external committees. Unfortunately, little is known about the functions and powers of ethics committees.
8. Codes for the different categories of office holders are also subject to some considerable variation. In addition, the different codes vary with regard to their legal and political effects.

Ethics Rules and Public Trust

Critics argue that more rules of ethics do not necessarily provide an efficient response to the decline in public trust and integrity issues, but may cause even more cynicism regarding public and political institutions. The problem, critics say, is that the expansion of ethics regulations and more public discussions about the need for more and better (conflicts of interest) rules have not contributed to an increase in public confidence in government. In fact, the calls for more and better ethics have the opposite effects. More ethics regulations and more ethics enforcers have produced more ethics investigations and prosecutions. Whatever the new ethics regulations may have accomplished, they have done little to reduce publicity and public controversy about the ethical behaviour of public officials. Most ethics experts are, indeed, of the opinion  that more rules, even if well managed, may not build more trust. In fact, they may actually contribute to decrease public trust by generating a sense that all lawmakers are fundamentally untrustworthy. The assumption on the part of the legislators and the Members of Government who favour the adoption of new rules and standards is that this will have a positive effect and increase public trust in Government. However, a strong focus on ethics, too strict approaches, too much publicity and too many rules may undermine public trust.

Ethics Rules as a Political Instrument

The more rules and standards are introduced, the more often rules and standards can be violated. Consequently, media and the public may interpret this as a sign of declining ethical standards. Thus, rather than decreasing the number of cases of unethical behaviour, by declaring behaviour unethical which was formerly in accordance with the rules, the absolute number of scandals and cases of unethical behaviour increases, thus creating the appearance of public officials becoming more unethical. In reality, however, higher ethical standards lead to an overall more ethical public service. However, from a political point of view, it is diificult to be against new initiatives and new rules in the field. Regulating ethics policies is popular. Consequently, being against more rules and standards is risky from a political point of view. On the other hand, ethics policies are becoming increasingly politicised. Ethics has emerged as a perfect policy field in election campaigns. Politicians can be sure that calls for new initiatives will be applauded by the citizenry, because these calls reflect a widespread perception in European societies that levels of corruption and conflicts of interest are increasing, and that something must be done. From the point of view of a holder of public office (and even more of a legislator or a Minister), it would not just be detrimental to be against new or even higher ethical standards. In fact, the call for higher ethical standards and tighter rules of ethics are more and more becoming the subject of election campaigns in many countries. The downside of this development is that it becomes more difficult to avoid that ethics as a policy issue is abused as a moral stigmatisation. More and more politicians use accusations of unethical behaviour conduct as a political weapon. Rules of ethics, in particular, are resources, that politicians mobilise to attack and discredit their opponents. Consequently, ethics are increasingly used as a moral instrument with the aim of denoucing political opponents.

Ethics Rules as effective instruments in the fight against corruption

Rules of ethics are only one instrument in the fight against corruption, fraud and conflicts of interest. The reasons for corruption, fraud, etc. are too complex and there are too many variables that cause corruption. Many EU Member States have introduced very detailed and strict rules in the field of conflicts of interests. Often, these countries are also those with a high degree of perceived corruption and fraud. The adoption of new and stricter measures in these countries is also a reaction to important real life concerns and problems; thus, these rules are introduced with the best of intentions. A different question is whether these countries have the necessary capacities and skills to implement, manage, monitor and enforce the rules which they have adopted properly.

Clearly, the existence of strict rules and standards is no guarantee of an ethical government. In some Member States, in particular, it seems that one of the objectives of the introduction of strict and detailed rules (covering all categories of holders of public office) was prophylactically to prohibit holders of public office from entering into an ever-increasing number of specified, factually, ascertainable sets of circumstances beause they might lead to inner conflict. It is interesting to note that Scandinavian countries with fewer rules and standards in place have at the same time relatively low levels of corruption and bribery. 

There is no automatic link between strict rules and a low degree of corruption (and conflicts of interest)). A low degree of regulation density may also be perfectly compatible with a low number of conflicts of interest. This is not to say that countries with a high level of corruption and conflicts of interests should have fewer rules in place. Tough and strict rules are not a necessary condition for low levels of conflicts of interest. Moreover, too many ethics measures can damage the public interest instead of enhancing it. This is the case if the introduction of more rules supports the perception that these rules were introduced because of the existing high level of corruption and conflicts of interest. The problem is that subjective perceptions of increasing levels of conflicts of interest 'risk reflecting citizens' general predispositions towards government, rather than actual experienced corruption.

Ethics Rules and the Limits of Transparency Requirements

More transparency, openness,, accountability, new ethical rules and access to government-held informatio, as well as more effective declaration of interests by holders of public office, are widely applauded as remedies for public and individual deficiencies. However, these policies are often more preached than practiced, more often involed than defined, and indeed might ironically be said to be mystic in essence, at least to some extent.

Especially in the field of conflicts of interests, requirements for more transparency and declaration of information etc., are supposed to discipline institutions and office holders thus making information about their potential conflicts of interest public. In this way, transparency, in particular, is positively related to ethical behaviour, because public exposure is presumed to act as a stimulus: the more the public knows about holders of public office, the better they behave. Transparency and openness requirements are also popular since they are widely supposed to make institutions and their office holders both more trustworthy and more trusted. In addition, more reporting requirements about conflicts of interest should contribute positively to public trust. Thus, many experts in the field propose that holders of public office should be required to disclose more personal information. However, these suggestions are not without difficulties. For example, public disclosure requires effective management systems and may produce (depending on how strict the requirements are and how many holders of public office are required to make detailed reports) huge quantity of information. Another question is whether this information which is offered for public scrutiny is of interest and understandable for the wider public. So far, experience suggests that this is not the case. Another challenge is that financial disclosure and public registers can easily be politically abused because of the high degree of partisanship that occurs on a given issue. Political parties seem to use the instrument of public disclosure for their own political purposes. Similarly, there are many ways in which declarations and registers can be abued for populist (media) purposes. On a more personal level, financial reporting can also provoke jealously over income, activities and unequal rewards. Thus, despite all positive intentions, the reporting requirement does not just have the intended effect. Instead, it also has a number of unintentional negative effects.

Ethics rules and the regulatory quality

Particularly highly regulated countries and institutions face the challenge of the poor quality of the rules, overlapping rules and the low level of awareness of the existing rules and standards (which are, for the most part, not codified into one document, but fragmented over several documents. Because too many rules and standards may either be in conflict with other rights, unworkable, counter-productive in practice, or may create impediments to bringing experienced people into public office, the OECD has warned that too strict approaches, and excessive prohibitions and restrictions have negative effects. Thus, a modern conflicts of interest policy should strike a balance between the need to regulate conflicts of interest issues and the guaranteeing of both individual and organisational freedom and flexibility.

Ethics rules and costs of a professional ethics regime

Even if new ethics rules and standards have brought the expected results, any analysis must also include the potential costs of the introduction of new ethics policies. What are the financial, organisational and personal costs of regulations, standard-setting, management, monitoring and training? Clearly, the adoption of more detailed rules and standards alone does not suffice. Instead, in all cases, they must be accompanied by the introduction of additional monitoring, educational and control mechanisms. Rules and standards without capacity-building mechanisms and 'awareness' are rather useless.

Ethics rules, disclosure policies and effectiveness

Even if disclosure policies are important, they mostly reveal conflicts of interest without providing any guidance for resolving them.