Conflict of interest has increasingly become a hotbed for scandals involving public officials and corporate executives. At its core, this issue involves the intersection of personal gain and public or professional responsibilities. The challenge is not just the presence of conflict but also its potential to compromise integrity and objectivity. Globally, the need to address conflicts of interest has become paramount, leading to public outrage and a renewed political resolve to combat this pervasive issue. This growing concern highlights the crucial role institutions of directors play in safeguarding against such conflicts.
Understanding Conflict of Interest
Conflict of interest encompasses a wide range of situations where personal interests could potentially influence, or appear to influence, professional responsibilities. According to Williams (1985), a conflict of interest arises when an individual’s private financial interest is sufficient to influence the execution of their public duties and responsibilities. This can range from overt actions for personal gain to subtler influences that affect decision-making processes. Frier (1969) adds that such conflicts occur when public responsibilities clash with private economic affairs, regardless of whether the conflict results in personal gain.
Key elements of conflict of interest include:
Private Financial Interest: This could be any personal financial stake or advantage sought for family members.
Public Duties and Responsibilities: Public officials and corporate executives must prioritize their public duties over private interests.
Compromised Judgment: Conflict of interest interferes with the objective execution of duties, leading to compromised decisions.
The Role of Institutions of Directors
Institutions like the Institute of Directors in Southern Africa (IoDSA) are instrumental in addressing conflicts of interest. These institutions provide governance frameworks, training, and guidelines to ensure that directors in both public and private sectors adhere to ethical standards and prioritize the interests of the entities they serve over personal gains.
Why the Concern About Conflict of Interest?
The primary concern about conflicts of interest lies in their potential to erode public trust and compromise the integrity of institutions. When public officials or corporate leaders prioritize personal gain over their duties, it undermines the effectiveness of governance and accountability structures. This, in turn, can lead to significant repercussions, including financial losses, legal consequences, and diminished public trust.
Categories of Conflict of Interest
Conflicts of interest manifest in various forms, each with its own implications:
Using Inside Knowledge and Influence: Public employees and corporate executives can misuse insider information for personal gain or the benefit of others. For instance, a city planner may profit from knowing where new developments will occur before this information is public.
Self-Dealing: This involves actions taken in an official capacity that benefit oneself or close associates. An example is a public employee awarding a contract to a company they own or have a vested interest in.
Using Government Property: Unauthorised use of government or corporate resources for personal purposes constitutes a conflict of interest. This can range from minor offenses like taking office supplies home to major abuses like using company funds for personal projects.
Outside Employment: Holding external jobs or interests that conflict with one’s primary professional responsibilities can lead to biased decision-making.
Influence Peddling: Soliciting benefits in exchange for using one’s official position to influence decisions is a more active form of conflict of interest.
The Overlap with Corruption
While conflict of interest does not inherently imply corruption, it often overlaps with corrupt practices. Corruption involves the misuse of office for personal gain and can manifest as acts of commission or omission, including embezzlement, extortion, or accepting bribes. The distinction lies in the resolution of the conflict—whereas conflict of interest merely indicates a potential for bias, corruption is the act of allowing personal interest to override public duty.
The Importance of Institutions of Directors
Institutions of directors like IoDSA are vital in mitigating conflicts of interest through several mechanisms:
Governance Frameworks: They establish robust governance frameworks that set clear standards for ethical conduct and accountability.
Training and Development: Continuous education programs ensure that directors are well-versed in identifying and managing conflicts of interest.
Guidelines and Codes of Conduct: These provide clear guidelines on acceptable behaviors and the steps to take when conflicts arise.
Transparency and Disclosure: Encouraging transparency and requiring the disclosure of potential conflicts help in preemptively addressing issues before they escalate.
Conclusion
The increasing prevalence of conflicts of interest concerns in Lesotho highlights the critical need for institutions of directors to enforce ethical standards and accountability in both public and private sectors.
We are not disappointed and not surprised about their deafening silence of Institute of Directors Lesotho (IOD Lesotho) on the acquisition of Lucapa stake at Mothae Diamond Mine by Lephema Executive Transport, whose majority shareholder and director is one Lebona Lephema a serving minister in the current administration…After-all this is the same organisation which was used by Mergence Lesotho which stood accused of violating every known governance principles to cleanse it through its highly unsuccessful “generational wealth creation seminar.”
