Managing Conflicts of Interest

Today, we'd like to bring you some recent(ish) stories that got our attention:

  • A Chairman gets advice on sustainable construction (for his own house) from a member of staff. He also engaged an “approved supplier” to the firm to do some work on the house, but pays the going rate for the job.
  • An ex Finance Minister takes a part-time job on £200,000 a year with a firm whose fortunes depended for some years quite heavily on his decisions.
  • A CEO gets sponsorship for his son’s motor racing team from firms who also happen to be suppliers to “his” firm.
  • An ex-military senior officer goes to work for a defence contractor, having been involved in specifying equipment and making supplier selection decisions in past years that favoured that firm.
  • A top government technology executive takes a top job with a foreign-owned telecommunications firm, that some believe may be operating in a manner against the UK’s national interest.
  • A partner in a top engineering consulting and project management firm becomes acting CEO for the largest single infrastructure programme in Europe, one that his own firm is working for and from which that firm will potentially make billions in revenue.

Conflicts of interest all. Some more serious than others, and it doesn’t mean anything corrupt or morally “wrong” is going on in any of these cases. But one key point to make is that conflicts of interest exist even if they do not lead to any problems.

So often you hear these people claim “there is no conflict of interest” when what they mean is “yes, there is a conflict but we are managing it, and there is no moral, operational or financial issue here because of that”. (Sebastian Coe was a classic in terms of his Nike relationship where the conflict was blatantly obvious yet he denied it existed.)

The first and third examples above in our list are from Sainsbury’s; David Tyler, the Chairman, has been in trouble recently over advice and work he got done on his home, using Sainsbury’s staff and suppliers. At least action was taken; interestingly, the motor racing example, which was Sainsbury’s previous CEO (Justin King) was reviewed and all was apparently fine.

The final story is about HS2, the UK rail programme, and the acting CEO, Roy Hill, who was on secondment from CH2M. Ironically perhaps, he will now be replaced by a permanent appointment, who is also coming from CH2M!

Then we have George Osborne, UK Chancellor of the Exchequer until recently, who is going to work for BlackRock Investment on £200K a year (for one day a week). That seems almost a parody – or the answer to the question “what could a top politician do to most effectively add to the feeling in the population at large that an elite is hell-bent on screwing as much as they can out of the world at the expense or ordinary people?”

Perhaps he sees Tony Blair’s dubious income sources in recent years and just thinks, sod it, I wasn’t appreciated by the British people, I might as well have some of that. Then we see politicians call doctors “greedy” for doing a few extra shifts and wanting the going market rate for their work.

At a more day-to-day level, and bringing it back closer to home, procurement must always be aware of conflicts of interest, in our own positions of course as well as amongst colleagues who have any involvement in the procurement process. That includes budget holders, specifiers, those who manage suppliers or sign off invoices – and we’ve seen some frauds recently that highlight where conflict of interest can easily tip over into criminal behaviour. Putting work the way of a friend’s firm because you know they will do a great job morphs into nice dinners together, perhaps a paid-for holiday, and next thing you know the police are asking you what you did with the £100K paid into the secret back account.

Enough of the rant. But we do wonder whether the UK is going to be rising up (or sinking down) the next Transparency International Corruption Index given what seems to be happening with increasing frequency.

Voices (2)

  1. Tim Cummins:

    Peter,
    A more optimistic perspective would be that at least these things are often made visible and they are discussed. That, surely, is what transparency is all about? In the real world, there will always be conflicts, in both business and personal life, financial and non- financial. The big question, I think, is whether they are exposed and discussed.

  2. Stephen Heard:

    There’s an interesting correlation here with todays other post about the NHS. How many clinical specialists actually encourage NHS delays only to suddenly have the capacity to see a patient privately using the very same under utilised resources and equipment. Sweating the assets are fine as long as it is equitable and there are no conflictions!

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