CONFLICT OF INTEREST

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WEALDEN MARCH 2006

Planning Crime arises more often than in any other civil crime, because the system is rigged for it, and if you get caught, there is no punishment.  Except a trip to Coventry - which means you get shuffled off to another department for a while.

Land has a value.  With planning permission, land values go through the roof.  Many developers offer cash incentives to planning officers to approve their applications.  This may or may not be in the form of cash.  It could be they'd build a planning officer and extension for free.  Or, build him a house at cost.  Either way you look at it, it's a bribe and a criminal act.

In no other civil arena can you not declare an interest and also be sure that you will not be investigated in any event.  Planning officers do not have to declare an interest.  If their uncle of father in law, submits a planning application, or if a private citizen has bribed the officer concerned, the application will get rubber stamped.  Wealden District Council tried very hard last month to cut out the democratic system.  I.e. cut out the members from the chain.  Can you imagine that?  If every application is decided by the officers. 

Very sneakily, those clever planning officers, headed by Ian Kay, tried to table a motion that would have meant every application went on the knock, with it left up to members to keep their eye out for discrepancies and give three days notice!  All an officer would need to do was put a late item on the agenda, and bingo, it slips under the net- whatever it was for.  Unfortunately, on this occasion Wealden's members were on the ball and almost unanimously voted against the proposal.

Nelson says: "Any move to undermine the democratic process, should be viewed with suspicion

You can imagine the consequences if the above proposal had been approved.  You might as well form an orderly queue for your permission, and dno't forget your brown envelope.  

Officers keep tight controls on approvals and refusals.  If they don't like any particular architect or planning consultant, he or she gets the run round.  If you are applying in person, you may be okay if it's just a small modification to an existing building, or a conservatory, but anything else and you're sure to be badly advised.  Typically, you will be asked to apply, where no application is needed (See permitted development rights).  The reason for this is simple.  They give you the paper run around, because this has the effect of putting most people off.  Thus, preserving the playground for themselves.  Should you appeal, they will play the odds at no cost to themselves, and more often than not, they will win due to superior knowledge, slight of hand and in fact any other devious spanner they can throw in the works to get you off their patch.

Even if they foul up, what does it matter to them anyway. All their mates (the other officers) will close ranks to protect the offending officer.  The legal department will lie through their teeth to protect the officer.  The internal complaints system is rigged and never finds anyone guilty of anything other then spilling his tea.  The Local Government Ombudsman is a joke, refusing to investigate anything serious (since they are ex planning officers) and the District Auditor is actually on the take anyway.  Then after a short career pocketing favour money, you can retire early on an enhanced pension at the ratepayers expense.  Is there a conflict of interest?  Too right there is!  See below for a dictionary definition.

CONFLICT OF INTEREST

conflict of interest is a situation in which someone in a position of trust, such as a lawyer, a politician, or an executive or director of a corporation, has competing professional or personal interests. Such competing interests can make it difficult to fulfill his or her duties impartially. Even if there is no evidence of improper actions, a conflict of interest can create an appearance of impropriety that can undermine confidence in the ability of that person to act properly.

In the legal profession, the duty of loyalty owed to a client is generally supposed to preclude an attorney (or a law firm) from representing persons with interests adverse to those of the client. As perhaps the most common example encountered by the general public, the same firm will not represent both parties in a divorce case.

More generally, conflict of interest can be defined as any situation in which an individual or corporation (either private or governmental) is in a position to exploit a professional or official capacity in some way for their personal or corporate benefit.

Having a conflict of interest is not, in and of itself, evidence of wrongdoing. In fact, for many professionals, it is virtually impossible to avoid having conflicts of interest from time to time. A conflict of interest can, however, become a legal matter if an individual tries to (and/or succeeds in) influencing the outcome of a decision, for personal benefit.

There often is confusion over these two situations. Someone accused of a conflict of interest may deny that a conflict exists because he/she did not act improperly. In fact, a conflict of interest does exist even if there are no improper acts as a result of it. (One way to understand this is to use the term "conflict of roles". A person with two roles - an individual who owns stock and is also a government official, for example - may experience situations where those two roles conflict. The conflict can be mitigated - see below - but it still exists. In and of itself, having two roles is not illegal, but the differing roles will certainly provide an incentive for improper acts in some circumstances.)

Types of conflicts of interests

The following are the most common forms of conflicts of interests:

• Self-dealing, in which public and private interests collide, for example issues involving privately held business interests,

• Outside employment, in which the interests of one job contradict another,

• Family interests, in which a spouse, child, or other close relative is employed (or applies for employment) or where goods or services are purchased from such a relative or a firm controlled by a relative. For this reason, many employment applications ask if one is related to a current employee. If this is the case, the relative could then recuse from any hiring decisions.

• Gifts from friends who also do business with the person receiving the gifts. (Such gifts may include non-tangible things of value such as transportation and lodging.)

Other improper acts that are sometimes classified as conflicts of interest are probably better classified elsewise. Accepting bribes can be classified as corruption; almost everyone in a position of authority, particularly public authority, has the potential for such wrongdoing. Similarly, use of government or corporate property or assets for personal use is fraud, and classifying this as a conflict of interest does not improve the analysis of this problem. Nor should unauthorized distribution of confidential information, in itself, be considered conflict of interest. For these improper acts, there is no inherent conflict of roles (see above), unless being a (fallible) human being rather than (say) a robot in a position of power or authority is considered to be a conflict.

Examples

• Self-policing of any group is also a conflict of interest. If any organization, such as a corporation or government bureaucracy, is asked to eliminate unethical behavior within their own group, it is in their interest to eliminate the appearance of unethical behavior, rather than the behavior itself, by keeping any ethical breaches hidden, instead of exposing them and thus ending them. An exception is if the ethical breach is already known by the public. In that case, it is in their interest to end the ethical problem to which the public has knowledge, but keep remaining breaches hidden.

• Police charged with traffic enforcement frequently benefit from writing tickets. This includes better job evaluations and promotions, especially where a formal or informal quota system is used. The funds collected from traffic violations also frequently go into a fund from which the officer is paid, or in some other way benefit the officer and/or their town. This can lead to speed traps and more onerous means of collecting violation revenue, such as blocking traffic and posting officers to catch drivers who attempt to bypass the blockage on the shoulder. Excessive enforcement against out-of-town drivers is often a result of this conflict of interest.

• Taxation without representation is a case where one body has the ability to levy taxes, fees, or charges on another, separate group. It is thus in their interest to levy heavy taxes, limited perhaps by the ability and willingness of the other group to pay without resorting to violence. This is often cited as a principle cause of the American Revolution, due to British taxes imposed on the American colonies. This practice continues today, however. One example is the city of Detroit in the United States which imposes an income tax on those who work in the city, but don't live there (and are thus unable to vote on such issues). Detroit also recently attempted to impose higher water rates on those cities which they supply than on Detroit itself.

• Representatives, in general, have different interests than their constituents. Thus, accepting bribes to vote a certain way is in their interest (assuming they don't get caught), while not in their constituents interest. These actions are sometimes illegal, but often not, as in the case of a politician accepting large amounts of money for a political campaign, and in return, granting the contributor access to political leaders. This is often cited as an argument for direct democracy.

Ways to mitigate conflicts of interests

The best way to handle conflicts of interest is to avoid them entirely. For example, someone elected to political office might sell all corporate stocks that he/she owns before taking office, and resign from all corporate boards. Or that person could move his/her corporate stocks to a special trust, which would be authorized to buy and sell without disclosure to the owner. (This is referred to as a "blind trust".) With such a trust, since the politician does not know in which companies he/she has investments, there should be no temptation to act to their advantage.

Short of avoiding conflicts of interest, the best way to deal with them is one or more of the following (mitigation) measures:

Disclosure

Commonly, politicians and high-ranking government officials are required to disclose financial information - assets such as stock, debts such as loans, and/or corporate positions held, typically annually. To protect privacy (to some extent), financial figures are often disclosed in ranges such as "$100,000 to $500,000" and "over $2,000,000".

Recusal

Those with a conflict of interest are (ethically) expected to recuse themselves from (i.e. abstain from) decisions where such a conflict exists. For example, if the governing board of a government agency is considering hiring a consulting firm for some task, and one firm being considered has, as a partner, a close relative of one of the board's members, then that board member should not vote on which firm is to be selected. In fact, to minimize any conflict, the board member should not participate in any way in the decision, including discussions.

Judges recuse themselves from cases when personal conflicts of interest may arise. For example, if a judge has participated in a case previously as some other judicial role he/she is not allowed to try that case. Recusal is also expected when one of the lawyers in a case might be a close personal friend, or when the outcome of the case might affect the judge directly, such as whether a car maker is obliged to recall a model that a judge drives. This is required by law under Continental civil law systems and by the Rome Statute, organic law of the International Criminal Court.

Third-party evaluations

Consider a situation where the owner of a majority of a publicly-held corporation decides to buy out the minority shareholders and take the corporation private. What is a fair price? Obviously it is improper (and, typically, illegal) for the majority owner to simply state a price and then have the (majority-controlled) board of directors approve that price. What is typically done is to hire an independent firm (a third party), well-qualified to evaluate such matters, to calculate a "fair price", which is then voted on by the minority shareholders.

Third-party evaluations can also be used as proof that transactions were in fact fair ("arms-length"). For example, a corporation that leases an office building that is owned by the CEO might get an independent evaluation showing what the market rate is for such leases in the locale, to address the conflict of interest that exists between the fiduciary duty of the CEO (to the stockholders) and the personal interest of that CEO (to maximize the income that the CEO gets from owning that office building).

Codes of ethics

Generally, codes of ethics forbid conflicts of interest. Often, however, the specifics can be controversial. Should therapists, such as psychiatrists, be allowed to have extraprofessional relations with patients? Ex-patients? Should a faculty member be allowed to have an extraprofessional relationship with a student, and should that depend on whether the student is in a class of, or being advised by, the faculty member?

Codes of ethics help to minimize problems with conflicts of interest because they can spell out the extent to which such conflicts should be avoided, and what the parties should do where such conflicts are permitted by a code of ethics (disclosure, recusal, etc.). Thus, professionals cannot claim that they were unaware that their improper behavior was unethical. As importantly, the threat of disciplinary action (for example, a lawyer being disbarred) helps to minimize unacceptable conflicts or improper acts when a conflict is unavoidable.

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