A conflict of interest arises when an individual or entity is in a position where their interests or affiliations could compromise their ability to make impartial decisions in a professional or fiduciary capacity. It involves a clash between one’s duties and personal gains, potentially influencing decision-making in favor of personal benefit rather than the best interests of the party they are meant to serve. Actual conflicts of interest occur when a person is currently influenced by conflicting interests, impacting their objectivity. For instance, a financial advisor recommending an investment solely because it benefits them financially represents an actual conflict. On the other hand, potential conflicts of interest involve situations where there is a risk or possibility that conflicting interests may arise in the future. An example would be a government official owning shares in a company they may need to regulate. Distinguishing between actual and potential conflicts is crucial in understanding the immediacy and severity of ethical concerns in various professional and organizational settings.
Tag: Ethical concerns and dilemmas in government and private institutions.
Decoding the Question:
- In Introduction, try to define conflict of interest.
- In Body,
- Write the difference between actual and potential conflict of interest.
- Mention how public institutions are seriously affected by conflict of interest.
- In Conclusion, try to write the ways to deal with conflict of interest.
Answer:
A conflict of interest involves a direct conflict between one’s official duties and responsibilities and a competing interest or obligation, whether personal or involving a third-party. It refers to situations where a conflict is inevitably established such as acceptance of gifts or hospitality from a company which one may be dealing with in one’s official capacity.
A potential conflict of interest arises where an interest or obligation, whether personal or involving a third-party, could conflict with official duties and responsibilities in the future. It refers to situations where a possible anomaly might arise (such as the conflicts with the immediate family interests unless disclosures are made) with respect to friendship, investment, gift or treats.
Difference between Actual and Potential Conflict of Interest:
- An actual conflict of interest occurs when any circumstances or interests that detract from a person’s fulfilment of their obligation to government.
- When personal interest leads a person to act against the interest of the employer or the government agency.
- For example: A person is on the interview board of a selection committee. His/her family member is appearing in the same interview. Such a scenario represents an actual conflict of interest.
- A potential conflict of interest means any action or any decision or recommendation by a public official that could result in a financial benefit or detriment for self or relatives.
- A potential conflict of interest differs from actual conflict of interest in terms of probability.
- If a person agrees to give a contract to a party without holding competitive bidding and justifying it on grounds of superior technology/first come first serve.
- The person might not have gained anything from the agreement. The contractor might not be known to the person. But following the above procedure gives rise to a potential conflict of interest.
Nowadays, public institutions are seriously affected by conflict of interest:
- Awarding of contracts to known persons in exchange for personal favours.
- Ministers or representatives getting involved in policy making in those areas of substantial personal interests.
- Leaking of secret information to other persons which might be of personal advantage to him later.
- Verdict in favour of a particular political party in view of future political appointments as post retirement benefits.
Public servants face conflict of interest due to the nature of their work:
- Personal and professional responsibilities: Public servants may be approached by near and dear ones to take favourable decisions which may put him in conflict with his line of duty.For example: public servant in charge of giving out contracts for a certain project will face a conflict of interest if one of the applicants is a relative or friend.
- Conflict due to moral values: A public servant’s responsibility may demand him to take decisions which are at conflict with his own values.For example- in land acquisition cases, a civil servant may prefer not to harm scheduled tribes but due to pressure from higher authority he will have to evict them from their lands.
- Conflicting Organizations: A public servant may be associated with other organizations like NGOs/ welfare societies with apparently conflicting objectives and this might put him in a certain conflict of interest.
Ways to resolve the conflict of interest:
- Enhanced transparency and objectivity in decision making and declaring one’s conflict of interest to the concerned authorities to recuse one from any conflicting situations. There is a need to reduce discretion and codify procedures.
- Ensuring high ethical conduct: As a civil servant, one has to adhere to the standards of civil service values like impartiality, efficiency, integrity and must show exemplary behavior.
Therefore, the moral obligation on public officials requires that the authority entrusted to them be exercised in the public interest. The trust of civil servants should be maintained for efficient and effective governance.
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