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  1. Managing conflict of interest is common sense

Managing conflict of interest is common sense

To diagnose a deal, whether it falls into someone’s conflict of interest or not, is an easy task. We need to keep our primary interest for the organisation and profession as the principal goal, and separate ourselves from the secondary interest and wishes to favour family and friends, which is objectionable in public sphere.

Published: April 13, 2018 3:36 AM
All of a sudden the storm of “conflict of interest” is heading into the Indian financial market. This buzzword is making news and raising a lot of eyebrows on some corporate honchos. (PTI)

All of a sudden the storm of “conflict of interest” is heading into the Indian financial market. This buzzword is making news and raising a lot of eyebrows on some corporate honchos. To judge this is not rocket science and there is no need for attending a Harvard or a Cambridge or IIMs. It is a common sense subject and can be easily defused voluntarily. But why do some corporate honchos fall into this trap and get into a debate of having conflict of interest or not? To diagnose a deal, whether it falls into someone’s conflict of interest or not, is an easy task. We need to keep our primary interest for the organisation and profession as the principal goal, and separate ourselves from the secondary interest and wishes to favour family and friends, which is objectionable in public sphere. We have to be honest, transparent and unbiased while taking business decisions and applying judgement. Most business executives do this, but why do some get trapped in the conflict of interest debate? Even if someone doesn’t have any personal gain while exercising authority in decision making or in approval process, the public can still perceive it differently. Hence, we have to operate in a manner that we don’t leave any dust in the eyes of the public. This is not an easy job. We need to think through public’s eyes. At times, even if the business executive is not the sole decision maker or approving authority, still she is questionable as having conflict of interest due to her high level of position of power or authority in the organisation. Such executives should take utmost care to separate their company’s dealing with third-party firms, especially if their family’s or friends’ firms also simultaneously deal with the same third-party firms.

Else, the concerned executive should take proactive measures to prohibit her family’s or friends’ firms in dealing with those third-party firms where the executive’s company has corporate dealings. It is unfortunate that, at times, proactive actions are not taken by some senior business executives holding power of authority to defuse conflict of interest. They only perceive the matter from their own vantage points and do not take a 360-degree view of the matter; thus, they often fail to take serious action to show separation from passive interest. That’s why they get trapped into the conflict of interest debate.

A lot of you might have heard of the game of cricket’s famous umpire Dickie Bird (umpired during 1973-96). This Englishman was regarded one of the best cricket umpires of all time due to his high standard of umpiring decisions. Those days, there was no decision review referral system. Also, those days, neutral umpiring was rare. Umpires from home country used to officiate matches. When visiting teams played in England and Bird umpired, he used to give most of the benefit of doubt decisions in favour of visiting teams. Had he given benefit of doubt decisions in favour of the home team England, spectators or critics could have easily linked him up for favouritism. To overcome this dilemma of conflict of interest, Bird gave benefit of doubt decisions to the visiting team so that no one could point a finger at him. Corporate honchos should learn from the Bird style of conflict resolution and should go the extra mile in protecting their image and personal brand with preventive measures, and keep safe distance from any passive conflict of interest scenarios. They should be neutral all the times and transparent with on-time disclosures to independent Board members and the ethical committee.

Mrutyunjaya Mohanty
Founder & managing partner, MSQUARE Management Consulting.
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