Whether you are a public servant involved in procurement or a judge sitting in the highest courts of the land, it is harder than you might think to objectively consider your own conflict of interest.
In most Victorian departments and agencies, once interests or relationships are disclosed on a conflict of interest form, another person is involved in assessing the materiality of the disclosure, and determining what strategies are warranted to manage the risks. This may be a line manager, procurement manager or an independent probity advisor. The task of assessing conflict of interest risk and deciding suitable management strategies is best done by someone who is objective and at arm’s length in consultation with the discloser to minimise bias blind spots.
A conflict of interest includes actual, potential and perceived conflicts. Although an individual may be quite confident that they will be objective and impartial and not swayed by the relationships they have disclosed, perceived conflicts are in the eye of the beholder. If a reasonable third party might perceive bias or favouritism or lack of independence, there is likely to be a perceived conflict of interest. And, perceived conflicts can include conflicts of duty arising from work-related dealings with service providers on other projects (see our blog Are You Comfortable Disclosing Conflicts of Interest).
The Victorian Auditor General’s Office (VAGO) explains the accountabilities for conflict of interest management in a procurement context:
“…it is the project steering committee and/or project sponsor that must be satisfied that conflicts of interest have been identified and managed. Relying on individuals to make their own assessment of whether or not a conflict of interest exists, particularly where there is poor understanding of probity requirements, is inadequate. Best practice requires project staff to declare all related interests, with the project management responsible for assessing whether a conflict exists and documenting this assessment and, where necessary, any strategies to address it, in each instance.”
Managing Conflicts of Interest in Procurement, another VAGO report, was tabled in Parliament on 8 September 2021. It highlights:
“… the need for improved staff awareness, training and compliance with procurement policies and procedures. Staff need to consistently declare and manage any actual, potential or perceived conflicts of interest due to personal or professional relationships with a supplier. Each department needs to ensure it supports its staff with the guidance to do so.”
The 2021 South Australian ICAC Identify, Disclose and Manage Conflict of Interest Report outlines what can go wrong if public servants self-assess their conflicts of interest:
“As a general rule public officers should not solely manage their own conflicts of interests. A public officer who decides to manage their own conflict in the absence of involvement of others, may heighten an observer’s suspicion of misbehaviour. Once established, perceptions of bias and unfairness will be difficult to resolve.”
A perception of bias can be exacerbated if conflicts of interest are self-assessed, and a suspicion of wrongdoing or corruption can result.
Judicial Conflict of Interest
Even judges find it difficult to objectively assess their own position in relation to conflicts of interest in a way that meets community expectations. An Australian Law Reform Commission inquiry investigated the right for judges to rule on applications to recuse themselves. A submission from the National Justice Project, a not-for-profit human rights legal service based at Macquarie University, stated:
“The self-recusal process demands an impossible level of impartiality from the decision-maker as judges are required to identify and assess their own bias… a judge’s perception of what a fair-minded lay observer may view as partiality and what the public actually views as partiality may be quite different.”
The Inquiry considered many claims of bias made against judges, and noted it was rare for judges to recuse themselves. To improve the outcomes of such claims, the National Justice Project recommends that applications be transferred to a duty judge to be determined. This would remove some of the challenges associated with the bias blind spot:
“The independent judge can apply the test for apprehended bias with an independent view of the proceedings and more easily recognise bias in another judge rather than relying on self-assessment.”
Once formed, a perception of bias or unfairness is very difficult to overcome – it can tarnish the decision-making process, undermine confidence in the outcome and even “give rise to suspicion that corrupt conduct has occurred, is occurring or may occur,” says South Australia’s Independent Commissioner Against Corruption (ICAC), the Hon. Ann Vanstone QC. On the other hand, having an independent third party designated as the responsible authority for assessing perceived conflict of interest, can reduce suspicion and thereby promote confidence in the decision-making process and trust in the decision makers. Open and regular discussions about how to deal effectively with conflicts of interest are integral to remind everyone of their obligations.
CourtHeath recommends that VPS organisations:
- Check that conflict of interest forms include a space for recording conflict of interest management strategies and approval by a manager.
- Check that conflict of interest forms have up-to-date questions/prompts to assist personnel to identify conflicts of interest (including conflicts of duty with current and recent service providers – these can create a perception of bias or favouritism).
- Regularly restate the requirements and remind personnel of the need to identify, disclose and manage conflicts of interest – tone at the top is crucial to building a strong organisational integrity culture.
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A participant in the UN Global Compact, CourtHeath seeks to raise awareness about the Sustainable Development Goals and the principles of the Global Compact with business and government organisations in Victoria
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[category courtheath's blog]
[procurement, conflict of interest, Victoria]
[procurement, conflict of interest, Victoria]