Conflicts of Interest Essay Example
Conflict of interest; financial, relational and competitive, has become a bedeviling issue in most corporate organizations, with the public service being included. Many top executives have violated ethical codes and policies in return for personal benefits in deference to laid down laws of the country they operate in and legal standards. Conflict of interest is most times possible, when the organization does not have concrete policies addressing such or when the operational framework of the organization has leeway that the top executives or employees can leverage on. This paper will review the conflict of interest case against Siemens AG operation in Nigeria and the Nigerian public office holders involved with a view to ascertaining if the laws and policies on conflict of interest are effective and sufficient, what regulatory bodies and managers can do to discourage unethical practices and how the laws can be improved for better acceptability.
Conflict of interest is a moral burden on both employees and employers (Okunriboye, 2017). It is first and foremost a social vice that degrades the ethical conduct and moral fortitude of an organization, giving the employees a leeway for operate outside acceptable norm while positioning the organization in a place of administrative weakness (Inyang, 2017). Conflict of interest naturally erodes the level of professionalism expected of organizations as when there are expectations of a forward operational approach, what is obtainable is a skewed, selfish, personal and a destructive transactional approach.
Conflict of interest has been a major issue in Nigerian organizations; all the way from governmental public office holders who collect funds for projects and fix it in private accounts for the expected interest (Eyisi, 2019) to the senior parastatals directors who choose to use their offices for personal enrichment (Azubuike, 2005) and finally to the private organizations whose managers are increasingly violating the code of ethics policies and getting more involved in conflict of interest cases at the detriment of their organizations.
An Example of a Conflict of Interest Situation
When in 2006, there was a governmental audit into the international operations of Siemens AG in Nigeria, two of its management staff were indicted on charges of bribery, unethical conduct and conflict of interest (Blanc et al., 2019). Before then, Siemens has been known for technological products and reliable telecommunication services in Nigeria.
The company has always enshrined in its operational framework the need to maintain the highest ethical and legal standards as applicable to the OECD (2005) guidelines; irrespective of which laws guide their international operations.
Within the ethical conduct of Siemens AG was the revised OECD directive “No employee may directly or indirectly offer or grant unjustified advantages to others in connection with business dealings, neither in monetary form nor as some other advantage”.
When the news therefore came out in 2007 that some Siemens top managers had bribed some government officials, which included a federal minister, a Senator and other top officials in order to be given the contract for the upgrade of the Nigerian own NITEL and MTEL telecommunication network, it was unbelievable based on the perceived ethical stance of Siemens.
This was more so unacceptable considering the code of Conduct Bureau stipulates that a public officer shall not put himself in a position where his personal interest conflicts with his duties and responsibilities (LawNigeria, 1991) so how could the Senator culpable in the conflict of interest case (Senator Jubril Aminu) have violated the code of conduct stipulation..
Both the Nigerian constitution and the Senate Regulatory Laws eschew conflict of interest hence it was legally unacceptable that Siemens could have financially gratified a senator in return for award of telecommunication contracts. The Audit Committee Institute Nigeria has initially moved to tackle conflict of interest in companies at the level of board, management, staff and other stakeholders within the organisation hence it was a case of reverence.
Analysis of the Conflict of Interest
On the part of Siemens AG, its managers had committed a competitive conflict of interest; they had positioned themselves favorably to be awarded the profitable NITEL telecommunication upgrade contract as against the required fairness from all competitors. However, on the government officials involved in the conflict of interest case, it was more of a financial induced conflict of interest since it involved cash inducement with a subtle relational edge as the basis of considering Siemens AG was built on their relationship with the company (Blanc et al, 2019).
Organizational Policies discouraging the Conflict of Interest
According to the Code of Conduct Tribunal (LawNigeria, 1991), the policies guiding public officers include:
Serving the public interest: They are expected to maintain and strengthen the public’s trust and confidence by demonstrating the highest standards of professional competence, efficiency and effectiveness, upholding the constitution and the laws, and seeking to advance the public good at all times; this implies that they should not be involved in any conflict of interest.
Transparency and accountability: They are expected to use powers and resources for the public good, in accordance with the law and government policy. They should be prepared to be accountable for the decisions they make, and to justify their official decisions and actions to a relevant authority, or publicly, as appropriate in the circumstances hence financial gratifications as a form of conflict of interest is unacceptable.
Integrity: They are expected to make decisions and act without consideration of their private interests. Public service being a public trust, the improper use of a public service position for private advantage is regarded as a serious breach of professional integrity. This does not conform to the acceptance of financial inducement when making decisions.
Fairness: They should make official decisions and take action in a fair and equitable manner, without being affected by bias or personal prejudice, taking into account only the merits of the matter, and respecting the rights of affected citizens. This does not permit conflict of interest as fairness considers all parties without favor or prejudice.
Managerial Role in discouraging the Conflict of Interest
Within organizations and public services, regulatory bodies sanctions unethical behaviors hence managers and the government can discourage conflict of interest through audits and trainings.
When employees are aware that there will be audits into their operation, they will trend to avoid anything that could find them wanting in terms of unethical practices such as conflict of interest; multinational companies tended to avoid unethical practices in foreign operations when they noticed that their activities will be audited in the home country (Hock, 2017).
While employees and government officials cannot claim to be ignorant of the laws and sanctions applicable to unethical practices, they need to be continuously inundated on the necessities of their offices and the avoidance of conflict of interest via consistent training and review of the organization’s policies. The top managers too need to be role models of policies being instilled on the employees because in the case of Siemens AG and the Nigerian top public officer holders, their supervising managers were found privy to such underhand dealings (Berghoff, 2017).
Role of laws and policies in discouraging the Conflict of Interest
While laws and policies are supposed to guide the code of conduct of employees and the organization in general, it is the correct interpretation and implementation of such laws and policies that make it effective. Given that Siemens AG had laws and policies in place to address conflict of interest, the policies were not implemented nor enforced in its foreign operations giving a leeway to the company’s managers’ flaws (Islam et al., 2018). The laws and policies are not stand-alone, there is need for regulatory bodies to constantly audit and review the accuracy and applicability of such laws within organizations for it to be effective and sufficient.
Ways to improve laws and policies discouraging the Conflict of Interest
Employees will naturally resist or truncate laws and policies they feel does not positively contribute to their well-being (Inyang, 2017). Hence in order for laws and policies to appeal to employees, they need to be involved in the formulation process; they need to see the policies as being considerate and a safeguard of potential issues they may be involved in. The organization also needs to paint scenic pictures of what happens when such policies and laws are violated while openly punishing offenders and violators.
Organizations can also add compliance of ethical codes and policies to employee appraisals such that employees get rewarded for avoiding conflicts of interest; having spelt out the level of flexibility applicable to any foreseen potential conflict while also maintaining an ethical culture, as an organization.
Foreign government and regulatory bodies still have a major role to play in enforcing laws and policies in contrast to conflict of interest. While organizations, such as Siemens AG can publicly claim to be ethical, their books and operational conducts need to be reviewed and audited from time to time to ascertain conformance while commensurate sanctions and penalties are placed on violators (Blanc et al., 2019).
Organizations and their employees also need to understand that continued operation is dependent on perception of stakeholders on their ethical conduct, corporate culture and conflict of interest avoidance, hence in a bid to maintain competitive advantage, laws and policies to safeguard against unethical practices and conflict of interest needs to be put in place and enshrined in the organization’s corporate culture.
1. Azubuike, L. (2005). Privatization and Foreign Investments in Nigeria. Tulsa Journal of Comparative & International Law, 13(1), 59-89, [Online] Available at: http://digitalcommons.law.utulsa.edu/tjcil/vol13/iss1/3
2. Berghoff, H. (2017). Organised irresponsibility”? The Siemens corruption scandal of the 1990s and 2000s. Business History, 60(3), 423-445, [Online] Available at: https://doi.org/10.1080/00076791.2017.1330332
3. Blanc, R., Cho, C. H., Sopt, J., & Branco, M. C. (2019). Disclosure responses to a corruption scandal: The case of Siemens AG. Journal of Business Ethics, 156(2), 545-561.
4. Eyisi, E. C. (2019). Nigerian Conundrum: Democracy and the Hegemony of Corruption in Nigeria (1999-2017). International Journal of Academic Research in Business and Social Sciences, 9(3).
5. Hock, B. (2017). Transnational bribery: When is extraterritoriality appropriate. Charleston L. Rev., 11, 305.
6. Inyang, B. J. (2017). Corporate Governance Regulatory Framework in Nigeria: The Offerings and Challenges. In Dimensional Corporate Governance (pp. 63-78). Springer, Cham.
7. Islam, M. A., Dissanayake, T., Dellaportas, S., & Haque, S. (2018, March). Anti-bribery disclosures: A response to networked governance. In Accounting Forum, 42(1), 3-16). Taylor & Francis.
8. LawNigeria (1991). Code of Conduct Bureau and Tribunal Act. Tree & Trees Justice Media, [Online] Available at: http://lawnigeria.com/LawsoftheFederation/CODE-OF-CONDUCT-BUREAU-AND-TRIBUNAL-ACT.html
9. Nigerian Economic Summit Group (2013). A report on anti-corruption and good governance efforts in Nigeria. United Nations Global Compact [Online] Available at: http://csr-in-action.org/uncompact/docs/Publications/REPORT_ON_ANTI-CORRUPTION_AND_GOOD_GOVERNANCE_ReducedSize.pdf
10. Okunrinboye, O. (2017). Nigeria: A conflict of interest. The Guardian Opinion, [Online] Available at: https://guardian.ng/opinion/nigeria-a-conflict-of-interest/
11. Organisation For Economic Co-Operation And Development (2005). Managing Conflict Of Interest in the Public Sector. OECD Publication, ISBN 92-64-01822-0, [Online] Available at: https://www.oecd.org/gov/ethics/49107986.pdf
12. Sutherland, E. (2018). Bribery and corruption in telecommunications–the case of Nigeria. Digital Policy, Regulation and Governance, 20(3), 244-272.