Does Australia need a conflict-of-interest standard?

The continuing controversy over conflict-of-interest and confidentiality breaches in Australia has sharpened public attention on what can go wrong when checks and balances fall short and trust is eroded. 

Amid the on-going deluge of news about how and why conflicts occur, it is a powerful reminder that integrity should be at the heart of all our professional activities. Trust goes to the very core of this issue.

Integrity is a term often spoken about by many, but not always appropriately and deeply embedded into their activities and processes. Integrity involves a commitment to doing what is right, regardless of personal gain or convenience. Organisations with integrity treat their employees, customers, and stakeholders fairly, and are accountable for their decisions and actions. The consequences of failing to act with integrity are now being broadcast across our media screens - major reputational damage, censure and legal ramifications. However, in my mind, the real victim in this still unfolding story is professional trust.

While acting with integrity should be straight-forward, people are people, and some people will do the wrong thing. Hence, we have guidelines in place at a range of organisations. In addition to all major corporate guidelines, there are the Commonwealth Ombudsman Conflict of Interest Guidelines, the Australian Public Service Values and Code of Conduct, and New South Wales’ Independent Commission Against Corruption’s guide to Managing Conflicts of Interest, among others. 

Australia generally has strong, credible processes of high integrity, although these should not be jeopardised by the current environment of finger-pointing in a media frenzy. However, the scenario we find ourselves in creates an opportunity for improvement. 

Creating a conflict-of-interest standard

We require a better way for all to raise the bar on integrity protocols. There are currently no overarching guidelines to manage interactions between government and the agencies that provide the essential services to assist service delivery, tenders and contracts. Now is the time to start the conversation and consider the establishment of a conflict-of-interest standard. This would set a clear, efficient framework for all agencies across government and business to mitigate and manage conflict of interest when conducting major projects and services.

A recognised and accepted standard would mitigate legal and reputational risks and also ensure fairness and transparency. This would be a positive way to provide a best practice benchmark, including self-assessments for conflicts of interest, so any associated risks are known from the outset. A robust framework would follow best practice elements to ensure transparency, fairness, and accountability. Following established probity guidelines, appointing advisors responsible for integrity, and ensuring plans and procedures are in place is the first step. When advising our clients on conflict of interest management processes, we require individuals involved in procurement and other influencing activities, such as the provision of strategic and tactical advice, to disclose any real or perceived conflicts.

Then, where relationships or conflicts are declared, a risk assessment is conducted to identify and rate the risks, which may be accepted or mitigated. Importantly, a conflict management plan is developed, implemented and monitored to reduce the impact on the services or decision-making.

Ideally, this would include separation, confidentiality, information management or removal of the individual or firm providing services to a sensitive project.

It could be the case that an individual with a disclosed conflict may not gain access to specific tranches of information about a project or service, alongside access controls, data security, and confidentiality agreements for all involved. 

I would argue that the vast majority of advisors respect and honour confidentiality agreements.  Let’s not overreact to a trusted process just because it has been abused and exposed publicly.

Process matter

As someone who has made probity a central part of my career being the Partner responsible for probity services (as part of RSM Australia’s wider Risk Advisory Services offering), the integrity of people and processes matters. It is critical that we can ensure public confidence in our systems. We all have a responsibility to do the right thing and uphold our part. Governments and those bodies that set standards and processes also have a responsibility to advocate for, and implement, robust systems to identify conflict and potential probity risks before they eventuate. It must be diligent to ensure effective scrutiny of all integrity factors, based on a system that can also withstand scrutiny.

As we take the time to understand what has transpired, we should also look within. Governments and advisors should be looking internally so that risks that have come to light are identified and managed appropriately, through a rigorous system of controls and management.

The effort should be on the establishment, refreshment and rejuvenation of these processes to ensure they are as effective and efficient as possible.

This will be essential to maintain public trust and confidence.

FOR MORE INFORMATION

Please reach out to your local RSM Australia office if you have any questions or require further information.