Conflicts of Interest in Real Life

Berlin, 30May 2014

Comparative Study:

“Conflicts of interest in real life”

Outline and author guidelines

Objective of the Study

“The prevention of conflict of interest becomes one of the most important keys of corruption prevention” – with this words the Council of Europe summarised the prominent role of conflicts of interest in the area of fighting corruption.[1]

Numerous publications and resources in the anti-corruption literature deal specifically with conflicts of interest, for example:

-Council of Europe, Ethics for the Prevention of Corruption in Turkey, Academic Research Report, Conflict of Interest, Prof. Dr. Ömer Faruk Gençkaya, May 2009[2]

-OECD, Managing Conflictof Interest in the Public Sector, A Toolkit, 2005[3]

-OECD, Conflict of Interest Policiesand Practices in Nine EU Member States, A Comparative Review, 2006[4]

-U4, Sitting on the fence: Conflicts of interest and how to regulate them, Quentin Reed, U4 ISSUE 2008:6[5]

-World Bank, Public Accountability Mechanisms (PAM): assessments of countries’ in-law and in-practice efforts with regard to conflict of interest restrictions[6]

Useful statistical overviews on the implementation of conflicts of interest are contained in the following recent publication:

-Regional Anti-Corruption Initiative (RAI), Rules and experiences on integrity issues (2012).[7]

However, none of the above publications addresses real life cases and challenges on conflicts of interest.

The reader of this Study can benefit from concrete cases illustrating how conflicts of interest appear in real lives of public officials. Public officials either intentionally exploit such situations, or, they are often involuntarily confronted by such conflicts in the course of their work, and are then faced with the dilemma of multiple choices.

The real life cases approach of this comparative study, will allow for a in-depth analysis of the legal and organizational framework of ReSPA members. It will thus allow recommendations for reform, which are not based on abstract principles, but draw on real life cases and ethical dilemmas.

It is expected that ReSPA members will have different approaches to the regulation and solution of conflicts of interest; they will thus learn from an exchange facilitated by this comparative Study. As there is no such real life cases compilation in the area of conflicts of interest in anti-corruption literature, the added value and impact of this Study may go well beyond the ReSPA region.

The OECD/SIGMA Principles of Public Administration state in “Principle 7” of the “Public Service and Human Resource Management” Chapter (page 54): “Measures for promoting integrity, and preventing corruption and ensuring discipline in the public service are in place.” Under No. 1, this includes: “Effective and adequate legal provisions and institutional arrangements and tools exist to promote integrity and prevent corruption in the public service, and are applied in practice.” An explanatory remark in footnote 30 explicitly counts “regulation of incompatibilities and conflicts of interest” among the integrity measures in public service. The Study is therefore supporting implementation of these PAR-Principles.

Conditions

The success of drafting this Study will depend fully on ReSPA identifying national experts who can research real life cases and present them well in writing to an outside reader. Ideally, the national experts will have access to and consult with a variety of stakeholders facing, advising on, detecting, and disciplining conflicts of interest.

Draft structure

The Study will have the following tentative structure:

Foreword

Introduction

[Explaining the added value and methodology of the Study; defining “conflicts of interest” for the purpose of the Study; drafted by international expert]

Overview on conflicts of interest framework

[Drafted by national experts, except for the overview]

1.1.Overview

1.2.Albania

1.3.Bosnia and Herzegovina

1.4.Croatia

1.5.Kosovo[*]

1.6.Macedonia

1.7.Montenegro

1.8.Serbia

Real life cases

[Drafted by national experts, except for the overview]

2.1.Overview

2.2.Albania

2.3.Bosnia and Herzegovina

2.4.Croatia

2.5.Kosovo*

2.6.Macedonia

2.7.Montenegro

2.8.Serbia

Strengths and weaknesses in preventing, detecting, and managing conflicts of interests

[Drafted by national experts, except for the overview]

3.1.Overview

3.2.Albania

3.3.Bosnia and Herzegovina

3.4.Croatia

3.5.Kosovo*

3.6.Macedonia

3.7.Montenegro

3.8.Serbia

Policy recommendations

[The recommendations are drafted by the international expert, and reviewed and discussed by all national experts for subsequent adoption.]

Guidelines for Authors

4.1.Chapter 1

This chapter consists of two parts
A regional overview in the form of a chart
A country specific overview on the framework and an update on recent developments
Regional overview
The regional overview will build on the efforts done by the World Bank in terms of collecting statistical data.
National experts should review the country profiles sent as excel sheets, which are as of 2012 for the following information:
Is the information up to date as of June 2014? Should any laws or answers be changed? If so, please indicate in track change mode or mark visibly the change with colour.
Is any information missing?

(For Kosovo*, there is no data yet, so the full data set has to be filled out.)

Country specific overview
National experts should also give a brief overview on the conflicts of interest system in their country:
How are conflicts of interests defined?
What conflicts of interests are restricted?
Stockholdings or Private firm ownership
Officials holding government contracts
Gifts and Hospitality
Patronage/Nepotism
Private firm engagements, e.g., board member, advisor, company officer
Outside employment with international organizations
NGO or labor union membership
Voting on policy decisions
Post-employment engagements
Other
What conflicts of interests need to be declared? (same list as previous point)
What are the procedures in case of a conflict of interest?
Divestiture of the investments/interests
Cessation of further acquisition of the investments/interests
Freezing any investment transaction for a specified period of time
Placement of the investment in a blind trust (without the requirement to first divest from current investments)
Cessation from handling cases with actual or potential conflict of interest
Re-assignment of duties (to another individual) that pose actual or potential conflict of interest
Prohibition of information flow regarding actual or potential conflict of interest
Other?
Who is monitoring compliance?
Who is monitoring of regular declarations? (incompatibilities, restrictions)
Who is monitoring that the public official’s job description and his/her concrete assignments and tasks do not conflict with private interests?
What are the steps for monitoring compliance with incompatibilities and restrictions (e.g. detecting an undeclared second job)? Is there a checklist of such steps? What does it include?
Are anonymous complaints possible?
Are declarations available online?
What sanctions are in place?
National experts should also draft a brief overview on recent developments in the area of CoI, such as legislative or organisational changes since 2012.
Are there any statistics on CoI cases, the number of cases reviewed or investigated, number of complaints, sanctions? What are the most frequent factors for conflicts of interest?
Please provide an English translation of the relevant law(s) regulating among other restriction on conflicts of interest, their disclosure, proceedings to resolve them, their oversight, and sanctions. The regulations go into the annex of chapter 1 or of the study. The laws might be already published on the World Bank website ( but might not be up to date.

4.2.Chapter 2

This chapter presents several real life cases from each ReSPA member. The cases should be all about public officials violating conflicts of interest rules, or having tried to violate such rules.

-How was the case detected?

Did the asset and interest declaration play a role in the detection?
Was it detected by accident or as a result of systematic monitoring?
Was it detected by civil society (media, NGO)?

-Which rule did the public official violate?

-Was any other corruption offence committed except for the violation of conflict of interest rules?

-How was the case investigated? What evidence was used?

-What was the challenge in dealing with this case?

-What was the outcome for the public official and other stakeholders involved?

-Was the outcome communicated to the public?

-Did the case lead to any other impact or reform measures?

It is important to underline that cases do not necessarily need to have been ruled by a court; it is sufficient if they were only reported or noted by certain stakeholders (such as media, NGOs, internal administration staff, etc) and are of potential interest for a wider audience of this study.
The following is a first list of possible categories of conflicts of interest situations in order to give the authors of this study an idea of the diversity of possible cases:

-Stockholdings or Private firm ownership

-Officials holding government contracts

-Gifts and Hospitality

-Patronage/Nepotism

-Private firm engagements, e.g., board member, advisor, company officer

-Outside employment with international organizations

-NGO or labor union membership

-Voting on policy decisions

-Post-employment engagements

There need to be at least 4 cases from each country; in order to reach the required minimum of pages, authors are happily invited to draft several more cases – there is no maximum number. The cases need to be diverse, showing a different type of casefor all 4 of them(e.g. one case will be nepotism, the other will be outside employment; one case will be a member of parliament, another case will be a judge). Each case needs to provide the reader with the following information, so an outside reader can exhaustively understand the case:
Each case should have a catchy concise headline that captures the essence of the case – somewhat like in a newspaper (e.g. “Procurement to Mayor’s wife”; “Hiring of Minister’s husband”; etc.).
Each national author needs to fill out the following chart for his/her cases, as shown in the following example:

Country / Detection (anonymous complaint; open complaint; media; internal control; etc.) / Position of public official / Cause of conflict of interest (family member, close person, own business interest) / Sector (health, education, civil registry, procurement, etc.) / Possible financial damage? (yes/no)
AL / Media / Head of department / Family member / Health / Yes

ReSPA will consolidate the charts into one overview for the beginning of chapter 2.

The overview is drafted by an international expert, whereas the country chapters are drafted by national experts, with guidance provided by ReSPA and the international expert. The overview will mainly consist of a chart-overview of the cases – see for this chart below, and some highlighted points of analysis]

4.3.Chapter 3

This chapter will draw lessons learnedfrom the practical cases in Chapter 2, as well as a general assessmentof the framework as described in Chapter 1. It will assess any strength and weaknesses in the conflicts of interest framework that influenced the cases or is of general interest, inter alia:
Are restrictions formulated comprehensively and clearly enough? Is the private interest formulated sufficiently broad?
Are disclosure requirements sufficient? Are they on case-by-case basis and/or done regularly?
Is the monitoring and supervision efficient? Especially with regards to the concrete job tasks and assignments of the public official?
Does the monitoring body have enough powers for detecting and investigating conflicts of interest?
Are sanctions actually administered?
Are disciplinary bodies informed of conflicts of interest violations?
Etc.
Any of the points answered “no” in the regional overviewchart of chapter 1 will be of particular interest, but the assessment will not be limited to such points.
Any conclusion from the GRECO evaluation round 4, insofar implemented already for the respective country, will be of interest.

4.4.Chapter 4

This chapter will contain policy recommendations and will be drafted by the international expert.

4.5.Technical aspects

Number of pages

The contribution from each expert should be minimum 12 pages (1 page = 2.800 signs incl. spaces) for all three chapters 1-3 together. The 12 pages do not have to be split equally in three junks of 4 pages, but can be spread according to what chapter needs what length. However, the following maximum/minimum numbers apply

-Chapter 1: minimum 1 page

-Chapter 2: minimum 7 pages

-Chapter 3: minimum 1 page

Footnotes

If there is a source for your information, such as a website, media report, or court decision etc., this needs to be included in the text or in footnotes (court, case number, date of decision, journal of publication, weblink if available; similar with other references).

British English

The language setting should be British English.

Style

-Currencies: € after numbers (10,000 €);

-Numbers with comma: 10,000

-Bulletpoints: use “-“ as bulletpoint sign (as in this bulletpoint/document)

-Footnotes: same formatting for all footnotes – same fonts, size; full stop at end of each footnote

-Paragraphs: one line between each paragraph

-Emphasis: only in bold letters (not italics or underlined)

-Quotations: italics

-Quotations (longer than 2 lines): unified formatting – indent left and right, italics; other quotations not italics and in the text

-Law, article: use small letters if not at beginning of sentence.

-No double spaces between words

-Abbreviations: introducefull wording in the text first time an abbreviation is used with the abbreviation in brackets behind (For example: The United Nations (UN) have decided…)

-Avoid passive voice and use only in rare exceptions. Why? – Sentences in passive voice don’t tell the reader who is acting, and thus leave question marks when reading the text. An example: “The Ethics Commission asked the Tax Office to conduct an investigation. Following the investigation, it was concluded that the declaration was correct.” – Who concluded this? The Commission, the Tax Office, or somebody else, such as a judge?

Deadlines

A first draft should be submitted to the international expert Tilman Hoppe, , cc ReSPA Training Manager, Mr. Goran Pastrovic, ) by 31 July 2014. Authors should send each of the three chapters separately, as soon as they are ready in increments.

Compliance

Drafts not complying with above technical guidelines will be sent back to experts for revision.

6. Experts

-National experts: a national expert with specialization in integrity and conflicts of interest will contribute a country sub-chapter to chapter 1, 2, and 3.

-It is foreseen that a proof-reader will fine-tune the English language from a mother-tongue perspective. The national experts need to submit a text free of mistakes in grammar and language. By contrast, elegance and flow of language as well as a thorough end-review of compliance with style-guidelines is the task of the proof-reader.

-International expert: an international expert on integrity and conflicts of interest will review the national drafts, draft an overview for chapter 1, 2, and 3, and formulate recommendations for chapter 4. The proof-reader will work closely with the international expert from the time of the first submission of the drafts; this will ensure that time foreseen for the international expert will not need to be spent on language issues, but rather on substance issues.

Overview on CoI framework in Western Balkans (based on 2012-information by World Bank, but should be updated as of May 2014):

Country / AL / BiH / HR / KO* / MK / ME / RS
Legal framework
Laws regulating restrictions on conflict of interest / Yes / Yes / Yes / Yes / Yes / Yes
Constitutional requirement to avoid specified conflict(s) of interest / Yes / No / Yes / Yes / Yes / Yes
Code of Conduct/Ethics / No / Yes / Yes / Yes / No / Yes
Public Officials Coverage
Head(s) of State are obligated to avoid specified conflict(s) of interest / Yes / Yes / Yes / Yes / Yes / Yes
Ministers/Cabinet members are obligated to avoid specified conflict(s) of interest / Yes / Yes / Yes / Yes / Yes / Yes
Members of Parliament (MPs) are obligated to avoid specified conflict(s) of interest / Yes / Yes / Yes / Yes / Yes / Yes
Civil Servants are obligated to avoid specified conflict(s) of interest / Yes / Yes / Yes / Yes / Yes / Yes
Spouses and children are obligated to avoid specified conflict(s) of interest / Yes / Yes / Yes / Yes / Yes / No
Restrictions
Head(s) of State
General restrictions on conflict of interest / Yes / No / Yes / Yes / Yes / Yes
Income and Assets
Accepting gifts / Yes / Yes / Yes / Yes / Yes / Yes
Private firm ownership and/or stock holdings / Yes / Yes / Yes / Yes / Yes / Yes
Ownership of state-owned enterprises (SOE) / Yes / Yes / Yes / Yes / Yes / Yes
Business activities
Holding government contracts / Yes / Yes / Yes / No / Yes / Yes
Board member, advisor, or company officer of private firm / Yes / Yes / Yes / Yes / Yes / Yes
NGO or labor union membership / Yes / No / No / Yes / No
Outside employment / Yes / Yes / Yes / Yes / Yes / Yes
Post-employment / Yes / Yes / Yes / Yes / Yes / Yes
Public office mandate
Simultaneously holding policy-making position and policy-executing position / Yes / Yes / Yes / Yes / Yes / Yes
Simultaneously holding two distinct policy-making positions / Yes / Yes / Yes / Yes / No / Yes
Participating in official decision-making processes that affect private interests / No / Yes / Yes / No / No / No
Assisting family or friends in obtaining employment in public sector / Yes / Yes / Yes / Yes / No / Yes
Ministers/Cabinet members
General restrictions on conflict of interest / Yes / No / Yes / Yes / Yes / Yes
Income and Assets
Accepting gifts / Yes / Yes / Yes / Yes / Yes / Yes
Private firm ownership and/or stock holdings / Yes / Yes / Yes / Yes / Yes / Yes
Ownership of state-owned enterprises (SOE) / Yes / Yes / Yes / Yes / Yes / Yes
Business activities
Holding government contracts / Yes / Yes / Yes / No / Yes / Yes
Board member, advisor, or company officer of private firm / Yes / Yes / Yes / Yes / Yes / Yes
NGO or labor union membership / Yes / No / No / No / Yes / No
Outside employment / Yes / Yes / Yes / Yes / Yes / Yes
Post-employment / Yes / Yes / Yes / Yes / Yes / Yes
Public office mandate
Simultaneously holding policy-making position and policy-executing position / Yes / Yes / Yes / Yes / Yes / Yes
Simultaneously holding two distinct policy-making positions / Yes / Yes / Yes / Yes / No / Yes
Participating in official decision-making processes that affect private interests / No / Yes / Yes / No / Yes / No