There have been a number of occasions when we have established contact with solicitor’s practises to consider awarding a contract to represent a client’s interest in a commercial matter. One of the early questions we are asked is, ‘Who is the client and what is the issue?’ This is followed by a request for details of the other parties who are involved. We are then usually told that the solicitor’s practise will then check to see ‘If they are conflicted.’ When they have satisfied themselves that there is no conflict of interest they confirm that they are prepared, if appointed, to represent our client. That is excellent professional practice and it raises other commercial situations where a conflict of interest could arise.
Let us deal, first of all, with a buyer’s shareholding in a manufacturing or service company. We have some client’s where the buying team must declare any shareholdings. The logic is that a contract award can, in some situations, have a direct bearing on the share price. Dealing in shares immediately to contract award could be held to be insider knowledge. In a similar vein, buying teams have been made to declare any financial interests in suppliers who may be awarded contracts. It is certainly not unknown for buyers to form companies to bid for work that the buyers can award, nor is it unknown for buyers to award contracts to companies run by family members. Only yesterday there was a reported instance of a museum manager awarding contracts to her husband. This may be ‘above board’ where an individual has fully complied with contract award and procurement policies and procedures.
In the public sector there are been a number of situations where Councillors have not declared an interest in a matter upon which they vote. Declarations of a conflict of interest are supposed to be a matter of public record. When there is a conflict and it is not declared the public are, rightly, suspicious of the Councillor’s motives.
There clearly are risks in all these situations but we have not yet dealt with one of the biggest risks of all. This concerns consultants and advisers. It is not unknown for major firms to act on behalf of opposing parties. The classic argument of ‘Chinese walls’ is used to explain away the issue. What many buying organisations haven’t worked out is that the consultants/advisers in-house ‘knowledge garden’ carries details of assignments and is made available to all their consultants/advisers. It is appropriate to formally test whether there is a conflict of interest and to require a formal legal statement that there is not! Remember, if it is stated that there is no conflict of interest and it is later found that there is the Misrepresentation Act will come into play.
We now ask the rhetorical question, “Who in your organisation is accountable for assessing potential or existing conflict of interest situations?”
