Types of Conflicts of Interest

Conflicts of interest can take a variety of forms and involve multiple interests, both personal and professional. While there are many highly specific instances of conflicts of interest, there are some that occur more frequently than others.

Several common activities that can create a conflict of interest include:

Nepotism
Nepotism is the practice of giving favors to relatives and close friends in matters of hiring, promotion, transfer, or termination. The term comes from the word for “nephew,” and it was common practice in ancient times. Nepotism is considered a conflict of interest because the relative may not be the best person for the job.

Self-dealing
Self-dealing is a situation in which a person, usually a high-ranking official within a large corporation, uses the company’s money or access for personal betterment at the expense of the business. For example, a person might take money from their company as a personal loan.

Excess compensation
This occurs when the organization pays an employee, usually high-ranking with substantial social or political influence, far more than they do other, similar roles or comparable roles in other organizations

External employment
When someone works more than one job in the same sector, a conflict of interest can arise. For example, one of the person’s companies may have access to information the other business does not. If the employee uses that information for their second job, that would be a conflict of interest.

Gifts and Hospitality
Accepting gifts from external persons/organisations in order to gain an advantage is a conflict of interest.

Procurement
Procurement of goods and services is governed by regulations and due diligence is essential to prevent bribery, small gifts, relationships or any other conflict of interest from arising.