Conflict of interest vs Corruption and Fraud
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- Mishandling a conflict of interest constitutes a breach of trust with one's employer.
- It may compromise professional judgement and create doubts about a person's fairness and integrity. It may also lead to criticism and reputational damage.
- If any advantage is offered or accepted when handling a conflict of interest, this may violate the Prevention of Bribery Ordinance.
- If false documents are used to conceal a conflict of interest, this may breach Section 9(3) of the Prevention of Bribery Ordinance.
- If fraudulent acts are involved to conceal a conflict of interest for personal gain or to benefit acquaintances, other criminal offences such as deception, fraud or false accounting, may also be involved.
Common examples of conflict of interest situations
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Company should adopt a “three-step mechanism” in managing conflict of interest
- Avoid – All directors and staff should remain alert to and avoid any actual, potential or perceived conflict of interest situation;
- Declare – If the conflict is unavoidable, the director or staff member should report it to the designated approving authority once he becomes aware of the conflict; and
- Mitigate – The designated approving authority, after assessing the impact of the conflict and the risk of impropriety, should take appropriate mitigating measure as early as possible.
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Declaration and mitigation
The mitigating measure to be taken would depend on the circumstances of individual cases and the level of mitigation should commensurate with the severity of the conflict, the interest involved and others' perception
Proper documentation of the declaration, the rationale for the decisions made and the course of mitigating measure taken should be maintained.
Depending on the operational needs and circumstances, companies may require a staff member who participates in projects involving sensitive issues or information to declare whether or not they have any conflict of interest (i.e. positive declaration) on the matter in order to protect the interest of the companies.
Please click here for a sample code of conduct.
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