GUEST BLOGGER
Raina Verma, CFE
Manager, Financial Crimes, National Bank of Fujairah

Part of the role of fraud risk management (FRM) is to create awareness around potential conflict-of-interest situations that may arise between employees and your organization. Employees are frequently consumed with their day-to-day work deliverables, so one way of highlighting the role of business ethics or FRM in this area is to conduct regular focus and awareness sessions that explain an organization’s in-house conflict policy.

Employees may frequently wish to engage in activities within their normal scope of work due to passion, interest, social responsibility or financial gain. It’s your organization’s responsibility to educate and train employees so that they are aware of any potential conflicts of interest in relation to external activities. This will allow both the employee and the organization to avoid compromising situations.

This general approach can provide a guiding pathway to employees who otherwise might be nervous to raise a potential conflict-of-interest situation.

Recognizing the perception of a conflict

Conflict-of-interest policies require employees to disclose certain precluded scenarios, especially those where employees are perceived to place their personal interest before the interest of the organization since “perception is reality.” Here are three examples where the perception of conflict of interest exists.

An employee is good at a sport, and they coach their child’s team. One of your vendors also has a child on the team. Your employee is not paid to coach but does receive perks for friends and family. This may be perceived as a potential conflict.
An employee is involved with a friend to set up an evening market where a product line which directly competes with the organization is sold.
An employee writes a blog or magazine article in their area of expertise without their employer’s knowledge.

The power of a hypothetical situation

Don’t hesitate to encourage colleagues and your employees to raise hypothetical situations. This allows them to talk through and clarify how to go about making a potential conflict-of-interest situation disclosure.

Here are some potential hypothetical situations you can use to get started.

What if I was to open a company in the name of my spouse, but I am one of the partners? How does that impact my role in this organization?
What if I sit on the board of [Professional Organization] in an unpaid role, which could elevate my profile and the profile of the [Professional Organization]? Does this conflict with my role at this organization?
My spouse is a consultant for a project that the company may undertake in the near future, but the spouse will not be on the ground to manage the project. Is this a conflict of interest?

While an organization would want to ensure that employees understand the importance of declaring a potential conflict of interest, the organization must accept that that the full adoption of new policies related to conflicts of interest may take time to achieve. New policy boundaries cannot be established on the spur of the moment. They need to be created, understood and lived.

Direct face-to-face communication can ensure that employees understand the expectations of your conflict-of-interest policy. It’s important to remember the human element that is part of someone raising a concern. No data or reporting dashboard can replace an understanding nod and empathy in eyes! The employees should feel assured that resolutions of the issue will be fair, clear and confidential.

The objective of such a policy is to ensure that employees feel confident in coming forward to share evidence of a potential conflict of interest. Over time, this will build trust in the integrity and transparency of your organization in handling conflicts of interest.

The views expressed in this article are the author’s own.

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