Across the Board
Managing conflict of interest
Managing conflicts of interest in a transparent and open way is vital not only
to the best interests of every association, but also to the perception by others
of the association’s integrity, and the integrity of the sector as a whole. A
perception that there is a conflict of interest that is not being managed
effectively by an association can be just as damaging as an actual conflict of
interest. Boards should ask themselves how a decision would be perceived
by others - what would they think and how would the board justify the
decision?
Conflicts of interest will always arise in organisations: they are an inevitable
part of any business. Community housing organisations are unlikely to be
able to eliminate all conflicts of interest. Instead they must work to develop a
culture of recognition, disclosure and effective management.
What is a conflict of interest?
Conflicts of interest occur when something other than the best interests of the
association influences the decision making of a board or staff member.
Conflict of interest has been defined as:
“any situation in which a decision-maker - whether a board member, board
officer or staff member - is influenced in an organisational decision by
personal, financial, business, or other concerns unrelated to the organisation’s
best interests.” 1
Any information you get through your position must be used properly and in
the best interests of the company. It is a crime to use that information to gain,
directly or indirectly, an advantage for yourself or for any other person, or to
harm the organisation. This information need not be confidential; if you use it
the wrong way, it may still be a crime.
Types of conflict of interest for community housing
The types of conflict of interest that can occur in housing associations include:
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(Daniel Kurtz 2001 Managing Conflicts of Interest: Practical guidelines for nonprofit boards
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
Individual board members or their families and friends personally
benefiting through their involvement with the organisation

Specific groups or organisations receiving preferential treatment as a
result of individual board members representing their interests

Employees being involved in decisions that affect their conditions of
employment

Tenant board members raising issues that affect their personal tenancy
In community housing, areas of potential vulnerability to conflicts of interests
include: leasing arrangements, contracting arrangements, allocations and
maintenance.
Managing conflict of interest
The organisation must have a policy on managing conflict of interest that
includes:

Commitment to managing conflict of interest as outlined in the
organisation's Code of Ethical Conduct

A process for annual disclosure - signed statements by all board
members

A process for ongoing disclosure - conflict or potential conflict outlined
in writing to the chair or highlighted to the chair at the start of board
meetings

A process by which the board will continually build conflict of interest
awareness - eg by asking whether anyone has a conflict of interest with
board agenda items at the start of each meeting

Stepping aside from decisions by board members where there is a
specific one-off conflict of interest

Stepping aside from the board by board members where there is an
ongoing conflict

The role of the chair in pro-actively managing conflict of interest

The process for managing conflict of interest when the chair has a
conflict either disclosed or undisclosed
-
the responsibility of the chair to step aside or stand down from the
board in the case of declared one-off or ongoing conflict
-
the responsibility of other board members to ask about potential
conflicts at board meetings including questioning the chair
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-
the chair being asked to step aside for the decision or to stand down
from the board in the case of undeclared one-off or ongoing conflict
-
the need for board members to seek external advice if necessary
References:
'Managing conflict of interest' policy NSWFHA
Future directions in corporate governance, NSWFHA, 2003
NSW Ombudsman www.ombo.nsw.gov.au
Independent Commission Against Corruption www.icac.nsw.gov.au
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