PREVENTING AND MANAGING
CONFLICT OF INTEREST IN THE PUBLIC
SECTOR
Julio Bacio Terracino
Deputy Head of Public Sector Integrity Division
Public Governance and Territorial Development Directorate
Contents
• Conflict of interest and OECD Integrity
Framework
• Conflict of interest definitions and OECD
benchmarking
• Preventing and managing conflict of interest
• Supporting CoI policies
• Enforcing CoI policies
• The Mexican case
Conflict of interest
OECD Public Sector Integrity
Framework: CoI spans all components
Defining Integrity
• Risk identification
• Values, legislation and policies (codes of conduct, rules for
disclosure, disciplinary regimes, etc.)
• Internal control rules and procedures (hiring, financial
management and reporting, procurement, IT, etc.)
Supporting Integrity
• Leadership and culture of integrity (example from the top)
• Communications and awareness-raising
• Training
Monitoring Integrity
• Detection mechanisms through complaints/whistle-blower
systems
• Internal and external audit mechanisms
• Proactive transparency (social control)
Enforcing Integrity
• Investigations and hearings
• Sanctions
• Recovery of losses or damages
DEFINING COI
POLICIES
Conflict of interest
• The reality: public officials are also private
citizens with their own personal interests.
• The potential problem: these private interests
can affect their official functions as pubic officials.
• Conflict of interest situations can arise: “the
misuse of official power and resources for
improper personal gain”
• Examples: fraud, nepotism, abuse of position,
failure to perform duties….
Conflict of interest
• OECD benchmarking on disclosure of private
assets:
– Assets and liabilities
– Paid and unpaid outside positions
– Previous employment
– Income source and amount
– Gifts
• Not just individual public officials but also
their immediate family members
Conflict of Interest (1/3)
• Level of disclosure and public availability of private interests across
branches of government
Source: OECD (2014), Survey on Managing Conflict of Interest in the Executive Branch and Whistleblower Protection, OECD, Paris.
Conflict of Interest (2/3)
• Level of disclosure and public availability of private interests by the
level of public officials in the executive branch
Source: OECD (2014), Survey on Managing Conflict of Interest in the Executive Branch and Whistleblower Protection, OECD, Paris.
Conflict of Interest (3/3)
• Pre-public employment is still largely unregulated
On private sector employees or lobbyists:
12.5%
No restrictions:
59.4%
On both private sector
employees or lobbyists
and government
suppliers:
21.9%
Israel
On government
suppliers:
6.3%
Source: OECD Government at a Glance (2015).
Example: Checklist for gifts, benefits
• Genuine: Is this gift genuine, in appreciation for something I have done
in my role as a public official, and not sought or encouraged by me?
• Independent : If I accepted this gift, would a reasonable person have any
doubt that I would be independent in doing my job in the future, when
the person responsible for this gift is involved or affected?
• Free: If I accepted this gift, would I feel free of any obligation to do
something in return for the person responsible for the gift , or for his/her
family or friends/associates?
• Transparent : Am I prepared to declare this gift and its source,
transparently, to my organisation and its clients, to my professional
colleagues, and to the media and the public generally?
Managing conflict of interest
• Recusal: withdrawal (permanent or temporary)
from duties
• Divestment: removal, sale of the official’s private
interests, transfer of ownership
• In terms of trust, perceived/potential CoI can be
just as important as actual/real CoI!
• Need to address both cases: suspicion, even if
unfounded, can still undermine legitimacy
• Transparency therefore is KEY to demonstrate
adherence to integrity principles
Apparent vs. potential vs. real CoI
• In terms of trust, apparent and potential CoI can
be just as important as real CoI!
• Need to address all cases: suspicion, even if
ultimately unfounded, can still undermine
legitimacy.
• Apparent CoI: further investigation required,
probable that resolution required.
• Potential CoI: No CoI at the moment but
reasonable foreseeable in the future.
Monitoring required.
• Real CoI: resolution required.
AUS
AUT
BEL
CAN
CHL
CZE
DNK
EST
FIN
FRA
DEU
GRC
HUN
ICE
IRL
ISR
ITA
JPN
KOR
MEX
NLD
NZD
NOR
POL
PRT
SVK
SVN
ESP
SWE
CHE
TUR
GBR
USA
OECD 33
EU20
Public availability of disclosed private
interests
100
90
80
70
60
50
40
30
20
10
0
SUPPORTING COI
POLICIES
Strong example from the top
Is there a central function (not necessarily an independent agency) responsible for
the development and maintenance of the conflict of interest policies, rules or
procedures?
Yes
No
23%
77%
Strong example from the top
Has your government developed a specific policy (with additional requirements
or more detailed standards) for managing conflict of interest for particular
categories of public officials due to the nature of their position?
Ministers
60%
Ministerial advisors
30%
Senior public officials
60%
Procurement officials
33%
Tax and customs officers
43%
Financial regulators
40%
Auditors
43%
Judges
63%
Public prosecutors
57%
Inspectors at central level of govt
27%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Raising awareness: advice and training
What initiatives are carried out in practice in order to raise awareness
and enhance understanding of the conflict of interest policy/ies?
Initial dissemination of conflict of interest policy/ies to
public officials upon taking office and/or new post
97%
3%
Ensuring online availability of conflict of interest
policies for access by public officials
81%
19%
Provision of training to public officials, including
examples of real-life conflict of interest situations and
how they were addressed
77%
23%
Provision of official advice when public officials have
doubts or questions regarding conflict of interest
policy/ies
68%
32%
0%
20%
40%
Yes
No
60%
80%
100%
MONITORING COI
POLICIES
Internal controls and audits
Verification that
disclosure form was
submitted
Yes
No
23%
Review that all
required information
was provided
Yes
No
Internal audit for
the submitted
information for
accuracy
Yes
No
29%
77%
71%
58%
42%
Whistle-blower protection
• Whistle-blower protection mostly afforded through a piecemeal approach
No protection :
13%
Protection through
dedicated law :
41%
Protection through
provisions in other law(s) :
47%
Source: OECD (2014), Survey on Managing Conflict of Interest in the Executive Branch and Whistleblower Protection
ICTs support better internal controls
Generally speaking, what elements of the private
interest disclosure system are administered or
managed electronically?
Completion of the form
38%
Submission of the form
28%
Review of the information submitted
17%
Audit of the information submitted
17%
Access to the publically disclosed information
38%
0%
50%
100%
Evaluating impact
Are diagnostic tools employed to measure the impact of the policy, rules
and procedures on conflict of interest (e.g. surveys, statistical data, costbenefit analysis, etc.)?
Yes: 27%
No: 73%
ENFORCING COI
POLICIES
Public official
accepting or
Managers not Public official
holding
resolving or not reporting prohibited Public official
managing
known
private
not resolving
conflict of
conflict of interest (e.g. a conflict of
interest of interest of co- gift or outside interest when
staff
worker
employment)
it arises
Sanctions
90%
Disciplinary or administrative sanction
Civil sanction
Criminal sanction
No personal consequences
Disciplinary or administrative sanction
Civil sanction
Criminal sanction
No personal consequences
Disciplinary or administrative sanction
Civil sanction
Criminal sanction
No personal consequences
Disciplinary or administrative sanction
Civil sanction
Criminal sanction
No personal consequences
19%
23%
10%
94%
26%
58%
10%
52%
3%
10%
10%
74%
6%
6%
16%
0%
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Mexico’s Federal Admin. Disciplinary
Regime
Integrity: legality, honour, loyalty, impartiality and efficiency.
Political/Constitutional
Administrative/Specialised
Criminal
• As stipulated in Articles
109, 110 and 114 of the
Constitution.
• Applies to elected officials,
Supreme Court Judges,
Attorney Generals, etc. (see
Article 110 for complete
listing).
• Subject to impeachment
following vote by Chamber
of Deputies and
confirmation by Senate.
•As stipulated in Articles
108, 109, and 113 of
Constitution. States are
required to have own laws
and regimes in place.
•For federal officials and
those managing federal
funds, the Federal Law
on the Administrative
Responsibilities of
Public Servants applies
(see Ch.2 for
sanctions). Implemented
by SFP according to Art. 37
Organic Law on Public
Administration.
•Ch.7 of Law on
Professional Career in
the Public Service
supports possible
disciplinary dismissal
under Administrative
Responsibilities Law.
•Specialised disciplinary
regimes for military
officers, foreign service
personnel, federal
judges and prosecutors,
and federal police.
• As stipulated in Articles
109 and 111 of the
Constitution, and Title 10
of the Federal Criminal
Code.
• Applies to all public
officials with exceptions for
some while in office (i.e.
President).
• Subject to criminal
sanctions under Federal
Criminal Code (Title 10).
Civil
• As stipulated in Article 111
of the Constitution and
Articles 31 and 1916 of the
Federal Civil Code and
Article 47 of Federal Law
on the Administrative
Responsibilities of Public
Servants.
• Applies to all public
officials.
• Subject to civil sanctions
under federal civil code.
Labour law
• Federal Law on State
Workers and Federal
Labour Law can be applied
for dismissal for poor
performance.
• Applies mostly to unionised
public servants (servidores
de base).
Preliminary findings
• SFP decisions are being upheld by the Tribunal: is the process becoming
more sound or is this a reflection of the types of cases being sanctioned?
(i.e. they are more “cut and dry” or less serious?)
16,000
40%
14,000
35%
12,000
30%
10,000
25%
8,000
20%
6,000
15%
4,000
10%
2,000
5%
0
0%
2012
2013
2014
Share of sanctions appealed
Share of appealed sanctions overturned
Sanctions issued
Sanctions issued less overturned
Preliminary findings
• Nature of sanctioned offences remains largely administrative and
for minor issues… contrasted with what suppliers report..
Breakdown of sanctions by type of fault, 2013
3.2% 2.6%
0.9%
Failing to complete conflict of
interest declaration
Administrative negligence
6.0%
Failure to follow budgetary or
financial management rules
27.5%
Abuse of authority
59.8%
Failure to follow public
procurement rules
Bribery or extortion
World Bank Enterprise
Survey: 35% of firms
expected to pay bribes
to secure government
contract (2010);
TI Bribe Payers’ Index:
Mexico #26/28
countries.
Preliminary findings
Netherlands
Breakdown of sanctions by type of fault, 2013
Brazil
Breakdown of sanctions by type of fault, 2014
Abuse of organisational
resources or not following
internal guidelines
0.5% 0.4%
3.9%
6.2%
2.0%
Financial
0.5%
8.2%
Misconduct in private time
Abandon of position,
lack of assiduity or
illegal job
accumulation
Other
8.7%
50.7%
Inappropriate social
behaviour (harassment)
12.5%
Abuse of position or
conflict of interest
17.1%
Corruption-related acts
Abusing access to
information
22.9%
66.4%
Negligence
Abuse of force
Misconduct as defined in
whistle-blower regulation
Acting as private firm’s
manager or equivalent
COI DISCLOSURE IN
MEXICO
New policy on CoI disclosure
• Supported by new code of conduct/ethics
– However CoI requirements issued first?
• Guidelines and training for staff and managers?
• Form does not require that managers sign off on
reported CoI or state planned resolution
• Additional forms /guidelines for at-risk positions?
• Verification/auditing of information through
DeclaraNet?
• Further benchmarking of CoI practices under
Integrity Review and upcoming workshop
Thank you
Julio.BACIOTERRACINO@oecd.org