What is a Conflict of Interest? Give Me Some Examples

Conflict of Interest Examples
Conflict of Interest Examples. Westend61/Getty Images

What is a Conflict of Interest? 

A conflict of interest is a situation in which an individual has competing interests or loyalties.  A conflict of interest can exist in many different situations. The easiest way to explain conflict of interest is by using some examples.

  • with a public official whose personal interests conflict with his/her professional position.  
  • with a person who has a position of authority in one organization that conflicts with his or her interests in another organization
  • with a person who has conflicting responsibilities. 

Is Conflict of Interest a Crime? 

Like other types of illegal or unethical activities, conflict of interest activities carry the risk of consequences. 

In certain circumstances, conflict of interest can result in prosecution. For example, public officials, like state legislators, are specifically prohibited from activities that would result in a personal gain because of conflict of interest. 

In most cases, though, conflict of interest matters are handled in court by a civil lawsuit. For example, if a company has proof that a board member profited from her role on the board, the board member has violated her duty of loyalty and can be taken to court. 

Conflicts of Interest in the Workplace

An employee may work for one company but he or she may have a side business that competes with the employer. In this case, the employee would likely be asked to resign or be fired.

 

Susan Heathfield, Human Resources Expert, has more examples of conflicts of interest in the workplace.

Conflicts of Interest by Boards of Directors

Members of a corporation board of directors sign conflict of interest policy statements. If a board member has a conflict of interest, he could be kicked off the board and possibly sued.

For example, if a board member has a sexual relationship with an employee, or if he is taking business away from the company and giving it to others. 

Joanne Fritz, Non-profit Expert, says that non-profit boards have the same issues. In fact, the IRS requires that non-profits disclose potential conflicts of interest. 

Conflicts of Interest in the Public Sector

Judges must recuse themselves (take themselves off a case) if there is a conflict of interest. For example, if the judge has a financial relationship with one of the parties in a case, she must disclose that relationship immediately and recuse herself from the case. 

Conflicts of Interest in the Professions

Attorneys are bound by the Code of Professional Responsibility of the American Bar Association. One common example of conflict of interest by an attorney is if the attorney tries to represent both parties in a case (like a divorce). 

Physicians have the same types of conflicts of interest as attorneys. For example, physicians should not be handling financial matters for patients, and should avoid improprieties with patients and staff. 
  
 And too can get into ethical trouble by publicly endorsing a political client or cause, or by getting too close to a source or compromising their journalistic neutrality.

 

To avoid conflicts of interest, it's most important to avoid the appearance of a conflict.