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Managing conflicts of interest

Blog post by Peter Riddell

Thursday 30 March 2017

One of the most fraught issues in public appointments is managing allegations of conflicts of interest. An appointee who has previously worked or still works in an area covered by the public body can be, and often is, criticised for that reason. This is not, however, a straightforward question.

The previous 2012 code and the new Governance Code rightly emphasise the importance of integrity, selflessness and openness amongst other principles. Public appointees should not benefit, or be seen to benefit, from their positions during, or after, their time in post,. Equally though, chairs and members are rightly sought who have knowledge and experience of the area covered from their past work, obviously in the case of some of the more scientific advisory bodies, but also for executive agencies.There is absolutely nothing wrong with an appointee who has had an interest or involvement in an area. There is a strong case for interchange between the private and public sectors, provided everything is clear and open. What matters is identifying and publicly acknowledging the interest and taking action to end or ring fence it. Transparency is central.

Perceptions can matter as much as the reality. The importance of addressing these questions more explicitly was underlined by the Public Administration and Constitutional Affairs Committee of the Commons in a report last July following a letter I had sent to the then Public Appointment Assessors after a controversy over the handling of the interests of the new chair of the Equalities and Human Rights Commission.

In theory, the current appointment processes are supposed to address potential conflicts. The Governance Code ( para 9.1) is specific:- ‘The Advisory Assessment Panel must satisfy itself that all candidates for appointment … have no conflicts of interest that would call into question their ability to perform the role. Candidates must be asked to declare potential conflicts of interest in their application. All potential conflicts of interest and how they might be managed must be discussed with an individual at interview. A potential conflict should not preclude a candidate from being shortlisted/appointed provided that appropriate arrangements are made’. The Code makes the departmental official on a panel responsible for seeking advice within their department and/or the Cabinet Office on handling any conflicts which should be included in the advice to ministers and to a Select Committee if the appointment is subject to a pre-appointment hearing.

These are sensible requirements. But the practice is not always satisfactory because of pressures of time, notably in relatively short interviews which are mainly concerned with other issues. Past and current interests, and potential conflicts, can be too hastily considered by departments and by interview panels. Assurances may be taken at face value and the full details of a candidate’s interests may not be explored either at the short-listing or interview stages. While in these instances the past Code and the Governance Code may not be breached, there can be loose ends which later cause controversy. As Charlotte Hogg’s resignation as a Deputy Governor of the Bank of England showed ( an appointment not regulated by me), inadvertent omissions, unchallenged judgements and lack of full disclosure can prove fatal.

There are six desirable steps, each about disclosure. First, to ensure that applications really are accurate, full and specific. Second, officials in sponsoring departments need to investigate any ambiguities and unresolved questions- for instance, the nature of any shareholdings and what steps a successful applicant might take to dispose of, or ring fence, any interests. Third, the assessment/interview panel needs to discuss these questions explicitly with an applicant to ensure firm commitments are made, and there should be an official record of the facts and any undertakings as a necessary part of the process. Fourth, a minister needs to be aware of all the above points when meeting appointable candidates and making a decision. Five, any interests which could be perceived as conflicting need to be declared to a Select Committee, along with mitigating actions. Sixth, these steps need to be spelt out in the press statement announcing an appointment.

Most, if not all, recent controversies over alleged conflicts of interest could have been resolved, or, at any rate, greatly minimised, if these steps had been properly taken. Not everyone will be satisfied. But, at least, no one should be able to say that interests were hidden, or not addressed.