Poorly managed conflicts of interest remain a major enabler of corruption according to a report released today by the state's anti-corruption body, IBAC.
IBAC Commissioner The Honourable Robert Redlich QC said: "Conflicts of interest are not of themselves corrupt, however, when public sector employees do not properly identify, declare and manage conflicts of interest, agencies can be exposed to significant corruption."
"Conflicts of interest are an inevitable part of life, and they clearly exist for most people working in the public sector. However, they can become a problem if they are concealed or mismanaged. That is why it is vital all public sector employees know what to do when conflicts arise," Commissioner Redlich said
A conflict of interest occurs when a public sector employee's private interests conflict with their public duties. Conflicts of interest can be actual, potential or perceived. Each form of conflict must be declared and managed.
"Properly managing conflicts of interest is important because when they are not appropriately managed there is a very real risk that important decisions about the delivery of community services, infrastructure and other vital public services and projects are not made in the public interest."
"Many IBAC investigations have found that when conflicts of interest are not properly managed, they can facilitate corrupt conduct."
"This damages the reputation of organisations and undermines community confidence in the public sector," he said.
IBAC's research report, Managing corruption risks associated with conflicts of interest in the Victoria Public sector, found areas most at risk from mismanaged conflicts of interest include procurement, recruitment and information management.
"Public sector leaders need to ensure robust systems are in place to properly manage conflicts of interest, to address this clearly identified risk of corruption," Commissioner Redlich said.
The report provides case studies of mismanaged conflicts of interest. These include examples of public sector employees awarding contracts to businesses owned by family members or friends, or to their own companies.
Another case study refers to the recruitment of friends or family without interviews or competitive selection processes.
IBAC research has identified around 20 per cent of state and local government employees and almost a third of Victoria Police employees had observed conflicts of interest in their organisations.
Commissioner Redlich said it was important for public sector agencies to establish clear polices and guidelines, and provide regular and ongoing training for all staff to manage the risks posed by conflicts of interest.
"While well-defined policies and processes are important, they are ineffectual if they are deliberately ignored, not understood, or staff are simply unaware of them."
"Corruption often starts with failing to adhere to proper processes and a willingness to engage in activities such as poorly managing conflicts of interest. Public sector leaders must clearly communicate their expectations to employees about how conflicts of interest should be handled, as well as ensure robust systems are in place to manage them when they do arise."
"This will build a workplace culture where employees feel comfortable discussing situations where a conflict of interest may exist so it can be effectively managed before it becomes an issue."
IBAC's report also found accepting gifts and hospitality can give rise to a conflict of interest, and creates a perception decisions have been inappropriately influenced.
"Inappropriately providing or requesting gifts is a common feature of IBAC investigations. Often, the best way for public sector employees to avoid a conflict of interest is to never accept a gift, benefit or hospitality," he said.
The report and an information sheet highlighting various myths and misconceptions about conflicts of interest are available on IBAC's website.
