What is a conflict of interest?
Conflict of Interest (COI) arises in circumstances where an employee’s public duty is influenced, or can be seen to be influenced, by a private interest.
Private interests include both financial and non-financial interests, and can include the interests of family members and close friends or associates. They can be positive or negative interests – personal enmity towards someone can be just as relevant as loyalty to them.
The public duty of all employees of the department (both in the Teaching Service and the Victorian Public Service) and employees of school councils includes the obligation to perform all duties in accordance with public sector values, which include 'accountability', 'integrity' and 'impartiality'. A conflict therefore arises if a private interest might undermine an employee’s ability to perform a particular role in accordance with these values, whether or not the outcome of the task or function is affected, an employee’s benevolent intention does not mean that risks of perceived COI can go unaddressed.
While COI can lead to corruption and fraud, it mostly arises innocently and independently of any fraudulent intent and should be managed with this in mind – with transparency, consistency and without favouritism or exception.
COI can be actual, potential or perceived. A potential COI refers to circumstances where it is foreseeable that a COI may arise in future and steps can be taken now to mitigate any risk. A perceived COI arises where a reasonable person might think that an employee could be unduly influenced by a private interest, even if the employee is confident of their own objectivity.
It is particularly important for employees to address risks of perceived COI because they are the most likely to be overlooked or underestimated.
An important consideration when identifying and managing COI is whether reasonable and fair-minded people would consider that a private interest is likely to influence the public duty to the extent that it would create a risk for the organisation or undermine public sector values. Being able to identify these risks will assist employees and managers in taking appropriate steps to protect the public interest.
Because COI is inherently subjective and personal, individuals can be prone to underestimating or misrepresenting the extent of the influence a private interest might have. It is therefore critical that managers are involved in assisting employees to assess and address risks associated with COI.
Poor management of COI can have a serious effect on the department, including:
- poor substantive outcomes arising from decisions in which merit is compromised
- loss of stakeholder confidence and the erosion of proper processes
- considerable expense and loss of efficiency to remedy actions which are tainted by undisclosed or improperly managed COI
- loss of employee trust in management
- loss of public confidence in government.
Refer to the COI Case Studies on the Resources tab for typical examples of conflicts of interest.
Reviewed 20 December 2023
