Conflict of Interest: When Relatives, Business, and Personal Interests Become a Cause of Law Violation

Family ties, business, or personal interests during decision-making can lead to a conflict of interest if they are not declared and regulated, explains the Labor and Employment Inspection of the Dnipro City Council.

Hypothetical situation: a manager signs an order to award a bonus to a relative, a deputy votes on a decision concerning their business, or an official participates in considering an issue where they have a personal interest. At first glance, these may seem like ordinary official actions, but under certain conditions, they create a conflict of interest and may have legal consequences.

Potential and Actual Conflict of Interest

The law distinguishes two types of conflict of interest.

Potential conflict of interest arises when a person has a private interest and simultaneously holds powers that can be exercised in this area.

Actual conflict of interest occurs when a private interest already contradicts official powers during decision-making or performing actions.

To establish a conflict of interest, the focus is not on the outcome of the decision but on the very fact of the private interest influencing the impartiality and objectivity of the person.

What Can Cause a Conflict of Interest

The most common grounds for a conflict of interest are:

• family and kinship ties;
• friendly relations;
• making decisions concerning oneself;
• participation in public, political, religious, or other organizations.

This list is not exhaustive — a conflict can arise in any situation where private and official interests intersect.

Main Duties of an Official

In case of a conflict of interest, an official is obliged to:

• prevent its occurrence;
• report a real or potential conflict of interest;
• not participate in decision-making in case of an actual conflict;
• take measures to resolve it.

Timely notification is often a key factor that allows avoiding liability.

What to Do If a Conflict Has Already Arisen

If a person is not a member of a collegial body, they must inform their immediate supervisor or the body responsible for their service about the conflict. After that, the supervisor determines the way to resolve the situation within two days.

Possible Ways to Resolve

Among possible measures are:

• removal from performing certain tasks;
• restriction of access to information;
• review of official powers;
• external control;
• transfer to another position;
• dismissal.

To Whom Are Measures Applied

Resolution measures are applied specifically to the person who has the conflict of interest.

For example, if a company manager makes a decision regarding his wife as an employee, the conflict arises for the manager. Accordingly, measures of influence may be applied specifically to him.

Features for Deputies and Collegial Bodies

A person is obliged to publicly disclose the conflict of interest before the issue is considered and not participate in voting.

At the same time, an exception is provided: if the absence of such a person leads to the loss of the body's quorum, they may participate in voting after publicly announcing the conflict of interest, which must be recorded in the minutes.

Conclusion

A conflict of interest by itself is not always a violation. A violation occurs when it is concealed or decisions are made under conditions of an actual conflict.

The main principle is to timely identify the private interest, report it, and choose a lawful way to resolve it. Transparency in such situations is a key condition for trust in officials and authorities.

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