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Public sector conflicts of interest: New ICAC guidelines released

15 July 2019

#Government, #Procurement, #Construction & Infrastructure

Scott Alden

Published by Scott Alden, Victoria Gordon, Jeffery Shi

Public sector conflicts of interest: New ICAC guidelines released

The Independent Commission Against Corruption (ICAC) published new guidelines called Managing Conflicts of Interest in the NSW Public Sector (the ICAC Guidelines) on 30 April 2019.  

The ICAC Guidelines adopt a more succinct and flexible approach to managing conflicts of interest compared to that of its predecessor: Managing Conflicts of Interest in the Public Sector Toolkit  (the Toolkit) which was a joint publication prepared by ICAC and the Crime and Misconduct Commission in Queensland in 2004.

In particular, the ICAC Guidelines offer guidance to public officials in NSW by:

  • providing a clear definition and test to assist in the identification of a conflict of interest
  • recommending an easy-to-find conflict of interest policy with clear requirements for all relevant groups of people and other entities
  • suggesting risk-based management by locating vulnerable units and branches
  • advising the avoidance of unnecessary conflicts of interest in their private capacities
  • encouraging disclosure and registration of personal interests
  • urging regular and proactive review and monitoring of the conflicts of interest
  • outlining procedures for investigation of alleged breaches and complaints of conflicts of interest.

Notably, the ICAC Guidelines provide a clear methodology in determining whether a conflict of interest exists by considering the following four questions:

  • does the official have a personal interest?
  • does the official have a public duty?
  • is there a connection between the personal interest and the public duty?
  • could a reasonable person perceive that the personal interest might be favoured?

In this way ICAC is departing from the conventional classification of conflicts of interests as actual, perceived or/ potential and adopting an objective ‘reasonable persons test’ to determine whether an undue connection between the official’s personal interest and public duty exists that amounts to a conflict of interest.

Further, the ICAC Guidelines offers more flexible conflict of interest management options compared to the ‘6 Rs’ which was the approach used in the Toolkit (register, restrict, recruit, remove, relinquish, resign). The management options under the ICAC Guidelines and their relationship to the previous 6 R’s in the Toolkit are as follows:

  • take no further action beyond disclosure (equivalent to ‘register’ in the Toolkit)
  • change the official’s relevant activities (equivalent to one or a combination of ‘restrict’, ‘recruit’, ‘remove’, and ‘resign’ in the Toolkit)
  • change the official’s personal interest (equivalent to “relinquish” in the Toolkit)
  • change the system or process.

The fourth option is a new management option provided by the ICAC Guidelines and emphasises involving either stronger record keeping or additional monitoring and assurance to reduce the likelihood of any improper conduct. 

Some examples of this include:

  • requiring more detailed documentation (including audio or video recordings) of the matter
  • designing the decision-making process to reduce the discretion
  • enhancing authorised access of the information
  • conducting a post-completion audit or review
  • appointing probity checkers, probity advisors or probity auditors.

Importantly, the ICAC Guidelines do not replace the Toolkit and the Toolkit should continue to be used as a companion tool to the new ICAC Guidelines.

Conflicts of interest for public officials are an unavoidable aspect of a public service career and are often insufficiently understood and mismanaged.

The new ICAC Guidelines should be adopted by all NSW government agencies to implement a more sophisticated control framework to appropriately and transparently deal with conflicts of interest to increase public confidence in government agencies, particularly government procurement processes.

Authors: Scott Alden, Victoria Gordon & Jeffery Shi

Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.

Scott Alden

Published by Scott Alden, Victoria Gordon, Jeffery Shi

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