Understanding Conflicts of Interest (The Changing Landscape in Australia in 2024)

How Recent Issues about Conflicts of Interest are Changing the way Businesses must deal with Government

You will no doubt be aware of recent media reports in Australia about Conflicts of Interest, in the context of alleged breaches of conflict of interest and use of government confidential information to benefit third parties. While I don't intend to weigh into the debate or comment on those alleged incidents or news reports specifically, I think it's important that we all - whether in industry, the private sector, business, government or consulting - realise the significance of these events. 

Map of Australia with the word "Government", a picture of Australian Parliament House and a red Confidential Stamp. Caption reads, "Conflicts of Interest." Blaze Business and Legal Logo.

For the first time in many years, Conflicts of Interest (and how they should be dealt with) have been brought to the forefront of peoples' minds.

Usually in large government procurements, Conflicts of Interest are dealt with perfunctorily - a Probity Adviser is appointed, a Probity Plan is drafted, a short Probity Briefing is given, Conflict of Interest Declarations are made, then the procurement and the project continues without much more attention being paid to these concepts.

I think this is going to change very rapidly over the next couple of years, for Commonwealth and State procurements and projects, as well as potentially for Councils, ASX-listed companies and Large Business procurements and projects.

Image of a laptop with a person typing. Overlaid words say "Performance, Structure, Governance, Process, Procurement Management, Probity and Conflicts of Interest." "Probity and Conflicts of Interest" are in red, with arrows leading to "Process", "Governance" and "Procurement Management." Blaze Business & Legal Logo.

My Experience

I've been a Probity Adviser on a number of projects for government (from within government at Australian Government Solicitor (AGS), in-house within government entities, and also advising government from private practice). I've given Probity Briefings, I've drafted Probity Plans and Conflicts of Interest Policies, and I've advised government about Probity issues on a large number of procurements and projects.

I've also been in Industry and in Business, making sure that my team put in place the necessary Probity measures to satisfy government requirements. 

I know how important these measures are. Because I've seen and heard about massive projects derailed by probity issues, whiffs of shady dealings, and the topical issue of Conflicts of Interest.

But now, and into the future, I suspect the way Government interacts with Business in relation to Conflicts of Interest will be different!

The Changes that are Coming

The current issues around Conflicts of Interest are so significant that numerous government agencies (beyond the one directly affected), as well as large private sector companies, are also taking action. Remember that this is happening before any ANAO report has been issued into the issue. And before any Parliamentary Committee has been formed.

This makes me believe we are going to see some massive changes in how government in Australia deals with probity and Conflicts of Interest over the coming years. Many of these changes will be imposed by individual government agencies in the short-term - often without consulting each other.

Then once the ANAO has reported on this issue (which I think will be inevitable), and within not even a few years, I suspect a co-ordinated change will be made across (at least) the Commonwealth Government.

How Conflicts of Interest will need to be dealt with in the Future

It will no longer be enough to pay lip-service to probity and to say "I have no Conflict of Interest" without backing up that declaration. 

Industry and private sector business will need to have robust Conflict of Interest Policies in place - my prediction is that this will be made an Essential Requirement of every procurement, the Conflict of Interest Policy will need to be submitted as part of the Tender Response, and the terms of the relevant Policy will be examined.

If you don't have a Conflict of Interest Policy, now is the time to put one in place - see my article on the 11 Essential Elements for your Conflict of Interest Policy for assistance. Or contact us to help get your Probity and Conflict of Interest arrangements in better shape and ready for new dealings with government.

Businesses will also need to actively manage - and be seen to be managing - any Conflicts of Interest that may arise, whether actual, potential or perceived. Call them what you will: Separation Protocols, Separation Policies, Information Barriers etc, these will need to be implemented robustly.

Read all about Separation Protocols and Information Barriers. What are they and how do they help manage Conflicts of Interest?

Any Government Agency who is carrying out a Procurement will also need to take a more active role in ensuring that the probity of the Procurement is strong and is regularly (and actively) monitored. Gone will be the days of the absent Probity Adviser who is engaged but then rarely seen over the course of the project.

Those who are ahead of the coming Probity and Conflict of Interest movement within Australia are likely to fare the best!

Learn about Conflicts of Interest in Australia

So what are Conflicts of Interest and what is required to deal with a Conflict of Interest?

In this article, I help you gain a deeper understanding of how a Conflict of Interest could potentially harm your business reputation or lead to a loss of Government Contracts. 

I explain the Conflict of Interest meaning and give you examples of Conflicts of Interest to guide you. I also help you navigate the laws and policies relating to Conflicts in Australia, and discovere how to manage Conflicts of Interest.

Here are some other things this article will help you do:

  1. Understand what is a conflict of interest
  2. Discover the importance of Conflict of Interest Policies
  3. Get tips about how to draft a Conflict of Interest Policy for your business
  4. Learn about Conflict Disclosure Procedures
  5. Learn effective Conflict Management Strategies
  6. Learn how to draft a Conflict of Interest Declaration
  7. Learn how to put in place a Conflict of Interest Register.

Gain insights into the essential elements your Conflict of Interest Policy should include, such as defining conflicts of interest, establishing roles and responsibilities, and implementing consequences for policy breaches.

Learn how to balance transparency and confidentiality, promote an ethical culture, and foster a 'Speak Up' environment in your organisation.

And understand what is a Separation Policy or Separation Protocol, and how that relates to Information Barriers. Read up on my top 10 Information Barrier Guidelines so you can draft one within your own business.

Whether you're a contractor, consultant, business owner, or government officer, this article will equip you with the knowledge and tools to navigate Conflicts of Interest in the workplace, in your business or in your government agency. And it will allow you to deal with government in an ethical manner while making sure your business meets all of the various government Probity requirements.

And it will position your business ahead of the curve when it comes to the new Probity and Conflict of Interest obligations I suspect we will soon start to see in government procurements.

This article will help you stay ahead of the changing landscape regarding Conflicts of Interest in Australia while ensuring transparency, integrity, and compliance in all your dealings.

Conflict of Interest Meaning: What is a Conflict of Interest?

A conflict of interest occurs when an individual or entity has competing interests that could potentially compromise their ability to make impartial decisions. In 2023, the concept of conflicts of interest has become increasingly important in various fields, including business, government, and professional organisations. It is crucial to understand the meaning of conflict of interest in this evolving landscape to ensure ethical conduct and maintain trust in these sectors.

A conflict of interest can arise in various scenarios, such as:

  • When a public official has a personal or financial interest that may influence their decision-making process.
  • When a professional service provider prioritises their own interests over the best interests of their clients.
  • When an employee of a company engages in activities that undermine the organisation's objectives or reputation.
  • When a researcher or academician fails to disclose financial or personal connections that could bias their research findings.

Navigating Conflict of Interest Laws and Regulations in Australia

In Australia, conflict of interest laws and regulations are designed to promote transparency, accountability, and fairness in various sectors.

Understanding and complying with these legal frameworks is essential to prevent conflicts of interest and maintain integrity within organisations.

Some key aspects of navigating conflict of interest laws and regulations in Australia in 2023 include:

  • Familiarising yourself with the specific laws and regulations relevant to your industry or profession.
  • Identifying potential conflicts of interest and implementing appropriate measures to mitigate or manage them.
  • Establishing clear policies and procedures to ensure disclosure and proper handling of conflicts of interest.
  • Regularly reviewing and updating these policies to align with any changes in legislation or industry standards.

What is a Conflict of Interest Policy?

Understand what is a Conflict of Interest Policy and why your business should have one.

Establishing a more Robust Conflicts of Interest Policy for your Government Department

Government departments play a crucial role in serving the public interest. Establishing a robust conflicts of interest policy within these departments is vital to ensure transparency, avoid undue influence, and maintain public trust.

Consider the following when creating a more robust conflicts of interest policy for your government department:

  • Clearly define what constitutes a conflict of interest and provide examples relevant to your department's activities.
  • Implement a comprehensive process for declaring and managing conflicts of interest, including the use of conflict of interest forms or declarations.
  • Ensure regular training and education for employees to raise awareness about conflicts of interest and the importance of ethical conduct.
  • Establish mechanisms for monitoring and enforcing compliance with the policy, including appropriate consequences for non-compliance.

Do I need a Conflict of Interest Policy for my SME?

Small and medium-sized enterprises (SMEs) may often overlook the importance of having a conflict of interest policy. However, regardless of the size of your business, having a clear policy in place can protect your company's reputation, maintain trust among stakeholders, and minimise potential legal and ethical issues.

Reasons why a conflict of interest policy is crucial for SMEs:

  • It provides guidance to employees on how to identify and disclose conflicts of interest.
  • It ensures transparency and fairness in decision-making processes within the company.
  • It demonstrates a commitment to ethical business practices, which can enhance your company's reputation.
  • It helps prevent potential legal consequences and financial losses associated with conflicts of interest.

Do I need a Conflict of Interest Policy for my Large Business?

Large businesses often face complex operational structures and a greater number of stakeholders, making conflicts of interest more prevalent and potentially impactful. Implementing a comprehensive conflict of interest policy is essential for large businesses to maintain integrity, manage risks, and uphold ethical standards.

Benefits of having a conflict of interest policy for a large business:

  • It establishes a framework for identifying, managing, and disclosing conflicts of interest across various departments and levels of the organisation.
  • It promotes transparency and ethical decision-making, which is particularly important when dealing with significant financial transactions or engaging with external parties.
  • It helps safeguard the company's reputation and mitigates the potential for conflicts of interest to harm business relationships or lead to legal disputes.
  • It provides a consistent and standardised approach to handling conflicts of interest, ensuring fairness and accountability throughout the organisation.

11 Essential Elements for Your Conflict of Interest Policy

Image of a document titled, "Conflict of Interest Policy." Caption reads, "Essential Elements for your Conflict of Interest Policy." Blaze Business & Legal

A Conflict of Interest Policy is a crucial document for contractors and consultants dealing with government or quasi-government entities in Australia.

It serves as a guide to navigate the complex landscape of personal and professional interests, ensuring transparency and integrity in all dealings. To ensure compliance with relevant laws and promote ethical business practices, here are 11 essential elements that your Conflict of Interest Policy should contain:

  1. Definition of Conflict of Interest
  2. Articulate the Purpose of the Policy
  3. Define the Scope of the Policy
  4. Clarify the Roles and Responsibilities
  5. Determine a Procedure for Identifying Conflicts of Interest
  6. Define a Procedure for Disclosing Conflicts of Interest
  7. Put in place Management and Mitigation Strategies
  8. Consider Confidentiality and Privacy Issues
  9. Identify the Consequences of Breaching the Policy
  10. Set out Policy Review and Update Procedures
  11. Define Training and Awareness Processes.

By incorporating these essential elements into your Conflict of Interest Policy, you can create a comprehensive framework that promotes transparency, integrity, and compliance with relevant laws. 

Check out our in-depth article on the 11 Essential Elements for your Conflict of Interest Policy.

Do I need a Separation Policy or a Separation Protocol?

When conflicts of interest arise within an organisation, it may be necessary to establish protocols or policies that clearly outline the steps and procedures to address these situations. The choice between a separation policy or a separation protocol depends on the specific needs and circumstances of the organisation.

Understanding the distinction between a separation policy and a separation protocol:

  • Separation Policy: A separation policy typically refers to a broader framework that outlines the general principles and guidelines for managing conflicts of interest within an organisation. It establishes the overall approach and provides a set of rules and procedures to follow.
  • Separation Protocol: A separation protocol, on the other hand, is a more detailed document that focuses on specific situations or areas where conflicts of interest commonly arise. It provides step-by-step instructions and specific actions to take when managing these conflicts.

Does an Information Barrier work?

An information barrier, which used to be known as a "Chinese Wall" or "Ethical wall", is a mechanism used by organisations to restrict the flow of sensitive information between different departments or individuals. The purpose of an information barrier is to prevent conflicts of interest, maintain confidentiality, and ensure fair decision-making processes.

Key considerations regarding the effectiveness of an information barrier:

  • Implementation: The successful implementation of an information barrier requires clear policies, procedures, and controls that are consistently followed throughout the organisation.
  • Communication: Adequate communication and training are crucial to ensure that all employees understand the purpose of the information barrier and their responsibilities in upholding its integrity.
  • Monitoring and Enforcement: Regular monitoring and auditing are necessary to ensure compliance with the information barrier and detect any breaches or attempts to circumvent it.
  • Continual Evaluation: It is essential to periodically review and update the information barrier to adapt to changing circumstances, technological advancements, and evolving risks.

What is a Legal Information Barrier?

A legal information barrier, also known as an "ethical wall" in legal contexts, is a mechanism used in law firms and legal departments to prevent the improper flow of confidential information between lawyers or teams representing different clients, particularly in situations where potential conflicts of interest may arise.

Image of two groups of businesspeople with a wall between them. Caption reads, "Ethical Wall and Separation Agreements". Blaze Business & Legal Logo

Key features and components of a legal information barrier:

  • Confidentiality: The information barrier ensures strict confidentiality and prevents the exchange of sensitive information between individuals or teams representing conflicting interests.
  • Physical and Digital Separation: Physical and technological measures are implemented to segregate individuals or teams, restrict access to specific documents or databases, and prevent inadvertent communication.
  • Written Policies and Procedures: Clear and comprehensive policies and procedures are established, outlining the obligations, responsibilities, and consequences associated with the legal information barrier.
  • Regular Training and Monitoring: Ongoing training and monitoring activities are conducted to ensure compliance, reinforce awareness, and detect and address any breaches or vulnerabilities.

Top 10 Information Barrier Guidelines

Implementing effective information barriers requires careful planning and adherence to established guidelines. Consider the following top 10 guidelines to enhance the integrity and effectiveness of your information barrier:

  1. Clearly define the purpose and scope of the information barrier.
  2. Identify the individuals or teams that should be separated by the barrier.
  3. Develop comprehensive written policies and procedures for the information barrier.
  4. Establish physical and digital controls to restrict access and prevent unauthorised communication.
  5. Conduct regular training sessions to educate employees about their roles and responsibilities.
  6. Implement monitoring mechanisms to ensure compliance with the information barrier.
  7. Conduct regular audits to assess the effectiveness and integrity of the barrier.
  8. Respond promptly to any breaches or violations of the information barrier.
  9. Continuously evaluate and update the information barrier to adapt to changing circumstances.
  10. Promote a culture of ethics and integrity throughout the organisation to support the information barrier's objectives.

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Rachelle Hare and Shannon Drew, Blaze Business & Legal
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About the Author

Rachelle Hare

Rachelle Hare - Managing Director and Principal Practitioner of Blaze Business & Legal

Rachelle Hare

Rachelle Hare is a highly experienced Construction Lawyer and Contract Lawyer, with over 23 years of experience in Tier 1 and Tier 2 Construction Firms, Top Tier Private Practice and Government.

With 23+ years of experience as a Senior Lawyer, Strategic Contracting Adviser and Management Consultant in Construction Law, Contracts, Major Projects, Commercial Advisory, Compliance, Procurement, Contract Management and Risk Management, Rachelle has the rare skills to offer you seamless business advice and legal advice to help support your organisation.

As well as a Lawyer and Business Adviser, Rachelle has also acted as a Strategic Procurement Adviser, Compliance Manager, Strategic Risk Adviser and Commercial Manager.

Rachelle owns
Blaze Business & Legal, a combined Commercial Law Firm and Business Advisory Firm located in Brisbane, Queensland, Australia. Blaze Business & Legal assists a broad range of clients in the Construction Industry and related industries, and advises owners, contractors, subcontractors, NFPs and other organisations on a broad range of Construction Law, Commercial Law, Business Advisory and Management Consulting issues in Brisbane, Queensland and around Australia.

Rachelle also owns Blaze Professional Learning, where she offers practical contracting skills, hands-on experience in drafting and working with contracts, and industry insights to help Professionals upskill and advance their careers with real-world skills.

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