Legal Issues

Various definitions have over time been applied in the definition of the term conflict of interest. The underlying argument involves breach of trust and loyalty between two parties especially by professionals.  Generally, organizations flourish when their stakeholders pursue a common goal that guides their decisions and activities. As such, they require those they depend on to be independent, unbiased and impartial. When there are occurrences that conflicts these fundamentals, then the possibility of conflict of interests arises. Moore (2005, p. 1) asserts that conflict of interest has been a fixture in the economic and political landscape since the rise of capitalism although its dominant negative consequences have increased in the recent history. Traditionally, conflict of interest has been defined as a situation where personal interests of an agent directly conflicts with the interests of the principal. A good example is when the interests of an employee (agent) in an organization conflicts with those of the employer (principal).

According to Responsible Conduct of Research (RCR, 2009) of Columbia University, conflict of interest is an occurrence rather than a simple phenomenon. It involves the actual, potential or apparent abuse of trust that individuals or organizations have in professionals. It involves a situation where personal or financial considerations have the potential to prejudice or compromise professional objectivity and judgment. It is prudent to note here that conflict of interest may not necessarily involve the physical occurrence of an act but goes towards intrinsic tenets within the network of individuals or organizations that dilutes the objectivity and impartiality required in making personal or business decisions.  Although offering of gifts among business partners and professionals have increased in modern days due to the need for networking, a gift can amount to conflict of interest if it comes out as controversial. A controversial gift is one that is given with a motive of obliterating business processes or reducing the objectivity that is required within a business process. It can also be one that increases the potential of compromising the objectivity and independence of the individual awarded.

Application to Bills Gift
In the case under study, the one week Cancun Mexico holiday gift given by Ottawa Digital Machinery Ltd to Bill and his wife appears not to have been impartial for a number of reasons. First, ODM was aware that Bill was the head of his companys specification committee and therefore wanted to bring him on their side in light of the transaction in which they had recently sold a numerically controlled milling machine to the company. In consideration of the faulty report that Bill received after the vacation, one may infer that ODM was anticipating such an occurrence and therefore gave a gift to the person in charge to dilute his objectivity were such a fault to be discovered.

It may be easy to argue that Bill was acting in good faith and a networking spirit  when he accepted the gift from their business partner but a close scrutiny proves that he was actually guilty of professional misconduct.  One of the clearest expressions of such misconduct was expressed by Lord Cranworth in the Aberdeen Railway versus Blaikie Brothers law case in 1854 when he expressed the duty of a professional to avoid and notice conflict of interest as follows

It is a universal rule application that no individual, having duties to fulfill, shall enter into engagements that presents a potential in which he can have or has, a personal issues which possibly may conflict with the interests of the subjects he is supposed to protect (Davies, 2003, p. 393).

As stated above, an individual should not enter, either consciously or unconsciously into a deal which has the potential to conflict the interests of those he serves. In this case, Bill acted in bad faith albeit unconsciously in accepting the gift considering that he was responsible for quality control in his company. His role required him to have free hands from those his organization dealt with so that he could be able to scrutinize their products impartially. As it is, his agreement to their gift produced a potential of his inability to judge their quality without bias. Bills act in a way diluted his companys negotiation power with their supplier and this is equivalent to professional misconduct.  According to Moore (2005, p. 1), professional misconduct is equivalent to a professionals inability to maintain the fragile equilibrium that exists between transactional partners.

Organizations flourish through their employees or stakeholders observance of moral business ethics, some of which could be documented while others may be unconscious.  Conflict of interest occurs when the action of an individual does not correspond with the organizations ethical expectations. According to Davis and Stark (2001, p. 4), the avoidance of conflict of interest for individuals requires professionals to prevent the promotion of self interest for the sake of the organization. In a typical ordinary market where individuals compete outside organizations, acceptance of gift may not pose an ethical dilemma but when an organization is concerned, an individual should make alternatives that do not compromise the organizations goals and processes. In organizations that recognize the possibility of their stakeholders, especially of employees receiving gifts, they establish policies meant to assess the validity of such gifts. For instance, philanthropy and charitable organizations recognize and encourages the acceptance and solicitation of gifts for purposes that helps the organizations to fulfill their mission.

In asserting that the gift given to Bill was a controversial gift which amounted to  conflict of interest it is the inference of this study that he was given the gift due to his capacity as the head of the corporations Specifications committee and not due to his own position as an individual. The gift had nothing to do with Bill as a person but had everything to do with his position. According to Comer (2009) the policy used by Johns Hopkins hospital in announcing their gift ban asserted that, gifts, even when small, carries an implied notion of reciprocity expectation. The policy also identified that individuals who are caught in self interest may be unaware of their unawareness about potential conflict of interest but that does not exonerate them from having shown a conflict of interest. Based on this assertion, it may be prudent to analyze Bills mind just before he accepted the invitation from ODM. According to the case study, Bill was not conscious of any conflict of interest considering that the actual purchases were made by the Purchasing department. In his own mind, he had measured the situation narrowly and judged that it was okay. As it turned out, his judgment was subjective and therefore failed to realize the wide implications of his action. His was a case of measured unawareness which does not amount to innocence. Judging from the response of the corporations president, the implications of Bills gift was pathologic to the corporations activities. The organization clearly did not approve of the gift. For this reason, Bills act amounted to professional misconduct- being involved in an activity that did not receive the organizations moral support or approval.

In conclusion, it is the view of this study that the gift presented to Bill was not in line with his organizations goals. As discussed above, conflict of interest occurs when an individuals act dilutes or has the potential to affect ones organizations independence and judgment. His act violated the existing professional expectations that the company had put on him virtue of his position.  Although he could have been consciously unaware of conflicting the interest of his employer with those of ODM, his actions clearly affected his objectivity, independence and impartiality in dealing with them and therefore strained his organization. In addition, the gift was offered to him based on his position in his company yet the company was not aware.  Lastly, the fact that a fault was identified in the milling machine soon after his vacation raises the likelihood that ODM were aware of such a fault and therefore offered the gift in anticipation.