Three type of Conflict Interest
Three Types of Conflict of Interest
1. Actual Conflict of Interest
A conflict of interest already exists
- Personal relationships may influence decisions
- The fairness of decision-making may be compromised
Example: A person responsible for procurement or tender evaluation must choose between companies, one of which is owned by a close friend or relative.
2. Potential Conflict of Interest
- No conflict currently exists
- A conflict may arise in the future
- Early identification and preventive action are important
Example: A friend or relative plans to establish a company that may later participate in the company's tender process.
3. Perceived Conflict of Interest
- No actual conflict exists
- The situation may create public misunderstanding
- It may affect the company's credibility
Example: The owner of a bidding company shares the same surname as a company representative, but they have no relationship.
How Should a Conflict of Interest Be Managed?
- Make proper disclosure
- Declare the conflict promptly
- Manage the situation appropriately
- Abstain from discussions and voting when necessary
Summary
- Conflicts of interest can be actual, potential, or perceived
- They should be identified early, disclosed, and managed properly
- The objective is to uphold corporate integrity, fairness, and transparency