Revisiting inherent conflicts of interest

While other stories dominate the news these days, it is likely that national attention will turn to COIs as the presidential election gets closer. If Biden is nominated, then much will be said about possible COIs involving his son Hunter serving as a director of a controversial Ukrainian energy company. On the other side of the coin, President Trump has recently been accused of having more than 3000 COIs.

In anticipation of this, I thought it might be useful to revisit a post describing about the First Defense Insulation on inherent conflicts of interest.

At his trial for Libor rigging several years ago, evidence was introduced  that former trader Tom Hayes had told the Serious Frauds Office that “many of the people responsible for submitting panel banks’ Libor rates also traded products linked to the rate, creating an inherent conflict of interest” and that “’[n]ot even Mother Teresa wouldn’t manipulate Libor if she was trading it,…’”

While obviously somewhat self-serving, this colorful bit of analysis still  helps to underscore the overarching behavioral ethics point that to reduce the risk of ethical transgression … one cannot always count on the characters of those involved.  Rather, the situation will often play the decisive role.

Inherent COIs are an instance of that. Granted, they are just one of many such types, but they may also be more common than most others, and hence worth further study.

And beyond an area of interest to behavioral ethicist scholars, seeing some COIs as being inherent (or near to inherent) can be useful to others, too, such as:

– C&E professionals, who should consider the category of inherent COIs in their risk assessments.

– Senior managers and directors, who should – as part of their C&E program oversight – make sure that nothing their company is doing or contemplating doing falls into (or anywhere near) this category of risk.

– Enforcement personnel, who often can find good fishing in the inherent COI waters.

– Individual business people, who – in making career decisions – should steer clear of jobs that could involve inherent conflicts of interest.

It is worth noting – in light of the election – that virtually any COI involving the President of the U.S. could be inherent, given his extremely broad powers.

Finally, note that anti-COI measures can be undertaken on an “inherent” basis too, as described here.