De Minimis Conflicts

Trump’s hotel

As noted in the Washington Post last month: President Trump recently released financial disclosure forms which “show that the Trump International Hotel produced $41 million in revenue, which, according to CNN, brings to more than $80 million the total amount he has made from the property during his presidency. The hotel accounted for almost a tenth of his company’s revenue last year. High demand on the part of Republicans, lobbyists and foreign governments helps explain the hotel’s success. T-Mobile executives spent nearly $200,000 there as they sought approval for a merger with Sprint. A variety of foreign countries have held events at Trump International. The Trump Organization says it donates all the profits it makes from foreign governments. But the president, who has refused to divest from his company, undoubtedly still benefits from high, price-driving demand at his landmark property, not to mention the profits domestic lobbyists produce. For those seeking to influence the Trump administration, padding the president’s wallet with conspicuous spending at his hotel must seem like a viable strategy.”

But could a man apparently worth billions be influenced by a mere $200,000? When reading this story I was reminded of a study  from 2016 on the impact on prescription writing of pharma companies buying meals for doctors. One of the results was stunning: “As compared with the receipt of no industry-sponsored meals, we found that receipt of a single industry-sponsored meal, with a mean value of less than $20, was associated with prescription of the promoted brand-name drug at significantly higher rates to Medicare beneficiaries.” (Emphasis added.)

The last (for now) word on this subject goes to this timeless exchange: George Bernard Shaw: Madam, would you sleep with me for a million pounds? Actress: My goodness, Well, I’d certainly think about it. Shaw: Would you sleep with me for a pound? Actress: Certainly not! What kind of woman do you think I am?! Shaw: Madam, we’ve already established that. Now we are haggling about the price.

Tending to personal matters on company time

Last week the Institute of Business Ethics published its 2015 Ethics at Work survey of employees in the UK and Western Europe, available for free download here.  One of the findings was that “employees tend to be more lenient towards conducting personal activities during work hours, than other practices.”

For instance, in Western Europe (France, Germany, Italy and Spain), more than 90% of respondents found it unacceptable to pretend to be sick to take the  day off,  charge personal entertainment to their employer or engage in “minor fiddling of travel expenses.” Eighty-five percent thought it was not okay to “use company petrol for personal mileage” and 76% said the same of “favoring family or friends when recruiting or awarding contracts.” However, only 59% had such a view of using the internet for personal use during work hours and only 52% said that it was wrong for employees to make personal calls from work.

Frankly, I’m surprised that the disapproval percentages for the last two questions were as high as they were.  To the extent that respondents could tell (from instruction, context or otherwise) that they were part of an ethics survey perhaps that – based on the notion of “framing” –  played a role in the results. But regardless of this methodological quibble, the authors’ conclusions about employees’ views of personal use of company time and resources are almost surely sound.

In this connection, they note that the fairly widespread acceptability of “using the internet during hours is perhaps indicative of the way in which lines between work and home have increasingly become blurred over the past few years, as the 21^st Century business landscape becomes increasingly mobile and flexible and less reliant on employees being physically present in the office.” This makes sense to me, and I think that a successful conflicts of interest/use of company  resources regime is one that accepts these (and other similar) modern realities.

That is, for many employees (particularly those with young children), a total bar on using phone or intranet for personal purposes is simply impractical, and thus cannot be a true ethical issue – as there is effectively no choice involved. The same is obviously not true with respect to fudging expenses or faking sick days.

The alternative, harsher view would be that embodied in a classic episode of the TV series The Office (the US one), concerning (among other things) a “time theft” policy applicable to the company – under which even a four-second yawn is seen as a transgression.  Besides being impractical and unfair, branding reasonable use of company time/facilities as morally wrong could actually lead to other, more worrisome wrongdoing – by making reasonable uses the first step on a “slippery slope,” as described here.

On the other hand, reasonable personal use really should be limited to uses that a) are truly personal, and do not further other business  interests; and b) cannot harm the company by subjecting its tangible or intangible property or other interests to risk. For instance, many years ago a client of mine learned that an employee was using company phones to run an “escort service.”  Although he apparently did so only during his lunch hour, the reputational harm to the company was clear enough to justify firing him.

Finally, and in a somewhat related vein, you might find of interest this prior post on the connections between ethical standards at work and those in our home lives.

Conflicts of Interest in the News: 123011 Edition

This is not all the COI news that’s fit to print, but hopefully some items of interest that you might not otherwise see – with notes on why I think they’re noteworthy.

COIs and Government

NY State “Attorney  General Eric Schneiderman has asked the state’s 932 towns to show his office their ethics codes in an effort to bolster self-policing by local government.” As explained in the article, “one practical aim is providing the attorney general’s office with referral information for calls from New Yorkers with concerns, which have recently included questions about officials with connections to wind power and hydrofracking interests.”

This seems like an important initiative, given the COI risks that can occur on local levels of government – risks exacerbated by often weak controls.   Because, over the years, the NY AG’s office has been a leader in addressing many COI issues, I imagine that other states’ enforcement officials will be watching this effort as it unfolds.  The story may also be of particular interest to private sector organizations that deal with local governments.

A story about conflicts that occur when individuals have more than one government role   This not your typical public sector COI, which involves a conflict between a public duty and a private interest.  (But it is not altogether unique, either: NY’s legendary “Power Broker” Robert Moses  once held twelve public posts  at  the same time.)  More generally, the  story shows that an interest for COI purposes  can itself be a duty – something we’ll return to next week when we look at COIs arising from  outside board service.

COIs in Business

For Wall  Street Deal Makers, Sometimes It Pays to Be Bad (may require registration).  This is about COIs in the buy-out area –  which  can indeed be a COI minefield.  The story is  interesting for, among other reasons, showing the difficulties  that shareholders  can face in seeking redress for COIs in corporate governance settings.  (Also, this is the first time in my more than thirty  years as a lawyer that I’ve heard a court use the word “icky.” )

Drug company  money on rise for 2 Minn. clinics.   Among other things, the piece a) has an  interesting discussion of conflict of interest management plans, which can be  crucial for this one – very significant – type of COI; b) reveals a split in  approaches between the two institutions at issue (the Mayo Clinic and the University  of Minnesota) on whether to have a de minimis threshold for COI reviews. (Both COI management and de minimis COIs are topics we’ll explore in 2012.)

COIs and Criminal Law

Prosecutor’s  Literary Contract Creates Conflict of Interest. Even though he cancelled the contract  and returned the advance, the court held, “this is a bell that cannot be  unrung.”  Note that cases concerning COIs  in the legal profession are rarely useful for analyzing those in business  organizations, but this one may be an exception for at least some cases where a  party tries fecklessly to “undo” a COI.