Conflict of the interested

The rule against conflict of interest for those in government service can be expressed in a simple formula: it should be service to the public, not to oneself or to one’s relatives.

For example, a Cabinet member pays his or her sibling’s TV show with government money to place a tourism ad. That may be for tourism but the process of selecting suppliers and the benefit to family make a clear case of conflict. Another example: a government official whose job is to put people behind bars. If the same person is an investor in a security agency that procures contracts with the government, there is a case of self-interest, especially so if there are a thousand other security agencies that can qualify.

The rule is that government personnel or officers cannot grant or influence the granting of contracts or favors to their relatives (up to first cousins). It is also with more reason that there is conflict if the government person is connected with the private entity getting the favor, as an executive, employee or owner, whether full or partial.

It seems though that the worst case that can happen to a person in government guilty of conflict of interest is to be asked to resign from government. And the best case is that there are no consequences – not even rescission of contracts or refunds. It’s not that conflict of interest is not a crime, because it is. Conflict of interest is a punishable crime under Republic Act 6713, not to mention that other criminal laws also apply. Conflict of interest is even a constitutionally prohibited act.

Perhaps conflict of interest for those in government service is commonplace that people do not even recognize it when it happens. Or if they see political positions advancing business interests, they just watch it unfold.

The simple truth is, in every move taken by those in government, public funds – the taxpayers’ hard-earned money – is involved. Conflicts not only appropriate taxpayers’ money to private benefits. Conflicts impact level playing field, deprive equal opportunity and inclusion, and make a mockery of public trust.

Now more than ever, conflicts cannot happen. Many are reeling from the effects of new taxes meant for Build Build Build. Higher taxes are the cash flow of choice of the government to finance much-needed infrastructure, so taxpayers foot the bill. For all taxpayers to be encouraged to comply and contribute, and for government to command strong support for its programs, corruption and conflicts must be contained.

We are not naïve; eradication is next to impossible. But a good place to start is maybe to copy governance practices from the private sector. The following are examples of what the private sector does that government agencies can adopt to build transparency and trust.

1. Relationship independence check. People involved in processing contracts with private parties should report blood relations or consaguinity with the latter or its related companies.

2. Financial independence check. Require people to report ownership or financial interest in private entities securing government contracts and to divest if conflict exists, or disqualify the private entity.

3. Whistleblowing policy. This encourages voluntary reporting of infractions of fellow government personnel. This requires a hotline, anonymity, and an ethics committee that conducts investigations and takes action.

There are many tools. If the government were serious, they would use these tools, train their people, and lead by example. The same is required in no less degree of the legislative and judiciary.

What I ask is simple – accountability. Make people accountable. Am I overestimating the value of my taxpayer money? If the value that government places on conflicts of interest is expressed by toleration and lack of real consequence on those who violate public trust, then who cares? Well, I do. And I am not the only one.

* * *

Alexander B. Cabrera is the chairman and senior partner of Isla Lipana & Co./PwC Philippines. He is the chairman of the Tax Committee and the vice chairman of EMERGE (Educated Marginalized Entrepreneurs Resource Generation) program of the Management Association of the Philippines (MAP). Email your comments and questions to [email protected]. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.