Conflicts of Interests
March 29th, 2007 at 6:42 am by David FarrarAuckland DHB Chair Wayne Brown is under fire from National for not continuing with a formal agenda item of declaration of conflicts of interests at every meeting. He says members were still obliged to declare conflicts.
I’m a member of two boards (one commercial, one non-commercial) and on both these boards it is our standard practice to have declarations of conflicts of interests as the first agenda item for each meeting. This is standard governance best practice.
You are required to list on a conflicts register any ongoing interests which might conflict. For example I receive free hosting from Inspire Net so I have declared that to .nz Registry Services as Inspire Net is a customer of theirs.
But simply listing it on the register is not enough. The purpose of having it on the agenda for each meeting is so that having read the agenda and associated papers, we are required to declare if we have a specific conflict for any particular item. And if you do, the board them discusses what action is necessary to deal with it – it can range from simply noting it has been declared to agreeing the director should absent themselves for the discussion.
If Auckland DHB had followed best practice, it may have helped avoid what happened. Having it formally noted in the board minutes that you have declared you have no conflicts on any agenda item is not a trivial undertaking, and one tends to err on the side of caution to protect your reputation should there be an issue at a later date.
Related posts:
- Conflicts of Interest
- Pecuniary Interests
- Canterbury Regional Council Conflicts of Interest
- Conflicts of Interest
March 29th, 2007 at 2:01 pm
This is yet another illustration of the pathetic level of governance especially corporate governance in this country.We are plagued with so called directors who either dont know or dont care for the principles of good governance.
Vote:Without getting into specifics the disregard for best practice is endemic across the board excuse the pun. Good governance is good business. Overseas studies have shown that listed companies that have good governance command a share price premium of up to 15%. Oh well guess this will fall on the usual cloth ears.
March 29th, 2007 at 2:16 pm
I too have served on boards whove handled very much smaller sums than DHBs bandy around and have found that the people on them have been scrupulous about potential conflicts of interest.
Even a school board I served on went through a highly transparent process when I indicated that my firm could write and design it’s prospectus at “mates rates”. This was a matter of a few thousand dollars yet these ‘ordinary’ people were concerned to see that everything was above board.
They, of course, were not part of that small coterie of ‘professional directors’ whom you now find on almost every board – public and private – you care to name. They all know one another, meet socially, and look out for one another’s interests.
The kind of arrogance displayed by Michael Laws and quoted admiringly by DPF recently is precisely why this problem exists.
In the view of people like Laws, only he and other elitists belong in elected office. They know best after all. Yet this is a man forced to resign from Parliament for making misleading statements about a poll conducted in Hawkes Bay involving another elected office held by him from which he was also forced to resign. The issue revolved around the awarding of Council contracts to a firm owned by Laws’ then wife.
Laws and his ilk are precisely the kind of people we don’t want on boards or in public office.
New Zealand is too small to have ‘professional’ directors, or people like Laws who’ll run for dog catcher provided they can get their name in the paper. This group inevitably comes to know one another, and conflicts of interest arise.
Only by regularly refreshing boards with new faces can we avoid this happening.
Vote:March 29th, 2007 at 3:35 pm
Rex the answer is education education and education of potential directors plus good ethics. Alas good governance education is not on the radar screen for this government.The few organisations who offer international standard programmes find a deep reluctance to assist and support Its so much easier funding hip hop dancing or twilight golf.
Vote:March 29th, 2007 at 3:45 pm
Our problem is that we have huge numbewrs of Boards wh owe their existence directly to the governmment of the day.
The members, chairmen and directors are mostly appointed by a crown agency and oh what a surprise, this is where the political lackeys get their baubles and snouts in the trough.
Ladies and Gents it is pay back time.
And just to be impartial it is as bad irrespective as to which party is in power. They all use the same reward system.
Vote:March 29th, 2007 at 4:00 pm
Brown is an incompetant pig when he said staff could either get a new job or drive taxis. It would be totally sensible to have this “conflict of interest” item at the beginning so each Board member there and then could address it. Especially in a Hospital Board situation when a number of members are KNOWN to be getting funding either directly or indirectly from the Board. And even more in this case when Bierre was known to have an interest in a major $500 million contract. Brown should have been aware of all this. He is a gonner if not under Labour then under National when the lame duck Government gives up office.
Vote:March 29th, 2007 at 4:40 pm
Meh… I’m beyond shock at more evidence that it’s hard to put the words ‘Auckland District Health Board’ and ‘managerial competence’ in the same sentence without heavy irony.
Vote:March 29th, 2007 at 6:20 pm
gd – While I totally agree ethics education is long overdue (and not just for directors!) that surely assumes that all the conflict of interest problems arise through lack of knowledge of the rules rather than it simply being business as usual for the old boys / girls network?
Vote:March 29th, 2007 at 8:21 pm
Cubit9f has got it in a nutshell – he’s only doing what every other political trough feeder in the country does (including all the ones in the behive). But like Nixon, Clinton, Field, etc his greatest guilt is being caught.
We all know most of these community boards, committees etc are just a way of earning a good living in a country bereft of real jobs – we’ve been doing it for over a hundred years – its how New Zealand has grown up. Many of these people are often 2nd or 3rd generation professional public tit suckers with little if any interest in the public good except as a way of climbing a corporate ladder they would otherwise be excluded from.
Vote:March 29th, 2007 at 10:04 pm
DPF – your analysis is absolutely correct.
It should be a standing agenda item – but it’s not always.
However the real point is ANY director (or member of any not-for-profit entity) should declare any potential interest up-front at the beginning of the meeting having read the board papers – or were it to emerge during the meeting. This is additional to & quite separate from any formal written standard declaration of interests.
Actually it’s not a matter for discussion how to handle the matter when it arises; the ‘interested party’ should seek to recuse him/herself – preferably by leaving the room of their own volition – full stop.
Once a potential ongoing interest is declared (as plainly happened) the minutes and/or future board papers should be/have been carved out to minimise/avoid any future conflict, embarrassment or access to self-interested information.
The Chairman bears the full responsibility on behalf of the ‘board’, the organisation & its stakeholders. That’s the bottom -line where the Chairman is equally culpable with the interested party for any failure of proper governance….once identified.
If the conflict issue cannot be accomodated appropriately – it’s time for that party to resign! Pushed at the final resort by the Chairman.
Quite plainly none of the ‘proper’ rules of procedure were followed – no matter how it is being dressed up as you/the media report.
There is another alternative. The Board is split into an ‘independent committee’ comprising those not conflicted…..this is very common where there are related party transactions particularly with a major shareholder…..but again this route was (apparently) not considered or adopted.
Vote:March 29th, 2007 at 10:24 pm
Time for Wayne to go drive a taxi. His “factory” like mentality has no place in healthcare. What a sad monomaniac. He needs a hobby.
Vote: