Conflict of Interest

A conflict of interest arises when what is in a person’s best interest is not in the best interest of another person or organization to which that individual owes loyalty.

For example, an employee may simultaneously help himself but hurt his employer by taking a bribe to purchase inferior goods for his company’s use.

A conflict of interest can also exist when a person must answer to two different individuals or groups whose needs are at odds with each other. In this case, serving one individual or group will injure the other.

In business and law, having a “fiduciary responsibility” to someone is known as having a “duty of loyalty.” For example, auditors owe a duty of loyalty to investors who rely upon the financial reports that the auditors certify. But auditors are hired and paid directly by the companies whose reports they review. The duty of loyalty an auditor owes to investors can be at odds with the auditor’s need to keep the company – its client – happy, as well as with the company’s desire to look like a safe investment.

So, those of us who wish to be ethical people must consciously avoid situations where we benefit ourselves by being disloyal to others.