Conflict of Interest in the Government

Whenever allegations arise concerning conflict of interest that involve a public official, the person usually never seems to have a problem with being accused, instead he rationalizes and justifies the activity which gave rise to the allegation.

Public officials are expected to act in the best interest of and behalf of the citizenry. A conflict of interest can arise by a public office official who has or appears to have self interest in an activity to which the citizenry is unaware of and can be potentially adverse to the interests of the citizenry. When a person’s conflict of interest results in financial or economical loss to a government entity, then it is considered as fraud. Public servants and those working with the government can be criminally liable for misconduct, receiving rewards, bribery, unlawful gratuities and coercive use of position. All these crimes include a conflict of interest.

Conflict of interest can also result in Fraud when a government entity has hidden agendas or hidden benefits from the outcome of a transaction or event. This type of conflict of interest occurs only if government officials who are representing a government entity, decide to obtain funds alone or in conspiracy and decides to use those funds for other intended purposes. In this situation, the government agency acts as a channel for these public funds, and has a hidden self interest which could be potentially unfavorable when concerning the interests of the citizenry.

The following is an example of conflict of interest in the government. A government agency official will direct the owner of an enterprise that is doing business based under a contract stating to provide equipment and contractor staff that will be used to perform non contract related work for the agency. When seeking payment for the services, the contractor bills the hours of the non-contractual work that has been spent on contract related activity. The billing of those services occurs only with the knowledge of the agency official, who instructs the lower level staff to approve the billing from the agency’s accounts. Since the contract is a part of the federally funded program, the agency will have to file a claim with the federal government for reimbursement, which in good faith always pays. The fraud that was perpetrated against the federal government by filing false claims and providing false statements resulted in almost $30,000,000 in settlements and fines in lieu of the criminal prosecution.

Thus this simply concludes that conflict of interest should not be treated disdainfully. The mere presence of a conflict of interest is always a red flag revealing that officials acts are being conducted which are not within the law.

Further reading: Corporate Governance | Audit | Performance Improvement

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