preventing and managing conflict of interest in the public sector julio bacio terracino deputy head...

PREVENTING AND MANAGING CONFLICT OF INTEREST IN THE PUBLIC

SECTORJulio Bacio Terracino

Deputy Head of Public Sector Integrity DivisionPublic Governance and Territorial Development Directorate

Contents

• Conflict of interest and OECD Integrity Framework

• Conflict of interest definitions and OECD benchmarking

• Preventing and managing conflict of interest• Supporting CoI policies• Enforcing CoI policies• The Mexican case

OECD Public Sector Integrity Framework: CoI spans all components

• Risk identification • Values, legislation and policies (codes of conduct, rules for

disclosure, disciplinary regimes, etc.)• Internal control rules and procedures (hiring, financial

management and reporting, procurement, IT, etc.)

Defining Integrity

• Leadership and culture of integrity (example from the top)• Communications and awareness-raising• Training

Supporting Integrity

• Detection mechanisms through complaints/whistle-blower systems

• Internal and external audit mechanisms• Proactive transparency (social control)

Monitoring Integrity

• Investigations and hearings• Sanctions • Recovery of losses or damages

Enforcing Integrity

Confl

ict o

f int

eres

t

DEFINING COI POLICIES

Conflict of interest

• The reality: public officials are also private citizens with their own personal interests.

• The potential problem: these private interests can affect their official functions as pubic officials.

• Conflict of interest situations can arise: “the misuse of official power and resources for improper personal gain”

• Examples: fraud, nepotism, abuse of position, failure to perform duties….

Conflict of interest

• OECD benchmarking on disclosure of private assets:– Assets and liabilities– Paid and unpaid outside positions– Previous employment– Income source and amount– Gifts

• Not just individual public officials but also their immediate family members

Conflict of Interest (1/3)• Level of disclosure and public availability of private interests across

branches of government

Source: OECD (2014), Survey on Managing Conflict of Interest in the Executive Branch and Whistleblower Protection, OECD, Paris.

Conflict of Interest (2/3)• Level of disclosure and public availability of private interests by the

level of public officials in the executive branch

Source: OECD (2014), Survey on Managing Conflict of Interest in the Executive Branch and Whistleblower Protection, OECD, Paris.

Conflict of Interest (3/3)

Gre

ece

Slov

ak R

epub

licUni

ted

King

dom

Unite

d Sta

tes

Australia

Austria

France

IsraelJapanNetherlandsNew Zealand

ChileHungary

Belgium

Canada

Czech RepublicEsto

nia

Finl

and

Germ

any

Icelan

dIreland

Italy

Korea

Mexico

Norway

Poland

Portugal

SloveniaSpain

Sweden

Switzerland

Turkey

On private sector employees or lob-byists:12.5%

On both private sector employees or lobby-ists and government

suppliers:21.9%

On government suppliers:

6.3%

No restric-tions:59.4%

• Pre-public employment is still largely unregulated

Source: OECD Government at a Glance (2015).

• Genuine: Is this gift genuine, in appreciation for something I have done in my role as a public official, and not sought or encouraged by me?

• Independent : If I accepted this gift, would a reasonable person have any doubt that I would be independent in doing my job in the future, when the person responsible for this gift is involved or affected?

• Free: If I accepted this gift, would I feel free of any obligation to do something in return for the person responsible for the gift , or for his/her family or friends/associates?

• Transparent : Am I prepared to declare this gift and its source, transparently, to my organisation and its clients, to my professional colleagues, and to the media and the public generally?

Example: Checklist for gifts, benefits

Managing conflict of interest

• Recusal: withdrawal (permanent or temporary) from duties

• Divestment: removal, sale of the official’s private interests, transfer of ownership

• In terms of trust, perceived/potential CoI can be just as important as actual/real CoI!

• Need to address both cases: suspicion, even if unfounded, can still undermine legitimacy

• Transparency therefore is KEY to demonstrate adherence to integrity principles

Apparent vs. potential vs. real CoI

• In terms of trust, apparent and potential CoI can be just as important as real CoI!

• Need to address all cases: suspicion, even if ultimately unfounded, can still undermine legitimacy.• Apparent CoI: further investigation required,

probable that resolution required.• Potential CoI: No CoI at the moment but

reasonable foreseeable in the future. Monitoring required.

• Real CoI: resolution required.

Public availability of disclosed private interestsA

US

BE

L

CH

L

DN

K

FIN

DE

U

HU

N

IRL

ITA

KO

R

NL

D

NO

R

PR

T

SV

N

SW

E

TU

R

US

A

EU

20

0

10

20

30

40

50

60

70

80

90

100

SUPPORTING COI POLICIES

Strong example from the top

77%

23%

Yes No

Is there a central function (not necessarily an independent agency) responsible for the development and maintenance of the conflict of interest policies, rules or

procedures?

Ministers

Ministerial advisors

Senior public officials

Procurement officials

Tax and customs officers

Financial regulators

Auditors

Judges

Public prosecutors

Inspectors at central level of govt

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

60%

30%

60%

33%

43%

40%

43%

63%

57%

27%

Has your government developed a specific policy (with additional requirements or more detailed standards) for managing conflict of interest for particular

categories of public officials due to the nature of their position?

Strong example from the top

Raising awareness: advice and training

Initial dissemination of conflict of interest policy/ies to public officials upon taking office and/or new post

Ensuring online availability of conflict of interest policies for access by public officials

Provision of training to public officials, including examples of real-life conflict of interest situations and how they were addressed

Provision of official advice when public officials have doubts or questions regarding conflict of interest policy/ies

0% 20% 40% 60% 80% 100%

97%

81%

77%

68%

3%

19%

23%

32%

NoYes

What initiatives are carried out in practice in order to raise awareness and enhance understanding of the conflict of interest policy/ies?

MONITORING COI POLICIES

Internal controls and audits

77%

23%

Verification that disclosure form was submitted

Yes No

71%

29%

Review that all re-quired information

was provided

Yes No

42%

58%

Internal audit for the submit-ted information

for accuracy

Yes No

Whistle-blower protection• Whistle-blower protection mostly afforded through a piecemeal approach

Source: OECD (2014), Survey on Managing Conflict of Interest in the Executive Branch and Whistleblower Protection

Protection through provisions in other law(s) :

47%

No protection : 13% Protection through

dedicated law :41%

Completion of the form

Submission of the form

Review of the information submitted

Audit of the information submitted

Access to the publically disclosed information

0% 20% 40% 60% 80% 100%

38%

28%

17%

17%

38%

ICTs support better internal controls

Generally speaking, what elements of the private interest disclosure system are administered or

managed electronically?

Evaluating impact

Aust

ralia

Cana

daEs

toni

a

Korea

Netherlands

New Zealand

Portugal

United States

AustriaBelgium

Chile

Denmark

Finland

France

Germ

anyHun

gary

Icel

and

Irela

nd

Italy

Japan LuxembourgMexico

Norway

Poland

Slovak Republic

Slovenia

SpainSw

eden

Switzerland

Turkey Yes: 27%

No: 73%

Are diagnostic tools employed to measure the impact of the policy, rules and procedures on conflict of interest (e.g. surveys, statistical data, cost-

benefit analysis, etc.)?

ENFORCING COI POLICIES

Sanctions

Disciplinary or administrative sanctionCivil sanction

Criminal sanctionNo personal consequences







Publ

ic o

ffici

al n

ot r

epor

ting

kno

wn

confl

ict o

f int

eres

t of c

o-w

orke

r

90%19%

23%10%

94%26%

58%10%

52%3%

10%10%

74%6%6%

16%

Mexico’s Federal Admin. Disciplinary Regime

Political/Constitutional

•As stipulated in Articles 109, 110 and 114 of the Constitution.•Applies to elected officials, Supreme Court Judges, Attorney Generals, etc. (see Article 110 for complete listing).•Subject to impeachment following vote by Chamber of Deputies and confirmation by Senate.

Administrative/Specialised•As stipulated in Articles 108, 109, and 113 of Constitution. States are required to have own laws and regimes in place.•For federal officials and those managing federal funds, the Federal Law on the Administrative Responsibilities of Public Servants applies (see Ch.2 for sanctions). Implemented by SFP according to Art. 37 Organic Law on Public Administration.•Ch.7 of Law on Professional Career in the Public Service supports possible disciplinary dismissal under Administrative Responsibilities Law.•Specialised disciplinary regimes for military officers, foreign service personnel, federal judges and prosecutors, and federal police.

Criminal•As stipulated in Articles 109 and 111 of the Constitution, and Title 10 of the Federal Criminal Code.•Applies to all public officials with exceptions for some while in office (i.e. President).•Subject to criminal sanctions under Federal Criminal Code (Title 10).

Civil •As stipulated in Article 111 of the Constitution and Articles 31 and 1916 of the Federal Civil Code and Article 47 of Federal Law on the Administrative Responsibilities of Public Servants.•Applies to all public officials.•Subject to civil sanctions under federal civil code.

Labour law

•Federal Law on State Workers and Federal Labour Law can be applied for dismissal for poor performance.•Applies mostly to unionised public servants (servidores de base).

Integrity: legality, honour, loyalty, impartiality and efficiency.

Preliminary findings

• SFP decisions are being upheld by the Tribunal: is the process becoming more sound or is this a reflection of the types of cases being sanctioned? (i.e. they are more “cut and dry” or less serious?)

2012 2013 20140

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

0%

5%

10%

15%

20%

25%

30%

35%

40%

Share of sanctions appealed Share of appealed sanctions overturned

Sanctions issued Sanctions issued less overturned

59.8%27.5%

6.0%3.2%2.6% 0.9%

Breakdown of sanctions by type of fault, 2013

Failing to complete conflict of interest declaration

Administrative negligence

Failure to follow budgetary or financial management rules

Abuse of authority

Failure to follow public procurement rules

Bribery or extortion


• Nature of sanctioned offences remains largely administrative and for minor issues… contrasted with what suppliers report..

World Bank Enterprise Survey: 35% of firms expected to pay bribes to secure government contract (2010);TI Bribe Payers’ Index: Mexico #26/28 countries.

50.7%

17.1%

12.5%

8.7%

6.2%3.9%0.5% 0.4%

NetherlandsBreakdown of sanctions by type of fault, 2013

Abuse of organisational re-sources or not following in-ternal guidelines

Financial

Misconduct in private time

Inappropriate social behav-iour (harassment)

Abuse of position or conflict of interest

Abusing access to informa-tion

Abuse of force

Misconduct as defined in whistle-blower regulation

66.4%

22.9%

8.2% 2.0% 0.5%

BrazilBreakdown of sanctions by type of fault, 2014

Corruption-related acts

Abandon of position, lack of assiduity or illegal job accumulation

Other

Negligence

Acting as private firm’s manager or equivalent


COI DISCLOSURE IN MEXICO

New policy on CoI disclosure

• Supported by new code of conduct/ethics– However CoI requirements issued first?

• Guidelines and training for staff and managers?• Form does not require that managers sign off on

reported CoI or state planned resolution• Additional forms /guidelines for at-risk positions?• Verification/auditing of information through

DeclaraNet?• Further benchmarking of CoI practices under Integrity

Review and upcoming workshop

Thank you

[email protected]

preventing and managing conflict of interest in the public sector julio bacio terracino deputy head...

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