Research reports

Managing corruption risks associated with conflicts of interest in the Victorian public sector

Most public sector officers will experience a conflict of interest at some point in their careers. While conflicts should be avoided wherever possible, the existence of a conflict of interest in itself is not necessarily a problem nor inherently corrupt. However, the risk of corruption occurs when individuals and their organisations fail to properly and actively identify, declare and manage a conflict in the public interest. This report outlines opportunities to strengthen the identification, disclosure and management of conflicts of interest across the public sector. Some good practice is also highlighted.

This report explores how certain organisational functions and activities in the public sector are at heightened risk of conflicts of interest, and how conflicts of interest can facilitate corrupt conduct if they are not properly identified, managed and declared. 

Since becoming fully operational in 2013, the Independent Broad-based Anti-corruption Commission (IBAC) has identified conflicts of interest as a recurring corruption risk. Failing to declare or manage conflicts of interest, either deliberately or because of a lack of understanding of obligations, leaves public sector agencies vulnerable to corrupt conduct. It also contributes to the wasting of resources, loss of staff morale and reputational damage when decisions are not made in the public interest. Mismanaged conflicts of interest are corrosive, potentially adversely impacting the decisions or actions connected with the conflict. They also undermine the integrity of the organisation and public trust in the broader public sector.

Risks associated with poorly identified and managed conflicts of interest can be mitigated through strong ethical culture and leadership. This includes leaders clearly communicating how employees are expected to handle conflicts of interest, as well as ensuring robust systems and controls are in place, such as clear and accessible policies and procedures, and regular training. These are the critical foundations for public officers to enable them to identify, declare and manage a conflict.