Conflict of interest

What is the definition of “conflict of interest“?

Conflict of interest occurs when an employee, manager or statutory body member has an undisclosed economic or personal interest in a business transaction, which is concealed from his employer and which may have an adverse impact on the employer. The employee exerts his influence and efforts to the detriment of his employer.

Motives

Most cases of conflict of interest occur when an employee has an undisclosed economic interest in a business transaction. But the hidden interest does not always have to be economic. Often, there are cases when an employee acts without expecting any financial gain, e.g. when he is helping a family member. In order for actions to be considered conflict of interest, the employee’s personal interest in a transaction must be undisclosed.

Indicators

Conflict of interest can take the following forms:

• Purchase of goods on unfavorable terms from a company owned by the employee (e.g. at high purchase prices)
• Sales of goods on unfavorable terms to a company owned by the employee (e.g. at low purchase prices)
• Employee sets up his own company and takes over his employer’s customers
• Misuse of the employer’s funds (e.g. recording of costs that the employee used for his own business, use of company funds for private purposes)