Q2 2019 Newsletter

Conflicts of Interest at Work

Conflicts of interest (COI) can be difficult to understand, especially when something that would seem acceptable in our personal lives is considered unacceptable in a business setting.  Imagine this scenario.  You’re working in your yard, and a neighbor calls out, “You have the best-looking flowers around!  How do you do it?”  You say it’s because of a new plant food, and you give your neighbor the phone number of the company that sells the product.  “You should really try it,” you say.  “Mention my name, and they’ll cut you a good deal.”  What you don’t tell your neighbor is that your brother-in-law owns the company.  You don’t tell your neighbor that you get the product for free.  And you don’t tell the neighbor that you get $20 for every customer you refer.

In this personal context, it probably makes sense to steer business to your brother-in-law, especially if you like the product.   The neighbor gets a good product, your brother-in-law gets new business, and you get a $20 reward—no big deal. In the end, everyone wins. 

In the work context, however, referring a potential customer to a company in which you have a personal, professional or financial interest can be an impermissible COI.  Consider the example in this video:

Conflicts of Interest Policy

Potential COIs are an everyday fact of business life. Employees are hired because of their knowledge of the industry, usually gained in their employment with other companies in the same field.  Our friends from college may work for one of our competitors.  Something overheard in a public restaurant may describe another company’s strategy for winning a contract that we are pursuing.

For this reason, Policy #2006 Conflicts of Interest provides guidance on recognizing, managing and resolving real or perceived COIs. Under this policy, a COI exists when the personal interests or activities (financial or otherwise) of an employee (or the personal interests or activities of an immediate family member) may influence the exercise of his or her independent judgment in the performance of one or more duties to the company and interfere with the interests of the company. There may be cases where such conflicts are more theoretical than real, but the appearance of a conflict can be as damaging as an actual conflict and should be avoided.

Disclosing a Conflict of Interest to the Company  

Transparency is the key to dealing with and managing conflicts of interests in compliance with Policy #2006.  Many of us may have potential conflicts of interest that are only problematic to the extent they remain undisclosed, secret or hidden. Employees have an obligation to promptly disclose to their supervisor any situation that may be, give rise to, or that gives the appearance of, a COI. Employees are encouraged to obtain assistance from Business Integrity and Compliance and/or the Law or Internal Audit organizations to determine if a conflict exists and, if so, how it can be limited, managed or resolved.  Here are two recent examples in which employees did just that:

Potential conflict of interest:  A contractor with whom MPC does business sponsored my child’s non-profit organization.

Company’s response:  Thank you for your disclosure. In order to avoid a potential conflict of interest, you should not directly accept or request donation to your son's non-profit organization from Acme. The decision by Acme to donate is voluntary and Acme’s business dealings with the company should not be impacted by a decision to donate (or not).  Further, any donation made to your son’s non-profit organization should be an unrestricted gift, with the non-profit organization having autonomous discretion as to the use of the funds.

Potential conflict of interest:  My brother is employed by an MPC contractor who is bidding on a project that falls within my area.

Company’s response:  Thank you for your disclosure. In order to avoid a potential conflict of interest, neither you, nor your subordinates (if applicable), should exert any undue influence through the selection process or serve as the final approver in a decision to utilize Acme. Additionally, neither you, nor your subordinates (if applicable), should approve any work orders, work tickets, invoices or payroll time sheets submitted by Acme. Any safety-critical or environmentally sensitive work performed by Acme should be inspected and/or accepted by someone other than you or your subordinates (if applicable). It is important to understand that you should not share any non-public information regarding the Company’s business and/or processes with outside parties, including relatives. Finally, you have an obligation to keep your supervisor informed of this relationship.

Employees are required to disclose potential conflicts of interest on the Annual Code of Business Conduct Questionnaire and Certification.  However, conflicts of interest can arise, change or disappear at any time. Submitting an Interim Disclosure outside the annual questionnaire process is easy using the instructions on the BI&C TeamView page.