1.6 Conflicts of interest
As a statutory agent, you need to know how to identify and manage conflicts of interest in the alcohol licensing process. This section provides you with information to do this.
Snapshot of this section
A conflict of interest is a situation in which someone cannot make a fair decision because they will be affected by the result.
You may have a conflict of interest if your responsibilities as a regulatory officer could be affected by some other interest or you have.
You need to be sure that you have no conflict of interest which would make it inappropriate for you to take part in the process.
Even where no actual bias exists, you should be careful to avoid the perception of bias.
If you think you have a real or perceived conflict of interest, you must identify and disclose it to the appropriate staff member in your organisation.
If a member of the DLC has to stand down due to a conflict of interest, the secretary can select another member from the list of members maintained by the council.
This section covers:
- What is a conflict of interest?
- Why you need to think about conflicts of interest
- When do conflicts of interest arise?
- You must identify and address conflicts of interest
- The steps in determining bias or conflict of interest
- What happens if a member has to stand down?
According to the Cambridge English Dictionary a conflict of interest is “a situation in which someone cannot make a fair decision because they will be affected by the result”.
The Office of the Auditor-General defines it the following way: “Put most simply, a conflict of interest can arise where two different interests overlap.”
In the public sector, there is a conflict of interest where a member’s or official’s duties or responsibilities to a public entity could be affected by some other interest or duty that the member or official may have.
The other interest or duty might exist because of:
- the member’s or official’s own financial/business interests or those of his or her family
- a relationship or other role that the member or official has
- something the member or official has said or done.
Every member or official of a public entity has professional and personal interests and roles. Occasionally, some of those interests or roles overlap. This is almost inevitable in a small country like New Zealand, where communities and organisations are often close-knit and people have many different connections.
Conflicts of interest sometimes cannot be avoided, and can arise without anyone being at fault. They are a fact of life. But they need to be managed carefully.
Even where no conflict of interest exists, you must be careful to avoid any perception of a conflict of interest. You need to be impartial and be seen to be impartial.
A conflict of interest can arise when:
- you or somebody closely connected to you (including a company) could benefit financially or otherwise from a DLC decision, either directly or indirectly
- your statutory duty competes with a duty or loyalty you have to another organisation or person.
Examples of real or perceived conflicts of interest could include:
- being related to an applicant or any other parties
- having a financial interest in a premises or its competitor
- being on close personal terms with an applicant or any other parties
- belonging to a group that is a party to a hearing
- being or knowing the property owner of the site of the premises.
You need to be sure that you have no conflict of interest which would make it inappropriate for you to take part in the process. Even where no actual bias exists, you should be careful to avoid the perception of bias. This includes any situation where it could be perceived that your personal interest or loyalties could affect your decision making.
If you think you have a real or perceived conflict of interest, you must identify and disclose it to the appropriate staff member in your organisation. You will always have the fullest knowledge of your own affairs, so will usually be in the best position to realise whether your participation in the process has a connection with another interest of yours that could result in actual or perceived bias.
It is critical to declare an actual or perceived conflict of interest and then to determine whether to continue participating. You should follow these steps to make that decision:
- Identify – determine what your potential conflict of interest is.
- Disclose – ensure that you let the appropriate staff know what the conflict is (actual or apparent) and decide what to do.
- Assess – make a decision. Would a reasonably informed observer feel it was appropriate for me to be involved in this application?
- Manage – if you feel that participating is unreasonable, ensure that this is recorded in a file note and communicated to staff.
Your organisation may also have policies or procedures about conflicts of interest that you should be aware of and follow.
If a member has to stand down due to a conflict of interest, the secretary can select another member from the list of members maintained by the council. If the chair has to stand down, the deputy chair will take the chair’s role. Every DLC should have a deputy chair or additional commissioners who can take on the role of chair if the chair needs to stand down.
If all the members have a conflict of interest, the secretary (on instruction from the chair) can either refer the application to ARLA to be heard (with leave of ARLA) or go back to the council to appoint new members to hear the application.
If a conflict of interest comes to light at the start of a hearing, the most likely outcome would be to adjourn the hearing. A new date would be set when a new member had been appointed to the DLC. This process would be described and form part of the minutes attached to the hearing.