Conflicts of Interest Essay
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There are many different definitions for Conflict of Interest, but most all mean the same or point to the same direction. When gifts, outside activities such as consulting, or financial and fiduciary interest have potential to create a certain decision or commitment with a business it is considered conflict of interest. Although there are numerous definitions the one adopted by the Institute of Medicine is helpful. It states, “A conflict of interest is a set of circumstances that creates a risk that professional judgment or actions regarding a primary interest will be unduly influenced by a secondary interest.
” A conflict of interest usually occurs in a few common ways.
One may be when an individual has the opportunity to use his/her partners’ position for personal financial gain or benefit a company in which the individual has a financial interest. Another way is when outside financial inappropriately influence the way in which an individual carries out his/her partners’ responsibilities. The last most common way of conflict of interest is when an individual’s outside interests otherwise may cause harm to partners’ reputation, staff, or patients.
Conflicts of interest are often unavoidable and in many cases can be appropriately managed or reduced to an acceptable level. The people in the business should notice outside activity, interest, or interaction that has potential to create conflict. A few conflict of interest examples that are not acceptable are: Receiving a gift from a vendor.
For example, Aaron works for a consulting firm. He accepts a large gift from a client in exchange for a discount on the services his employer provides. Being related to workers and giving them different treatment than the standard employee. For example, John works for a company that is managed by Uncle Steve. John reports to Uncle Steve to receive pay raises, promotions and other benefits that others in his same position do not receive. Doing freelance work for a competing company on the side.
For example, Melissa works full time for Canon as a marketing director. In her spare time, she does freelance work for Nikon, helping to market their company with the skills she has learned from Canon. Richard Parsons is a part of two different businesses. “Because Parsons has a clear-cut fiduciary duty to Citibank’s shareholders and must put their interest ahead of his or anyone else’s, his financial stake in Providence looks like a paradigm of a conflict of interest – not to mention the fact that Citibank, with all its problems, probably needs the full-time attention of the chairman of its board.” As stated in the text it is believed to be conflict of interest since Mr. Parsons is involved in both companies. Citibank however does not see it being a conflict of interest, and in fact says they would not allow “even the appearance” of conflict of interest. At times Providence needs financing and Citibank often lend them money. It is believed the two companies have such great relation because of Richard Parsons. Both businesses accept a deal they will benefit from, but is it the best deal Citi can have?
Although Citibank believes there is no conflict of interest there may be. Both businesses can benefit from one deal, but Citi bank can negotiate a deal that they can benefit from more. Why don’t they negotiate a better deal though? If they do receive a better deal it will have the possibility of hurting Providence. Richard Parsons may not be a part of the deal, but the negotiators know who their boss is and do not want to make his business look bad. Because Richard Parsons is in both business it creates conflict of interest he does not intend for. It also creates unethical actions occur. Although they aren’t intentional they still happen. It is unethical for one person to affect both businesses, their deals, and their success. Keyon Communications is a broadband provider that is worth about only four cents. In 2009 the companies stocked climbed from four cents to two dollars and ten cents. The big question is how? Investors bid up the company’s stock and hope for it to take off. Of course the company believed it was a billion dollar company, but the truth is the stocked was fueled up by Joe Noel. Joe Noel was an analyst for Emerging Growth Research. He keeps a secret that Keyon awarded him seventy five thousand shares before he even began covering the company.
The company’s stock eventually went down and showed that the company’s stock was truly only ninety five cents. The texts states that it is less certain whether there is conflict of interest or not, but it believe it is easier to determine in the case with Joe Noel and Keyon Communication. Joe Noel accepted a great amount of shares before he boosted their sock. Giving Joe Noel such shares moved him to invest in their company. One of the easiest conflict of interest to see is when a gift or something is accepted from a vendor, and the vendor knows it will eventually benefit them. It was unethical for Joe Noel to boost their stock so much. It mislead others in thinking the company was better and worth more than it truly was. I believe people do not go around discussing or recommending specific stocks unless they are asked. It can be considered to be conflict of interest to discuss investments because someone can invest in a certain company to benefit someone or a business.
Friends may discuss stocks and investments and can create conflict of interest or can just simply recommend certain investments and discuss what may be best. If someone ask about your investments it is okay to discuss, but not to create deals that will be considered conflict of interest. Every company should have a policy to avoid conflict of interest. The policy must included many things but some main ones are: The employee owes a duty of loyalty to the company.
At all times when on duty, without regard to time or place, employees should devote their full attention to the company’s business and their duties. An employee must avoid any activity that conflicts with their interest of the company. An employee must disclose a potential conflict in advance.
Outside employment is prohibited unless approved by the employer in advance. The company will deny permission for such outside employment if at any point it adversely affects the employee’s ability, fitness, or readiness to work.