Question

What are conflicts of interest? What types of conflicts of interest are there? Please provide examples.

Answer 1

Conflicts of interest are a situation when an organization or any individual is involved in multiple interests, and all the interests contradict one another. Involvement in various relationships that do not have any coordination among one another is called conflicts of interests.

There are three types of conflicts of interest. Types are demonstrated below:

• Direct financial interest: The direct financial conflicts of interest occurs when while the member of a governing body, board of directors, and committee member gets direct financial benefit over and above the agreed conditions. For example-Selling an asset at below the market per value to a person who can financially benefit from the dealing.

• Indirect financial interest: Indirect financial benefit occurs when a governing body member gets benefits indirectly from any financial decisions. For example- The manager of AB construction has illegally rewarded the company where his spouse works.

• Conflict of loyalties: Conflicts of loyalty happens when a group or committee member may witness competing for loyalty at a time while gaining additional benefit forgetting his responsibility to his organization. For example- awarding contracts to the closed ones.

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