Nick Smith resigned as a result of letters written in his capacity as ACC Minister. Bronwyn Pullar, friend and former National Party official, approached Mr Smith in 2010 for help with her ACC claim. As a loyal friend, he accepted. So what's the problem and why did he have to go?
Its obvious says Labour's ACC Spokesman, Andrew Little, "He was trying to use his Ministerial influence to get a decision in favour of someone who was a friend of his – you just don't do that as a Minister and he knows that".
Writing a letter on Ministerial letter head in support of a friend's ACC claim when you just so happen to be ACC Minister screams "conflict of interest". Mr Smith's personal interest in the matter as a friend clearly came into conflict with his professional obligations as Minister of ACC.
Mr Smith is not an "employee", but conflict of interest situations like the one he found himself in can and do arise in the course of everyday employment relationships. This problem is not unique to elected members of parliament who are governed by their own set of rules.
There would no less of a problem with Mr Smith's conduct, for example, if Mr Smith was CEO or a manager of ACC and was found to have written letters in support of a friend's claim on ACC letterhead. For employees, conflict of interest situations can constitute serious misconduct and be grounds for dismissal.
This is because employees owe a duty of good faith and fidelity to their employer. They must at all times act in the best interests of their employer and avoid any activities that may bring their employer into disrepute or damage the relationship of trust and confidence between them. This means that employees should avoid any potential or perceived conflicts of interest and must inform their employer where any actual or perceived conflicts of interest could arise.
In the case of state sector employees, the State Services Commission Standards of Integrity and Conduct includes the obligations to be "trustworthy" and ensure "actions are not affected by personal interests or relationships".
So what is a conflict of interest? You may have a sense that you understand what this term means, but it is somewhat difficult to succinctly define. It is often defined in an individual's employment agreement or in company Codes of Conduct.
A conflict of interest generally occurs when an employee's personal interest in a matter may influence or compromise, or appear to influence or compromise, their duties as an employee. This can happen in the following scenarios:
- When an employee accepts secondary employment in a role that conflicts or interferes with their primary role. A solicitor for the Department of Conservation, for example, was dismissed for acting for private clients in litigation against the Attorney-General. The litigation attracted media attention and the Department risked adverse publicity as a result;
- When an employee uses their position for personal benefit. You may recall Mary-Anne Thompson, former Head of the Immigration Service, who resigned in 2008 after a spate of allegations including that she was helping her relatives gain permanent residency in NZ;
- When an employee has an interest in a company that competes with or purchases or sells goods and services to their employer. The Employment Court upheld a decision by Air NZ to dismiss one of their employees who was found to be a director and shareholder of a company supplying food to Air NZ; and
- When an employee of a business/organisation enters into a personal relationship with an employee of a competing business/organisation. When Madeline Setchell applied for, and was appointed to, the position of Communications Manager with the Ministry of the Environment in 2007, she disclosed her personal relationship with Kevin Taylor, Chief Press Secretary for National Party leader John Key as a potential conflict of interest.
The bottom line is that employees' loyalties must lie first and foremost with their employer. If an employee's personal interest in a matter or activity could be seen to compromise their duties as an employee, this may give rise to a conflict of interest. If in any doubt an employee should proactively raise any potential issues and seek guidance, plowing ahead regardless may well give grounds for dismissal.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.