Anti-Corruption and Integrity Outlook 2024

5. Conflict of interest

Introduction

A conflict of interest involves a conflict between the public duty and private interests of a public official, in which the public official has private-capacity interests which could improperly influence the performance of their official duties and responsibilities. Managing conflicts of interest in the public sector is crucial. If they are not detected and managed appropriately, they can undermine the integrity of officials, decisions, agencies and governments, and ultimately lead to private interests capturing the policy process. Managing conflicts of interest helps level the playing field and ensure stakeholders’ fair and adequate access to policymakers and policymaking processes (OECD, 2020[12]).

Some foreign interests’ attempts to interfere in OECD democracies through exploiting the revolving door and rules on private interests in target states are increasing the risk of conflicts of interest in OECD countries. The risk of conflicts of interest is also increasing as engagement between OECD governments and external organisations intensifies as part of the green transition and the race to secure transition mineral supplies. This chapter shows that:

• OECD countries have strong regulations on conflicts of interest, but implementation and monitoring of submissions of declarations of interest could be improved.

• Stronger verification of interest declarations and improved processes for resolution of conflicts would better safeguard policymaking and the public interest.

• Sanctions for non-compliance with conflict-of-interest regulations are rarely applied.

• Most OECD countries do not know whether they are mitigating “revolving door” risks.

OECD countries have strong regulations on conflicts of interest, but implementation and monitoring of submissions of declarations of interest could be improved

Most OECD countries have strong regulations to prevent and manage conflicts of interest, especially if compared to lobbying, political financing and access to information. On average, OECD countries have adopted 76% of OECD criteria for regulations on conflicts of interest. For example, countries commonly have regulations in place to establish:

• circumstances and relationships that can lead to conflict-of-interest situations for public officials and establish the obligation to manage them

• obligations for members of government, as well as members of parliament to submit an interest declaration, as a minimum upon entry and any renewal or change in public office

• obligations for new top-tier civil servants of the executive to submit an interest declaration

• sanctions for breaches of conflict-of-interest provisions that are proportional to the severity of the offence

• incompatibilities between public functions and other public or private activities.

On the other hand, OECD countries commonly do not have regulatory safeguards in place with regards to:

• institutional responsibilities, as well as submission, compliance, and content verification procedures for conflicts of interest or interest declarations

• obligations for members of the highest judiciary bodies, as well as public employees in high corruption risk positions to submit an interest declaration, as a minimum upon entry and any renewal or change in public office.

In contrast, in practice OECD countries have only implemented an average of 40% of standard practices relating to conflict of interest (Figure ‎5.1).

Figure ‎5.1. Strength of regulations on conflict of interest and their implementation in practice

Note: Data not provided or collected: Belgium, Colombia, Germany, Hungary, New Zealand, and Slovenia for practice.

How to read: On average, OECD countries fulfil 76% of criteria on regulations and 40% on practice.

Source: OECD (2024[7]), OECD Public Integrity Indicators Database.

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Conflict-of-interest obligations are not the same for all categories of public office holders, but are usually shaped according to the functions and tasks office holders perform. For example, members of government (such as Ministers), members of parliament, high-ranking judges and top-tier civil servants (e.g. Secretaries-General) are positions with significant decision-making powers and, therefore, subject to more stringent regulations. In most OECD countries, this usually means that public office holders with important decision-making powers are legally required to disclose their private interests. However, a significant number of countries do not fully monitor whether these requirements are implemented in practice. Among the 29 OECD countries that require members of Government to provide private interest declarations, data to monitor compliance with disclosure regulations are available in 22 countries. Likewise, members of parliament are legally required to disclose their private interests in 32 OECD countries, but only 21 countries collect sufficient data to assess whether all declarations were fully disclosed. High-ranking judges are obliged to disclose their interests in 19 OECD countries, but full data on disclosure is only available in ten countries. The largest monitoring gap is for top-tier civil servants, where despite a legal requirement in 26 countries, only 11 fully monitor whether private interest declarations have been conducted.

Effectively monitoring compliance with regulations is itself an important part of implementation, as it enables governments to hold public office holders to account for their conduct and ensure their policies and processes are effective. It is significant to note that there is a strong correlation between the monitoring of interest submissions and submission rates in practice. Among OECD countries that fully collect the relevant data, the average submission rates of interest declarations are high (100% for members of parliament and members of government, and 93% and 97% for high-ranking judges and top tier civil servants respectively). Those countries which are effectively monitoring submission rates are able to assess what works and why and adjust their policies and processes to ensure that integrity is being upheld, which may in turn lead to higher submission rates and better management of conflicts scenarios (Figure ‎5.2).

Figure ‎5.2. Interest declarations across public functions: Regulations, monitoring and practice

Note: Data for regulations is based on criteria values for “Any member of government / member of parliament / member of the highest bodies of the judiciary must submit an interest declaration, as a minimum upon entry and any renewal or change in public office” and “Any newly appointed or reappointed top-tier civil servant of the executive branch must submit an interest declaration”. Data for monitoring and practice are based on statistics collected to calculate the criteria values for “The submission rate of interest declarations from: members of the Government is 100% for the past six years / members of parliament is at least 90% for the past six years / members of the highest bodies of the judiciary is at least 80% for the past four years / newly appointed or reappointed top-tier civil servants of the executive branch is at least 80% for the past four years.”

How to read: Members of government (Ministers) are legally required to disclose private interests in 88% OECD countries. Among these 88% of countries, the disclosure of private interests is fully monitored in 76% of countries. Among these 76% of countries, the average submission rate of interest disclosures by members of government is 100%.

Source: OECD (2024[7]), OECD Public Integrity Indicators Database.

Stronger verification of interest declarations and improved processes for resolution of conflicts would better safeguard policymaking and the public interest

Once private interest declarations are made, strong verification of such declarations plays a key role in identifying irregularities in a timely manner, helping responsible authorities to ensure that conflicts of interest are managed and violations are sanctioned where appropriate. However, many OECD countries are not thoroughly verifying declarations of assets (e.g. financial holdings and investments, properties, securities and stocks, trusts) and interests (e.g. memberships, positions and outside activities, spouse or partner’s functions). Regulatory requirements are only effective if declarations are verified through checks on the accuracy and completeness of declarations’ content. Only eight OECD countries, however, verified at least 60% of asset and interest declarations in the past two years (Figure ‎5.3). This leaves countries open to the possibility that false, misleading or incomplete declarations could be submitted, whether knowingly or not, and that conflicts of interest are not being managed properly.

Figure ‎5.3. Few countries verified at least 60% of declarations

Note: Data based on criterion values for “At least 60% of declarations filed during the latest two full calendar years were verified by the responsible authority.” Countries marked with an asterisk (*) do not fulfil the criterion as they do not have centralised data on the verification rates.

Source: OECD (2024[7]), OECD Public Integrity Indicators Database.

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In addition, many OECD countries are not resolving conflicts of interest when a conflict is detected, and some countries are unable to evidence whether resolution has occurred at all. Most countries have policies in place for the management of conflicts of interest, an important part of which is the designation of a process for resolving conflicts when they occur. By managing the tension between competing interests, these processes support office holders to perform in their public roles and protect the public interest and the integrity of the organisation (OECD, 2003[25]). Ideally, individuals would resolve conflicts of interest themselves as they occur or internally within their organisations. However, in instances when responsible authorities with a mandate to oversee implementation of conflict-of-interest policies have detected a conflict, only seven OECD countries can demonstrate that those authorities have issued recommendations for resolution within 12 months for all cases of conflict of interest detected for the past three years. For the remaining countries, either the responsible authorities have not issued recommendations for resolution, suggesting conflicts may be going unresolved, or they do not have data to show that resolutions are being reached, meaning countries are unable to check whether conflicts are being resolved and the corruption risk they create is being mitigated. This raises questions regarding the effectiveness of the exercised oversight, but also the overall implementation of conflict-of-interest regulations in practice.

Sanctions for non-compliance with conflict-of-interest regulations are rarely applied

A majority of OECD countries have defined a set of sanctions for breaches of conflict-of-interest regulations, but in cases of non-compliance with the regulatory framework in the past three years only ten countries have applied a sanction. A total of eight countries do not collect information on imposed sanctions (Figure ‎5.4). Effective anti-corruption and integrity systems should combine enforcement mechanisms for poor behaviour with nurturing a more consistent alignment of, and adherence to, shared ethical values, principles and norms (OECD, 2017[17]; Jenkins, 2022[26]; Heywood et al., 2017[27]). However, if sanctions are not being applied when according to the regulatory framework they should be, it undermines their deterrent effect and usefulness for upholding public integrity, and can undermine trust in the effectiveness of the public integrity system as a whole. Countries not collecting data on the use of prescribed sanctions are unable to tell whether their rules on conflicts of interest are fulfilling their deterrent functions or not.

Figure ‎5.4. Sanctions for breaches of conflict-of-interest violations and their implementation

Note: Countries marked with an asterisk (*) do not have centralised data on implementation of sanctions and are therefore not able to provide evidence that the criterion is met. Data for regulations are based on country values for the criterion “Sanctions for breaches of conflict-of-interest provisions are defined and proportional to the severity of the offence.” Data for sanctions in practice are based on country values for the criterion “A range of sanctions has been issued during the past three years in cases of non-compliance with disclosure obligations, non-management or non-resolution of a conflict-of-interest situation.”

How to read: Example 1: Canada has adopted regulations on sanctions for breaches of conflict-of-interest violations and has implemented sanctions in practice. Example 2: Austria has adopted regulations on sanctions for breaches of conflict-of-interest violations but has not implemented sanctions in practice.

Source: OECD (2024[7]), OECD Public Integrity Indicators Database.

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Most OECD countries do not know whether they are mitigating “revolving door” risks

Movement in and out of the public sector allows governments to benefit from a greater transfer of skills and knowledge, a process which is particularly valuable in delivering the green transition (OECD, 2014[28]; OECD, 2021[19]). Nonetheless, if left unchecked, this “revolving door” phenomenon can lead to conflicts of interest among public office holders, undue influence over public policymaking, and unfair commercial advantages (OECD, 2014[28]; OECD, 2021[19]; OECD, 2017[29]; Brezis and Cariolle, 2014[30]; Lee and You, 2023[31]; Strickland, 2023[32]). This is particularly the case when public office holders move into sectors they were formerly responsible for, or lobbyists take up positions in organisations they previously lobbied. While these risks have typically been domestic in nature, the risk of public office holders using their networks and knowledge for the benefit of foreign interests is an emerging challenge (Charon and Jeangène Vilmer, 2021[33]). Temporary “cooling-off periods” for public officials and lobbyists that prevent them from immediately taking up positions involving contact with their former employer can help reduce the risks while still allowing for valuable knowledge exchange between the public and private sectors. 19 OECD countries have introduced mandatory cooling-off periods for public office holders, but only two countries have introduced cooling-off periods for lobbyists before they can take public office.

Most importantly, most OECD countries, including many with mandatory cooling-off periods, are not tracking the post-employment activities of public office holders. Only nine OECD countries collect data on the frequency within the past five years with which ministers took up positions in a private sector organisation that operates in their former area of responsibility. Only eight collect the same data for the most senior civil servants (Figure ‎5.5). This data does not necessarily need to be made public, but the lack of data makes it difficult for governments to assess whether their rules on revolving door are being observed, and therefore whether they are mitigating the risks of movement in and out of public office.

Figure ‎5.5. Countries tracking office holders’ movement into sectors they formerly regulated

Note: The inner circle is based on whether post-employment integrity for ministers is tracked. The outer circle is based on whether post-employment integrity for top-officials is tracked. Countries marked with an asterisk (*) have mandatory cooling-off periods for public officials.

How to read: In Türkiye, post-employment integrity is only tracked for ministers, and not for top-officials, and there are no mandatory cooling-off periods for public officials.

Source: OECD (2024[7]), OECD Public Integrity Indicators Database.

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