Regulating Conflicts Of Interest Law Constitutional Administrative Essay

Published Date: 02 Nov 2017

GOVERNANCE

NEWSLETTER

A Publication of The Institute of Economic Affairs Vol.17 No.2 March/April 2011

REGULATING CONFLICTS OF INTEREST:

COULD DO BETTER?

by

Dr. Michael Ofori-Mensah*

Summary

Conflicts of interest in public office, and how to regulate them, are issues all countries face. This paper evaluates the effectiveness of Ghana's current system for managing conflicts of interest. First, the legal framework, together with the mandate, independence and enforcement capacities of institutions charged with addressing conflicts of interest, are examined. Next, drawing on evidence, a case study approach is adopted to explore how oversight institutions have addressed issues of conflicts of interest with respect to senior public officers. Finally, reform proposals are put forward. The paper argues that Ghana's existing system for regulating conflicts of interest has been ineffective and done little to stem the perception of corruption. The paper concludes that real political commitment is needed to introduce a clear and effective framework for the management of conflicts of interest in public office.

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INTRODUCTION

In December 2004, BBC News published an which [may] influence - or appear to influence -

article on its website titled "What if Blunkett the impartial and objective performance of his or

were African?" The commentary centred on a her official duties" (Reed 2008:7). A theoretical

conflict of interest saga involving David example will be the case where a government

Blunkett, a former British Home Secretary. Over official sits on a public tender board that

the course of an affair with a married woman, considers a bid by a company in which the

Blunkett, it was alleged, had abused his office by official has ownership or a stake. Even if the

facilitating the visa application of his lover's government official does not utilise his or her

nanny. Independent investigation into the matter public board position for private benefit, a

uncovered an email to the former Home conflict of interest situation still arises. This is

Secretary's office which suggested the because of the perception that the tender process

application had been fast-tracked. The revelation may be influenced for personal gain. It has to be

of this piece of evidence led to Blunkett's clarified that a conflict of interest situation does

resignation. What the BBC article sought to not necessarily imply corrupt behaviour -

emphasize was that in most African countries, if a although in some cases it could trigger

Minster had facilitated the visa application of an corruption. It is along this line that disclosure of

acquaintance, it would have been a non-story. interests has been used as a key anti-corruption

Indeed, the consensus from an online debate on mechanism and, also, as a tool to regulate

the article, which received comments from a potential conflict of interest scenarios.

diverse number of Africans, confirmed that in

most parts of the continent a Minister would not The literature on conflict of interest regulations

have been censured. What explains this trend? presents varied viewpoints. Scholars such as

Ayee (1997:370) argue that, despite their noted

The Blunkett saga reveals that conflicts of shortcomings, ethical codes have, increasingly,

interest among public officers have little to do been introduced in Africa "where unethical

with being 'African'. Rather, the consensus that it behaviour has been a hallmark of public service".

will not have received attention in an African On the other hand, Wamala (2008) emphasizes

setting raises questions about the durability of the that anti-graft measures need to take into account

framework for tackling conflict of interest. In the socio-cultural issues and concerns which appear

case of Ghana, even though the Constitution to overlook unethical behaviour such as

stipulates procedures to regulate ethical corruption. Thompson (1992) however suggests

standards in public office, reported cases of that ethics regimes need to move beyond

unethical conduct - especially corrupt conflict of legislation and enforcement and incorporate a

interest scenarios - have been rife. Conflict of significant education element for government

interest can be defined as "a situation in which a employees on their responsibility to act in the

public official has a private or other interest public interest.

This paper evaluates the effectiveness of Ghana's Public Office Holders (Declaration of Assets and

current system for managing conflicts of interest. Disqualification) Act, 1998 (Act 550) also

The sections that follow will apply both a requires senior public officers to make a written

theoretical and an evidenced-based approach. declaration of their assets and liabilities before

First, the legal framework, together with the taking office, at the end of every four years and on

mandate, independence and enforcement completing their term of office. Although these

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capacities of institutions charged with addressing declaration documents are to be submitted to the

conflicts of interests, are examined. Next, Auditor-General, they remain sealed and are not

drawing on evidence, a case study approach is verified thus creating a system of 'self

adopted to explore how oversight institutions certification'. In fact, there is little evidence of

have addressed issues of conflicts of interest vis- compliance. The documents are only made

2à-vis incumbent elites. Finally, reform proposals available to a court, commission of enquiry or the

are put forward. Commission on Human Rights and

Administrative Justice (CHRAJ) when requested as evidence in investigations. Critics of Act 550

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LEGAL FRAMEWORK

We are told the current practice argue that due to its 'non-transparent' nature,

[disclosure of interest] is that you fill in

conflict of interest situations involving senior

the form, you seal it, you give it to the

Auditor-General and then they are public officers may not be easily recognised.

locked to gather dust. If that is all the

nation wants to do, then I am afraid we

do not need to spend our hard earned Whilst the current asset declaration legislation,

resources for such an exercise.

Felix Owusu-Adjapong (Member of

Act 550, was under consideration in Parliament,

Parliament, NPP Akim-Swedru) the House rejected proposals that would have

Parliamentary Debates, 18 March 1998.allowed public access to disclosures. This is what

Article 284 of the 1992 Constitution states that "a

prompted the statement noted in the quote above

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by Felix Owusu-Adjapong, who made the case public officer shall not put himself in a position

for a transparent asset declaration system during where his personal interest conflicts or is likely to

the Parliamentary consideration of the conflict with the performance of the functions of

legislation. There was stiff opposition to the his office." The Constitution together with the

introduction of a transparent system and the

1 The public officers required to make asset declaration includes: the President, Vice-President, Ministers of State, Members of Parliament, Presidential Aides, District Chief Executives, Ambassadors, High Commissioners and Heads of State-owned Enterprises. It is important to note that both the Constitution and Act 550 do not clarify what conflict of interest entails.

2 Ayee (1996:372) details enforcement problems associated with asset declaration with an example that, six months after the 1992 Constitution came into force, "three-quarters of senior public officers required to declare their assets had failed to do so."

3 CHRAJ is charged by the Constitution to investigate complaints of contravention of the code of conduct for public officers, which includes conflict of interests.

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Rawling-led NDC regime supported Parliament members of the PNDC made declarations, not

in rejecting such a structure. The then NDC including real estate, which they were widely

Minister of Justice and Attorney-General, Obed known to hold. In one case, a senior member of

Asamoah, echoed the views of most Members of the PNDC regime declared a radiogram among

Parliament when he argued that making the the significant assets owned. The bank balances

system transparent would be an invasion of declared by other long serving members of the

privacy (Parliamentary Debates, 18 March regime amounted to less than one month's

1998). The then Majority Leader in Parliament, pension of a retired civil servant. There was,

J.H. Owusu-Acheampong, also attempted to arguably, a general mood of public cynicism

rationalise why such a system was not practical which was reflected in the private press; this may

by dramatically noting that "somebody can look have been the reason why some Ministers later

at it [asset declaration] and go and organise accepted that they had made mistakes on their

thieves to steal the properties" (Parliamentary submitted declaration forms. Overall, the main

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Debates, 18 March 1998). lessons emerging from the preceding assets

regime was that, despite its transparency

What appeared inconsistent was that the component, the lack of verification undermined

Rawlings-led NDC government, which its credibility.

comprised former PNDC members, had

previously promulgated a more stringent asset POLICY VS. PRACTICE

declaration system under the Public and Political CHRAJ, as the key agent charged with

Party Office Holders (Declaration of Assets and investigating conflicts of interest in public office,

Eligibility) Law 1992 (PNDC Law 280). Under provides us with some practical evidence. The

this system, declarations were transparent, as the Commission's reports, for example, offer an

Auditor-General was required to publish the insight into conflict of interest situations in

asset declared by public officers within 14 days Ghana's local government system of District

of receiving the forms. While Act 550, which Assemblies (DAs) which have been manifested

repealed the PNDC law appears at face value to in contract and procurement fraud. In one case,

be watered-down, the effect of Law 280 was CHRAJ reported that "an Assembly member",

generally viewed as flawed. This is because who was also the chairman of a DA finance and

declarations were not verified and some senior administration sub-committee, had formed a

public office appointees declared assets that company that was executing contracts awarded

portrayed them to be impoverished. For example, by the Assembly (CHRAJ 1996a:51). CHRAJ

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disclosures made by senior officials in 1992 and investigations uncovered that in the same month

published in the Ghana Gazette (7 October 1992) the company was established, it was awarded a

led to considerable head-scratching. Key construction contract in the electoral area of the

4 The Ghanaian Chronicle, 26 October 1992 p.1.

5 For unexplained reasons, the Commission did not name the DA or Assembly member in this case.

Assembly member in question. In its ruling on this matter, no disciplinary action was taken by

amount paid to Goldcity in different currencies as:

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CHRAJ; the Assembly member was only issued a US$705,031.25; £39,169.80; ¢3.11 billion (estimated). 8

warning. The Commission, however, stressed

that "the practice of DA[s] awarding contracts to There is little evidence to suggest Goldcity

its own members did not augur well for the fair undertook any divestiture related duties, yet

and smooth administration of the DA[s]" numerous 'consultancy' and 'public relations'

(CHRAJ 1996a:52). It is worth pointing out that payments were made to it. Tracing these

similar conflict of interest cases are replicated at payments led investigators to DIC officials. A

the national level. US$42,000 DIC 'consultancy payment' to

Goldcity, for example, was traced to the bank

Investigations conducted by the Serious Fraud account of EMEFS Construction Limited, an

Office (SFO) have also exposed various conflict estate developer (SFO, 2002). Questioned on the

of interest scenarios. In one case, the evidence transaction, the managing director of EMEFS

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from SFO investigations revealed that a public acknowledged that his company had not

relations firm contracted by the Divestiture rendered services to Goldcity. Instead, the

Implementation Committee (DIC) was only a amount was reported to be a part payment for a

vehicle for siphoning funds from the divestiture house at Community 14, Tema. The owner of this

office. The DIC contracted Goldcity property was Sedziafa, the DIC/Goldcity

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Communications Group Limited (Goldcity) in employee. The SFO probe also revealed that

the year 2000, for advertising, public relations Sedziafa used a similar method to misappropriate

and research functions. But records from the about ¢1.5 billion from the DIC through

Registrar-General's department indicated Goldcity. Sedziafa was subsequently charged

Goldcity was registered and incorporated as a with causing financial loss to the state. Even then,

limited liability company just before being he could not be prosecuted as he jumped bail.

awarded the DIC contract. Siegfried Sedziafa, a Comparable conflict of interest situations,

full-time employee at the DIC, also worked for backed by evidence, have been recorded across

Goldcity - and was a signatory to its accounts. the public sector, yet most of these allegations are

Between August and December 2000, the not investigated.

divestiture office made several payments to

Goldcity under the pretext of public relations The above case studies, which are only meant to

expenses. The SFO (2002:16) lists the total provide an insight into the issue under

6 In September 2010, the SFO became the Economic and Organised Crimes Office (EOCO).

7The functions of the DIC include preparing state enterprises for divestiture, and overseeing the process of tendering,

sale negotiations and payment associated with the process.

Converting into a single currency, the payments to Goldcity were approximately US$1.4 million in total.

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discussion, reveal how the absence of a robust conflict of interest implications their actions to

monitoring mechanism constrains the acquire the same properties may entail.

effectiveness of the current regime. Further, they

also illustrate how conflicts of interest may While there are potentially numerous conflict of

trigger corruption. An enforced code of conduct interest situations which cannot be covered by

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remains fundamental to maintaining ethical even the most comprehensive guidelines, there is

standards in public office. Reform proposals may a strong case for inculcating an ethical culture

have to include a significant ethics education among public sector workers to make them aware

component, and a combination of monitoring and of the standards expected of them. Ethics

verification of public officers' interests. These education needs to include all public sector

key elements are missing from the Ghanaian workers - not only the category of public officers

regulatory framework. It is in this light that the listed in Chapter 24 of the Constitution and Act

next section outlines issues to consider in the area 550. 10

of ethics reform.

Education in this area should extend to guidelines

REFORM PROPOSALS on gifts public servants may or may not receive

First, ethics education needs to be given primary over the course of their official duties. Political

consideration as a key tool in limiting conflict of parties may also have to consider tightening their

interest scenarios. In fact there is a paucity of ethics codes and hold their members to account,

guiding principles for public officials, and as part of the broad effort towards enhancing

CHRAJ attempted to fill this void by drafting a integrity in public office.

set of conflict of interest guidelines. Nonetheless,

the Commission's proposals are neither binding To support with the reforms in this area, the

nor far-reaching. Educating officials so that they establishment of a government ethics bureau

have a clear understanding of ethics regimes and may be necessary. This unit can take on a

recognize the interests to declare remains proactive role by conducting orientation

essential. The evidence from recent high profile programmes on codes of conduct for public

cases suggests senior public officers who have office holders, in addition to serving as an outfit

taken key decisions on sale of prime government where advice on asset declaration compliance

real estate have been, apparently, confused on the can be sought.

9 The case studies are only intended to demonstrate conflict of interest situations in public office and are by no means a selective indictment of the institutions cited.

10 Reed (2008) makes the recommendation that code of conduct should form part of public sector officials' contractual obligation in order to limit the need for passing legislation.

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CONCLUSION

Second, handing CHRAJ the responsibility for This paper attempted to evaluate Ghana's regime

monitoring and verifying the asset declaration for regulating conflicts of interest in public

process may be necessary. In this regard, office. The uncomfortable truth is that the current

adequately resourcing CHRAJ with the capacity system has been ineffective and done little to

to carry out this task will be essential. A system stem the perception of corruption. This owes

must also be put in place to ensure a continuous much to the synthesis of a weak disclosure

process of disclosure - at least every six months - framework and the lack of monitoring

of all interests, gifts or favours received after the mechanisms. Reforms in this area need to

initial declaration has been made. Monitoring acknowledge the fact that conflict of interest

disclosures made by members of Tender Boards, situations cannot be prevented. Thus, providing

especially at the district level, need to be given guidance on ethical standards and sensitization

urgency, as this remains an area rife with conflict on codes of conduct will be key tools in

of interest. managing unethical conduct in public office.

Finally, excluding senior public officers from Ghana could do better in terms of regulating

specific post-government employment, for a conflicts of interests in public office. What is

stated time period, may be essential. This is a required is a clear and effective framework.

necessary requirement to limit conflict of interest Enforcement measures, which entail verification

scenarios which may involve ex public sector of disclosures and monitoring compliance with

employees exploiting strategic knowledge the aim of making public officers accountable,

gained whilst in public service for private gain. are crucial. Yet, despite the protestations of good

governance by successive governments, calls for

On the whole, a well-informed and enforceable change have not gained traction where it matters

code of conduct can help check potential most - by securing political commitment.

conflicts of interest situations, and Reforms are long overdue. In Ghana’s interest,

recriminations over illicit asset ownership which we hope that policy makers will reflect on the

remain a hallmark of Ghanaian politics. above proposals with urgency.

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