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Conflicts of Interest in the company

There are different definitions on the subject, but for the purpose of implementing an Integrity Program, we will use the following:

Conflicts of interest are those situations in which different types of interests collide. The conflicts of interest on which the Compliance Programs of organizations usually focus are those in which the interests of the organization collide (or could collide) with a personal interest (family, financial, etc.) of any of its officials. In these cases, it is considered that the official’s judgment could be influenced by his personal interest, thereby affecting the integrity of his actions.

Conflicts of interest do not constitute crimes but in practice it has been observed that they are the “prelude” to some of them, such as some cases of fraud or corruption, so they could bring relevant legal consequences as well as cause damage on the reputation of an organization, whatever its size.

Why is it in the business’ interest to manage this risk?

In Argentina, Law No. 27401 establishes requirements and benefits related to anti-corruption Integrity Programs. These programs consist of the set of actions, mechanisms, and internal procedures for promoting integrity, supervision, and control, aimed at preventing, detecting, and correcting irregularities and illegal acts included in the Law.

From a legal point of view, the importance of implementing an Integrity Program lies in the fact that an adequate and robust Integrity Programs at the time of the acts of corruption (listed in art. 1) will be considered for graduation of penalties, the eventual exemption of the same and the eventual effective collaboration agreements that may be carried out with the authorities in the framework of the legal cases that arise under this law.

One of the main components of an Integrity Program is the establishment of a Conflict of Interest Policy.

Such policy, along with the rest of those that make up the Program, must be observed by all company employees, regardless of their rank or position, in all subsidiaries, dependencies, levels and activities of the organization.

In addition, it is the responsibility of all management to communicate and comply with the guidelines established by the Conflict of Interest Policy.

Conceptually, in the context of an Integrity Program:

Conflict of interest: It is any situation in which the interests of the company are opposed to the personal interests of the collaborators (or their relatives up to a certain degree of consanguinity), in such a way that they could induce the collaborator to act under different parameters to which the company has established to guarantee the real and ethical fulfillment of its responsibilities.

Recommendations to avoid Conflicts of Interest.

·  Employees must not have labor ties with suppliers, clients, or competitors, as well as with any other company, except for part-time teaching or similar activities.

·  It is recommended that employees declare their participation greater than X% (to be determined) in companies of the company’s suppliers, clients, competitors or those within the same market.

·  It is also convenient for employees to declare whether they receive income, directly or indirectly, from other activities outside of their salary in the company.

·  It could be considered a Conflict of Interest, both in SMEs and large companies, the linking of an employee with the purchase of products or services of the company, when it is done outside the conventional commercial channels, with special concessions, without being declared or authorized.

·  Even though in the SME world it is more difficult to carry out, the employment relationship of family members up to the third degree of consanguinity or affinity should be avoided when they imply a subordinate relationship or are in critical and complementary areas of the company.

At G5 Integritas, we can help your company to draw up a Conflict-of-Interest Policy, as well as to carry out a customized Integrity Program for it. Contact us for more information through the e-mail info@g5integritaslatam.com, or by visiting our website www.g5integritaslatam.com

Equipo G5 Integritas Latam

Equipo G5 Integritas Latam

Equipo G5 Integritas Latam

G5 Integritas is a consulting and strategic advisory firm for corporate clients, financial institutions, law firms, entrepreneurs and investors, specialized in: RISK AND COMPLIANCE DUE DILIGENCE AND BACKGROUND CHECK INVESTIGATIONS AND BUSINESS INTELLIGENCE SECURITY CONSULTING FORENSIC INFORMATION AND DATA RECOVERY


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