The topic of conflict of interest may sound a bit arcane (invented no doubt by lawyers) but it refers to a very common problem that many businesses confront occasionally, more often than you think, in fact. Its impact on business may be quite significant, not just in terms of possible damage to the business itself, but no less importantly to the trust between partners in business or between shareholders/owners and their executives.
I have not only dealt with this issue as a partner in various business partnerships, but I also advised on this topic my long-term client, a world leading FMCG company, when they ran into this issue. This happened after they acquired a minority stake in their nation-wide distributor in one of their key markets, the majority owners of which also owned a large retailer, a downstream customer. This created a potential conflict of interest which could have a material impact on the interests of my client as a minority shareholder and an upstream customer.
As a result of extensive work and negotiations with the owners and management of the distributor, we came up with a solution that can be used as a prototype for addressing similar issues in other contexts, including in that of small businesses where the issue of conflict of interest is no less important. Reliance on statutory rules on conflict of interest is unlikely to be sufficient.
I can claim credit of being the author of the detailed rules on conflict of interest implemented by this company, the leading distributor of certain products in this very large market. To my knowledge, these rules have proven effective and resilient in addressing the problem of conflict of interest.
This is a rather complex topic. Instead of writing a long post on it, I have made a video that provides some basic background for it, using not just the example mentioned above but also some examples drawn from the world of politics. You can watch in on YouTube at https://youtu.be/Liv14lK36BI. Happy to answer any questions or discuss specific concerns you might have.
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