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What is the real effect of Corruption / Conflict of Interest?

Posted By IRMSAInsight, 16 July 2015
IRMSA Breakfast
16 July 2015 



What is the real effect of Corruption / Conflict of Interest?


With all the talk of corruption at the highest levels of government and in big business and recently at a federation as renowned as FIFA, I wonder whether we in our companies or as a nation as a whole take corruption / conflict of interest as seriously as we should? Recently I heard comments such as: ‘so what if there was corruption at FIFA… it’s what it takes to grease the wheels and we got world cup didn’t we?’ Another comment on the radio the other day from a caller: ‘the president is entitled to spend as much tax payers’ money as he wants to because as we all know he is the president and can have what he wants’. I wonder if the caller would be quite as generous  if someone used his / her own personal money and spent it on themselves and their cronies, however when it is in a communal pot or someone else’s money it’s all okay?  More importantly however is the question:  at whose real expense was that money spent?  Those funds could have been put to far better use on basic service delivery such as running water, medical, education, job creation etc. for the poor and the general upliftment of South Africa.

Recently, I attended a breakfast presentation on the topic of ‘Conflict of Interest’ with a focus on supply chain where the real effects of ‘corruption / conflict of interest’ were brought home and made real.   Mr. Mbulelo Gingcana from supply chain management of the Civil Aviation Authority (CAA) spoke on the practical implementation of managing conflict of interest and verifying amongst other things the ‘declaration of interest’ (SBD4) supplier forms rather than taking them at face value (utilising tools such as Inoxico Matrix software). In one instance the software picked up a senior staff member who held more than 30 directorships in the aviation industry many of which were conflicted. Imagine if a person of influence at the civil aviation authority, (who is the custodian of air safety) also held shares in a flying school where pilot licenses are awarded; we could well have pilots who pass their exams, get their pilot’s license and have no clue on how to fly. A sobering thought indeed when you next climb onto a plane and entrust your and your family’s life to the pilots sitting up front.


Some questions we may wish to ask:

  • Are we taking corporate governance seriously enough in our organisation?
  • Do we have an active, independent and knowledgeable board ensuring that all stakeholders are protected?
  • Do we document the risks and verify the controls effectively in our organisation?
  • Is the ‘tone from the top’ in line with ethics, integrity and transparency?


For more information on ‘conflict of interest’ with specific reference to procurement- Read More

 Another interesting example of the consequences of collusion and conflict of interest and mal-intent can be seen in the article-Read More



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Saima N. Ashipala says...
Posted 16 July 2015
Most organization in Africa comply with King requirements for compliance's sake; to them corporate governance is about having the board of directors; attending meetings; etc., however the real concern of whether these boards are independent and knowledgeable remain critical especially in parastatals where they are politically appointed. The appointment independently depends on individual preferences and not knowledge.

In terms of whether risk professional do document and verify controls; this may be an area of improvement for most if not all risk professional especially when it comes to verifying controls as most businesses depends on Internal Audit to do this. However in some instances some of the risks control deemed insignificant thus do not make it onto the audit plans and risks spiral out of control in the long term.

Ethics and integrity is a personal choice; it cannot be forced upon a person and its a culture that one has to be brought up with and live by it. This brings me back to board appointment where people are appointed on board seats when there are question marks on their ethicality and integrity. Its important that these important aspects are put into consideration when appointing boards to ensure that stakeholders interest receive first priority.
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