CONFLICTS OF INTEREST

John W. Poston, Sr.Department of Nuclear Engineering

Texas A&M University

Readings and ReferencesC. E. Harris,Jr., M. S. Pritchard & M. R.

Rabins, Engineering Ethics: Concepts and Cases, 2nd. Ed., Chapter 6, sections 6.10 and 6.11.

Cases # 25, Hydrolevel; # 28 Last Resort;

SIMPLE CONFLICTS OF INTEREST

Many little incidents in our daily life:* dividing a bag of candy among

friends* sharing a yummy dessert with a

sibling or a significant other or a spouse

* making a date with your close friends regular date

CONFLICTS OF INTEREST

• Can arise in most professional activities (more often than you might suspect)

• Often can seem to be extremely subtle and/or not important

• May involve gifts and/or favors• Present a constant challenge to the

engineer, as well as other professionals

CONFLICT OF INTEREST

“ …. a conflict between the private interests and the official responsibilities of a person in a position of trust (as a government official).”

Webster’s New Collegiate Dictionary

CONFLICT OF INTEREST

“ … arises when employees at any level have private interests that are substantial enough to interfere with their job duties; that is, when their private interests lead them, or might reasonably lead them, to make decisions or act in ways that are detrimental to their employer’s interests.”

W. M. Shaw and V. Barry

Moral Issues in Business

CONFLICT OF INTEREST

“… is a personal interest or relationship, as defined by law or regulation, that conflicts with the faithful performance of official duty.”

Kenneth J. Wernick

Ethics Issues for Special Government Employees

CONFLICT OF INTEREST

More Generally:

… an individual has a conflict of interest when the individual serves in two (or more) roles and the interests of each role clash (or potentially clash).

WHAT DO THE PROFESSSIONAL CODES OF ETHICS HAVE TO SAY REGARDING CONFLICTS

OF INTEREST?

AMERICAN BAR ASSOCIATION

“A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer’s responsibilities to another client or a third party, or by the lawyer’s own interests ……”

NSPE CODE OF ETHICS

III. Professional Obligations 4. Engineers shall act for each employer

or client as faithful agents or trustees. a. Engineers shall disclose all known or

potential conflicts of interest that could influence or appear to influence their judgment or quality of their services.

NSPE CODE OF ETHICSIII. Professional Obligations

5. Engineers shall not be influenced in their professional duties by conflicting interests.

a. Engineers shall not accept financial or other considerations, including free engineering designs, from material or equipment suppliers for specifying their product.

NSPE CODE OF ETHICS

III. Professional Obligations 5. Engineers shall not be influenced in

their professional duties by conflicting interests.

b. Engineers shall not accept commissions or allowances, directly or indirectly, from contractors or other parties dealing with clients or employers for the Engineer in connection with work for which the Engineer is responsible.

CLARIFICATIONSConflicts of interest:

1. Are not just any set of conflicting interests – professional judgment.

2. The interests being protected must be morally legitimate.

3. Several types of conflicts of interest.

4. Conflicts of interest must be disclosed to the relevant parties.

CONFLICTING OBLIGATIONS

An engineer is designing an automobile.

* He has an obligation to the public to make it safe.

* He has an obligation to his employer to make the

automobile profitable.

CONFLICTS OF INTEREST

Three types of situations:

* Actual

* Potential

* Apparent

ACTUAL CONFLICT OF INTEREST

John is participating in a design that requires 100,000 bolts. For the past 100 years, John’s family has owned a company, JayCo, that makes bolts. If the bolts are specified in such a way that the bolts must be purchased from JayCo, John’s stock in JayCo will increase by 20%. John specifies the JayCo bolts, even though they are not the best for the design.

POTENTIAL CONFLICT OF INTEREST

John is engaged to Veronica, whose family has owned JayCo, a bolt manufacturing company, for 100 years. If John marries Veronica he will immediately become a major stockholder in JayCo. If he specifies bolts in his designs manufactured by JayCo, he will benefit financially.

APPARENT CONFLICT OF INTEREST

John marries Veronica, but he and Veronica have a fight with her family and divest themselves of all holdings in JayCo. This divestiture is public knowledge, but Rachel does not know about it. Rachel employs John to design a building for her. John specifies bolts that can only be manufactured by JayCo, because he believes they are the best for the building, even though he prefers not to give the business to JayCo. Rachel accuses John of conflict of interest.

CONFLICTS OF INTEREST• Actual – corrupt professional judgment

• Potential – may corrupt professional judgment now or in the future

• Apparent – can decrease confidence of the public in the objectivity and trustworthiness of professional services

WHY DOES IT MATTER?

• Engineers are hired for their expertise• An engineer’s judgment must be reliable• The client/employer must trust the

engineer to make correct, unbiased decisions

• Conflicts of interest can cause biased decisions and/or damage trust

CONFLICTS OF INTEREST

If a conflict of interest is unavoidable, the engineer should disclose it immediately.

* inform the client/employer of conflict of interest

* request not to be assigned to the activity but be willing to work on other activities

DISCLOSURE

If conflict is disclosed:

* the client or employer makes the decision as to how to proceed

* this act represents a form of “free and informed consent”

DISCLOSURE

• Recuse during the specific activity• Reassignment to other activities• Divestiture of financial holdings• Blind trust – administered by

another• Waiver of disclosure

ACTUAL CASEJohn is a professor at a major university in the

southeast teaching nuclear engineering and health physics. He is assigned to teach a required course for the semester. In looking at the early registrants for the course, he notices that his daughter has signed up for the course (it is a required course for her).

Does John have a conflict of interest?

What actions should he take, if any?

ACTUAL CASE

John is a professor at a major university in the southeast who consults with the nuclear utilities in the south. His daughter takes her first job out of graduate school with the U.S. Nuclear Regulatory Commission as an inspector in the same region of the country. She will be inspecting facilities in which he serves as a consultant.

What actions, if any, should he take?

ACTUAL CASE

John wrote a letter to his daughter’s immediate supervisor listing those nuclear utilities with which he worked in the region.

The disclosure was made a part of his daughter’s official file and she was not assigned responsibilities at these facilities.

HYPOTHETICAL CASESMary is a research chemist working in a

government laboratory. The lab is aggressively encouraging their scientists to generate patents that will generate income to fund more research. Because of her excellent research reputation, she is invited to review proposals from universities who are proposing new research projects in Mary’s area of research. If Mary agrees to serve in this capacity, will she have a conflict of interest?

HYPOTHETICAL CASES

Such review committees are common practice in engineering and science.

Review committees need individuals with the appropriate expertise to perform these duties.

Functioning of the committee is based on the integrity and honesty of each individual committee member.

HYPOTHETICAL CASESProfessor Schmedley is a world-renowned

expert in heat transfer. He has written the leading book on heat transfer which is used in 50% of the mechanical engineering departments in the U.S. Professor Schmedley teaches heat transfer to about 100 students each semester. He selects his own book as the text for the course (which generates about $2000/y additional income in royalties).

Does Professor Schmedley have a conflict of interest?

HYPOTHETICAL CASES

The textbook may be the best or the only one available in a very specialized area.

To avoid such apparent conflicts of interest, some professors waive their rights to royalties from books sold at their universities for use in their courses.

HYPOTHETICAL CASES

Fred Schull is an expert on the design of racing boat hulls. Two teams that are competing in the America’s Cup Races approach him to help design their hulls. Fred accepts the offer from each of the teams.

Does Fred have a conflict of interest?

HYPOTHETICAL CASESSally Prosser, is a mechanical engineer and is

Chair of the ASME Pressure Vessel Committee. This activity is strictly voluntary and unpaid. Her boss asks her to reduce the cost of their pressure vessels by using steel that is 25% thinner than required by the ASME Code. As Chair of the Committee she has an interest in protecting the public, but as an employee, she has an interest in serving her employer.

Does she have a conflict of interest?

ASSIGNMENT

Read Case # 25, Hydrolevel

Case # 28 Last Resort

Read Chapter 10, International Ethics for next Monday’s class