Rice’s New Staff Conflict of Interest Policy and Procedures Administrators’ Forum Richard A. Zansitis General Counsel April 2008

2 Why a need for a revised policy? –Prior policy (838-99) covered only conflicts in the purchasing of supplies, services and equipment –Standards had evolved since policy last reviewed in 1999 –Greater scrutiny of non-profits and universities by government and media –Need to better articulate ethical expectations and provide guidance for staff –Create a better process to identify and manage conflicts

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4 Evolution of revised policy –Last year, administration discussed need to revise policy with Audit Committee of Board of Trustees –Reviewed policies of peer institutions and resources on good governance –Draft policy reviewed with Audit Committee in December 2007 –Input received from senior administration and deans –Signed by President Leebron on March 31

5 Revised policy 838 primarily directed to staff employees, though ethical expectations applicable to all Faculty already covered by policies and

6 New Policy 838 meant to complement (not replace) existing policies that touch on potential conflicts of interest –Dual Employment and Multiple Jobs (404-96) –Nepotism (419-96) –Purchasing Policy (814) –Personal Use of University Property (831-96) –Appropriate Use of Computer Resources (832-99)

7 Fundamental rule behind policy is employees’ obligation to perform their Rice duties honestly and fairly without the University’s interests being compromised by individuals’ personal or financial interests

8 “All University employees are expected to perform their responsibilities diligently, legally, honestly, in good faith, in accord with principles of loyalty and fidelity to Rice University, and in furtherance of Rice’s mission of education, research and scholarship. Employees who have an actual or potential conflict of interest in performing their duties for the University have an obligation to disclose the conflict in writing in a timely fashion, so that the University can determine how best to avoid or manage the conflict. Employees must be sensitive to situations that may pose a conflict of interest or the appearance of a conflict of interest so that they are perceived at all times as objective, ethical, free from bias or undue influence, professional and fair in performing their duties.”

9 What is a “conflict of interest”? “A conflict of interest exists where an outside activity of the employee competes with or diminishes the interest of the University or interferes with the employee’s performance of duties on behalf of the University. A conflict of interest also occurs when the outcome of a decision that should be made in the best interest of the University conflicts with the personal or economic interest of the employee. Among such decisions that may present conflicts are those determining or recommending the use of suppliers or vendors, the use of University resources, or the use of one’s own work time.”

10 “To avoid a conflict of interest, employees must not be in a position of making or participating in the making of a decision as part of their University responsibilities if the personal or economic interest of themselves, members of their families or others with whom they have a personal relationship (including outside organizations) may be directly affected by the outcome.”

11 Key areas of new Policy No. 838 –Clearer expression of ethical standards expected of employees. –More explicit definition of familial and other relationships that are covered (individuals to which employee related by blood, adoption or marriage or residing in the same household, including spouses, domestic partners, others with whom the employee has an intimate relationship, children, grandchildren, parents, siblings, aunts, uncles, cousins, nieces and nephews and their spouses).

12 Key areas of new Policy No. 838 (con’t) –S pecification of size of equity/ownership interest in policy as trigger for disclosure, with carve out for stocks held through mutual funds. –Better guidance on prohibition of gifts and gratuities, prior approval of trips paid by vendors, as well as a discussion of business meals and events (e.g. payment for a modest meal or event).

13 Key areas of new Policy No. 838 (con’t) –Provides guidance on potential conflict of commitment or interest relating to an employee ’ s outside activities, including non-profit activities, recognizing that reasonable involvement of staff in community activities is good for Houston and good for Rice. –Revises the process for disclosure and management of conflicts to have written disclosure by employee to immediate supervisor with “ one-up ” review and approval. –Process would also allow VPs to require affirmative certification of no conflict every year for areas of their operations where they think there may be greater risks.

14 Key Points to Remember –Goal is to avoid even the appearance that an employee’s actions are tainted by personal or financial benefit –If any doubt, disclose –Disclosure of relevant facts must be in writing and to the supervisor –Plan for management of the conflict must be in writing, approved by the supervisor’s manager and followed –If any questions, seek guidance from HR or Legal

15 A question for Rice University department chairs, administrators and managers--- What do Astros tickets, dining out, purchase orders, and hiring the neighbor ’ s kid have in common? You better find out! A new conflict of interest policy that applies to all Rice staff is now in effect. Come learn about it and about your responsibilities to carry it out, and to communicate the expectations of the policy to your staff. One-hour information workshops are available to all chairs, administrators and managers. No RSVP is required. April 1610:30-11:30 AMFarnsworth April 2210:30 – 11:30 AMFarnsworth April 294:00 – 5:00 PMFarnsworth Presented by the Office of the General Counsel and the Human Resources Department of Rice University