PREVENTING AND MANAGING CONFLICT OF INTEREST IN THE PUBLIC SECTOR Julio Bacio Terracino Deputy Head of Public Sector Integrity Division Public Governance and Territorial Development Directorate

Contents Conflict of interest and OECD Integrity Framework Conflict of interest definitions and OECD benchmarking Preventing and managing conflict of interest Supporting CoI policies Enforcing CoI policies The Mexican case

OECD Public Sector Integrity Framework: CoI spans all components Risk identification Values, legislation and policies (codes of conduct, rules for disclosure, disciplinary regimes, etc.) Internal control rules and procedures (hiring, financial management and reporting, procurement, IT, etc.) Defining Integrity Leadership and culture of integrity (example from the top) Communications and awareness-raising Training Supporting Integrity Detection mechanisms through complaints/whistle-blower systems Internal and external audit mechanisms Proactive transparency (social control) Monitoring Integrity Investigations and hearings Sanctions Recovery of losses or damages Enforcing Integrity Conflict of interest

DEFINING COI POLICIES

Conflict of interest The reality: public officials are also private citizens with their own personal interests. The potential problem: these private interests can affect their official functions as pubic officials. Conflict of interest situations can arise: “the misuse of official power and resources for improper personal gain” Examples: fraud, nepotism, abuse of position, failure to perform duties….

Conflict of interest OECD benchmarking on disclosure of private assets: – Assets and liabilities – Paid and unpaid outside positions – Previous employment – Income source and amount – Gifts Not just individual public officials but also their immediate family members

Conflict of Interest (1/3) Level of disclosure and public availability of private interests across branches of government Source: OECD (2014), Survey on Managing Conflict of Interest in the Executive Branch and Whistleblower Protection, OECD, Paris.

Conflict of Interest (2/3) Level of disclosure and public availability of private interests by the level of public officials in the executive branch Source: OECD (2014), Survey on Managing Conflict of Interest in the Executive Branch and Whistleblower Protection, OECD, Paris.

Conflict of Interest (3/3) Pre-public employment is still largely unregulated Source: OECD Government at a Glance (2015).

G enuine: Is this gift genuine, in appreciation for something I have done in my role as a public official, and not sought or encouraged by me? I ndependent : If I accepted this gift, would a reasonable person have any doubt that I would be independent in doing my job in the future, when the person responsible for this gift is involved or affected? F ree: If I accepted this gift, would I feel free of any obligation to do something in return for the person responsible for the gift, or for his/her family or friends/associates? T ransparent : Am I prepared to declare this gift and its source, transparently, to my organisation and its clients, to my professional colleagues, and to the media and the public generally? Example: Checklist for gifts, benefits

Managing conflict of interest Recusal: withdrawal (permanent or temporary) from duties Divestment: removal, sale of the official’s private interests, transfer of ownership In terms of trust, perceived/potential CoI can be just as important as actual/real CoI! Need to address both cases: suspicion, even if unfounded, can still undermine legitimacy Transparency therefore is KEY to demonstrate adherence to integrity principles

Apparent vs. potential vs. real CoI In terms of trust, apparent and potential CoI can be just as important as real CoI! Need to address all cases: suspicion, even if ultimately unfounded, can still undermine legitimacy. Apparent CoI: further investigation required, probable that resolution required. Potential CoI: No CoI at the moment but reasonable foreseeable in the future. Monitoring required. Real CoI: resolution required.

Public availability of disclosed private interests

SUPPORTING COI POLICIES

Strong example from the top Is there a central function (not necessarily an independent agency) responsible for the development and maintenance of the conflict of interest policies, rules or procedures?

Has your government developed a specific policy (with additional requirements or more detailed standards) for managing conflict of interest for particular categories of public officials due to the nature of their position? Strong example from the top

Raising awareness: advice and training What initiatives are carried out in practice in order to raise awareness and enhance understanding of the conflict of interest policy/ies?

MONITORING COI POLICIES

Internal controls and audits

Whistle-blower protection Whistle-blower protection mostly afforded through a piecemeal approach Source: OECD (2014), Survey on Managing Conflict of Interest in the Executive Branch and Whistleblower Protection

ICTs support better internal controls Generally speaking, what elements of the private interest disclosure system are administered or managed electronically?

Evaluating impact Are diagnostic tools employed to measure the impact of the policy, rules and procedures on conflict of interest (e.g. surveys, statistical data, cost- benefit analysis, etc.)?

ENFORCING COI POLICIES

Sanctions

Mexico’s Federal Admin. Disciplinary Regime Political/Constitutional As stipulated in Articles 109, 110 and 114 of the Constitution. Applies to elected officials, Supreme Court Judges, Attorney Generals, etc. (see Article 110 for complete listing). Subject to impeachment following vote by Chamber of Deputies and confirmation by Senate. Administrative/Specialised As stipulated in Articles 108, 109, and 113 of Constitution. States are required to have own laws and regimes in place. For federal officials and those managing federal funds, the Federal Law on the Administrative Responsibilities of Public Servants applies (see Ch.2 for sanctions). Implemented by SFP according to Art. 37 Organic Law on Public Administration. Ch.7 of Law on Professional Career in the Public Service supports possible disciplinary dismissal under Administrative Responsibilities Law. Specialised disciplinary regimes for military officers, foreign service personnel, federal judges and prosecutors, and federal police. Criminal As stipulated in Articles 109 and 111 of the Constitution, and Title 10 of the Federal Criminal Code. Applies to all public officials with exceptions for some while in office (i.e. President). Subject to criminal sanctions under Federal Criminal Code (Title 10). Civil As stipulated in Article 111 of the Constitution and Articles 31 and 1916 of the Federal Civil Code and Article 47 of Federal Law on the Administrative Responsibilities of Public Servants. Applies to all public officials. Subject to civil sanctions under federal civil code. Labour law Federal Law on State Workers and Federal Labour Law can be applied for dismissal for poor performance. Applies mostly to unionised public servants (servidores de base). Integrity: legality, honour, loyalty, impartiality and efficiency.

Preliminary findings SFP decisions are being upheld by the Tribunal: is the process becoming more sound or is this a reflection of the types of cases being sanctioned? (i.e. they are more “cut and dry” or less serious?)

Preliminary findings Nature of sanctioned offences remains largely administrative and for minor issues… contrasted with what suppliers report.. World Bank Enterprise Survey: 35% of firms expected to pay bribes to secure government contract (2010); TI Bribe Payers’ Index: Mexico #26/28 countries.

Preliminary findings

COI DISCLOSURE IN MEXICO

New policy on CoI disclosure Supported by new code of conduct/ethics – However CoI requirements issued first? Guidelines and training for staff and managers? Form does not require that managers sign off on reported CoI or state planned resolution Additional forms /guidelines for at-risk positions? Verification/auditing of information through DeclaraNet? Further benchmarking of CoI practices under Integrity Review and upcoming workshop

Thank you