The term conflict of interest is often used in connection with an elected public official or judge. This is because people in positions of power are more likely to face such charges at some point in their careers. Many of the decisions they make must not be tainted by the possibility of favoritism or personal gain. It is not unusual for public officials to divest themselves of anything that could even be construed as creating a conflict, including stocks, pensions, board memberships and former clients.
In order to understand what a conflict of interest means, it may help to examine what is meant by "interest." Almost everyone has personal or professional interests, whether it be a hobby, an investment in a business, or a desire to help friends and family members succeed in their own interests. Sometimes people base their decisions on whether or not they will ultimately benefit one or more of these interests. Most individuals would not be faced with a conflict in such situations because their hobbies rarely interfere or intersect with their professional responsibilities.
But people placed in positions of judgment or power must take extra steps to ensure that their private interests do not compete with their professional duties. A conflict of interest may arise, for example, if a city councilman awards a lucrative contract to a company owned by his brother. It would not be illegal to award such a contract to the best qualified company, even if that company were indeed owned by a relative, but the councilman himself could not be part of the decision making process. There would be an obvious conflict because the councilman's own family would benefit financially from his position of power.
Definitions of this term are often spelled out in contracts or employee manuals. Enforcement of these agreements, however, is not always easy. Elected officials and judges usually fill out extensive disclosure forms that would reveal a potential conflict of interest, but private sector executives may not be so forthcoming. Often, such conflicts may not be revealed until a decision has already been made or a contract has been approved. Revealing some personal interests may be more of an ethical responsibility than a legal obligation.
Because there are some legal gray areas surrounding conflict of interest, it often falls on the official or executive to recognize potential problems before they interfere with his or her duties. When Dick Cheney was elected Vice President in 2000, for example, he first had to resign from his own company, Halliburton. If he had kept his financial interest in that company, any future government contracts might have appeared to be biased. Because Halliburton did receive lucrative government contracts for war reparations, Mr. Cheney could still be accused of having a conflict, but he can demonstrate he has nothing to gain financially from the awarding of those contracts.