Conflict of interest examples at work, and how to declare and manage them

What a conflict of interest is

You have a conflict of interest when a personal interest could get in the way of your duty to act in your employer’s best interest. The personal interest can be financial (shares, a loan, a side income), family (a spouse, sibling or cousin on the other side of a deal), or social (a close friend, a former employer, a club or association).

Three kinds matter:

• Actual: you are making a decision now that affects your personal interest, such as evaluating a tender from your brother-in-law’s company.
• Potential: the conflict will arise if things change, such as a friend’s company that is about to bid.
• Perceived: a reasonable person could think your judgement is affected even if it is not, such as approving a promotion for someone you live with.

Having a conflict is normal, especially in Malaysia where families, kampung networks and business circles overlap. The problem is not the relationship. It is keeping quiet about it, or making the decision anyway. The Guidelines on Adequate Procedures under section 17A of the MACC Act list a conflicts of interest policy as one of the control measures every commercial organisation should have, and ISO 37001:2025 now asks organisations to have mechanisms to detect, prevent and control conflicts of interest.

Conflict of interest examples at work

Procurement and related-party cases

Procurement is where conflicts cost the most, because one person’s preference can move a large contract. Watch for:

• specifications written so only one supplier can meet them;
• an evaluator who has a family member, former colleague or business partner in a bidder;
• repeated small orders to the same supplier that stay just under an approval limit;
• a supplier whose address, phone number or bank account matches an employee’s;
• a staff member who leaves to join a supplier that then wins work they had influenced.

Good practice is to make every member of a tender or evaluation committee sign a declaration of interest for that specific tender, after they see the list of bidders and before evaluation starts. Anyone with an interest steps out and the declaration is filed with the tender record.

Related-party transactions are the company-level version. When a company deals with a director, a major shareholder or someone connected to them, the deal can move value away from the company. For directors, section 221 of the Companies Act 2016 requires a director who is directly or indirectly interested in a contract or proposed contract with the company to declare the nature of that interest at a Board meeting as soon as practicable after learning the relevant facts. In public companies and their subsidiaries, section 222 also bars an interested director from discussing or voting on that contract, subject to limited exceptions. For listed issuers, Bursa Malaysia amended its Main Market Listing Requirements in 2023 to require disclosure of conflicts and potential conflicts, including interests in competing businesses, by directors and key senior management, and to make the audit committee review conflicts that arose or persisted and the measures taken to resolve them.

Public officers and section 23 of the MACC Act

Section 23(1) of the MACC Act 2009 makes it an offence for an officer of a public body to use their office or position for any gratification, whether for themselves, a relative or an associate. Section 23(2) adds a presumption: an officer is presumed, until the contrary is proved, to have done so when they make a decision or take action on a matter in which they, a relative or an associate has a direct or indirect interest.

The penalty under section 24 is imprisonment of up to 20 years and a fine of not less than five times the value of the gratification or RM10,000, whichever is higher.

This matters to private companies too, for two reasons:

• “Public body” is wide. Under the Act it includes federal and state governments, local and statutory authorities, and companies or subsidiaries in which such a body has controlling power or interest, as well as registered societies, co-operatives and trade unions.
• The Act defines relatives and associates broadly. Relatives include spouses, siblings and in-laws, parents and children, uncles, aunts and cousins. Associates include nominees, employees and companies in which the person has control or a substantial shareholding.

The Public Officers (Conduct and Discipline) Regulations 1993 also forbid an officer from subordinating public duty to private interests or acting in a way likely to bring private interests into conflict with public duty. If your staff deal with officials who appear to have an interest in your business, record it and escalate it.

Managing versus avoiding a conflict

Not every conflict means someone must leave the deal or the job. The aim is to make sure the decision is not influenced. Options, from lightest to strongest:

1. Record only: the interest is small and the person has no role in related decisions.
2. Step back: the person leaves the meeting, does not see bid papers and does not vote or approve.
3. Extra oversight: a second approver or a higher authority signs off decisions involving the interest.
4. Reassign: change the reporting line, account or project.
5. Remove the interest: sell the shares, end the outside role or decline the appointment.
6. Avoid entirely: the company decides not to deal with the related party at all.

The person with the conflict should never be the one who decides which option applies. That is for the line manager, compliance or, for directors, the Board or audit committee.

The declaration process and what the form should contain

A simple process that works in most organisations:

1. Declare on joining and every year, even if the answer is “nothing to declare”.
2. Declare again as soon as a new conflict arises, before taking part in any related decision.
3. Review: the line manager and compliance decide how to manage it and record the decision.
4. Register: keep all declarations and decisions in one conflicts register.
5. Check: compare the register with vendor master data, tender committee lists and payroll from time to time.

A conflict of interest declaration form should ask for:

• name, position, department and staff number;
• the type of interest: family, financial, outside employment or directorship, personal relationship, gift or other;
• the person or organisation involved and the relationship to you;
• the decisions, contracts or processes it could affect;
• whether the conflict is actual, potential or perceived;
• a signed statement that the information is complete, and an undertaking to update it;
• the reviewer’s decision, the mitigation agreed, the review date and signatures.

Make declaring easy and non-punitive. People hide conflicts when they fear that declaring will cost them their job. The message should be that a declared conflict is managed, while an undeclared conflict found later is a disciplinary matter.

Practise spotting conflicts

Most people recognise a conflict when it is written down. In real life it arrives as a request from a relative, a friendly supplier or a manager in a hurry. The WorkQuest2U Conflicts of Interest lesson puts staff on a tower office floor in a 3D scene where they face hiring relatives, family in suppliers, side businesses, investments and perceived conflicts, and decide when to declare and step back. Procurement Integrity covers evaluation and bid-rigging, and Gifts, Hospitality & Donations covers gifts that create obligations. For the wider programme, see our anti-bribery training guide.

This guide is general information, not legal advice. For a specific situation, speak to a lawyer or your compliance function.