Conflict of Interest at the Business/Politics Interface

People tend not to trust big business. And they tend not to trust the world of politics. But when those two worlds intersect, people really get nervous.

Witness, for example, this story by Eric Lipton, for yesterday’s New York Times: A Journey From Lawmaker to Lobbyist and Back Again

The story is about Dan Coats, a former corporate lobbyist recently elected to the US Senate.

Dan Coats, then a former senator and ambassador to Germany, served as co-chairman of a team of lobbyists in 2007 who worked behind the scenes to successfully block Senate legislation that would have terminated a tax loophole worth hundreds of millions of dollars in additional cash flow to Cooper Industries.

As part of the Republican wave in this year’s midterm elections, Mr. Coats will join the Senate again and is seeking a coveted spot on the Finance Committee, the same panel that tried to shut the tax loophole and that the Obama administration has pushed to again consider such a move.

The worry alluded to in the NYT piece, but not explored in any depth, is that of conflict of interest. The vague worry is roughly that there is — well, some sort of conflict between Mr. Coats’ old allegiances and his new position.

Coincidentally, here’s a piece (just published today) that I wrote about conflict of interest in the Canadians Prime Minister’s Office: Conflict of Interest in the PMO: Just What is the Worry?

The main point of my article is neither to accuse nor to absolve. It’s to point out that we need to get clear on just what the worry is, in any particular situation. A vague worry that “something ain’t right, here” is fine as a starting point, but if we want to go beyond that, and if we want to prescribe smart solutions, we need to get clearer about what the problem is.

Some scholarly definitions cast the matter as a question of judgment. Under such definitions, conflict of interest is said to occur if there is good reason to think that the judgment of the individual in question will be impaired. In other words, will she be able to exercise judgment impartially, or will her judgment be clouded by other factors that ought to, for ethical reasons, be excluded?

Other definitions frame the issue as one about the interests of those being served: a conflict is said to occur if there is reason to doubt the individual’s ability to faithfully serve the interests of those they are sworn to serve.

Whatever their differences, both definitions focus on service. We worry about conflict of interest when the incentives present in a given situation give us reason to doubt the quality of an individual’s service as a trusted advisor or decision-maker. This analysis suggests that, whatever the Conflict of Interest Act may say, the real question in the case of Wright is whether the judgment that he exercises in his capacity as the chief of staff can reasonably be expected to be skewed (consciously or subconsciously) by the interests of his former, corporate, employers.

The same could, and presumably should, be asked about Mr. Coats. But, as always, I am at pains to point out that a conflict of interest is a situation, not an accusation. If there is reason to worry about Mr. Coats’ judgment, that is not a matter of impugning Mr. Coats’ integrity. Rather, it is a matter of considering what measures (if any) are sufficient to make sure that the value of his service to the public outweighs the risks.

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