CONFLICT OF INTEREST

CONFLICT OF INTEREST

1.Conflict of Interest

1.1 Conflict of Interest Definition

Conflict of interest is a situation when an individual's personal interest may influence decision-making process and therefore harm the interests of the society or an organization.

A conflict of interest may arise at the following levels:

  • The Foundation's Board, when personal interests of the Board members prevail over the interests of the Foundation, resulting in the destruction of the Foundation’s operation principles. A conflict of interest may be a situation when the Board members use their powers, make a positive decision to finance certain projects implemented by other organizations, in which the Board members have personal interest in obtaining benefits directly for themselves or their close relatives.     
  • Expert committees of the Foundation's programs, when the expert has personal, familial or vested interest in how the Foundation's resources are used or how certain issues are addressed in its work related to cooperation with the Foundation.
  • Employees of the Foundation, when the interests of an employee prevail over those of the Foundation resulting in the violation of the Foundation’s business principles. A conflict of interest may be a situation, in which the employee uses his or her authority, facilitates a positive decision to conclude the contracts for provision of services to the Foundation, and financing of certain projects implemented by other organizations, in which the employee has a personal interest of gaining benefits directly or indirectly through his/her close relatives. A conflict of interest is also a situation, where the employee intends to commit an act or refrain from acting in relation to the Foundation's interests, while having his/her personal interest in the involved matter.

A conflict of interest also arises in situations where the employee uses internal information possessed by the Foundation or acts for his/her own benefit, or acts in his/her own interest, and not in the interests of the organization.

  • Applicants or grant recipients of the Foundation, when an organization or a project employs close relatives, who are subordinate to each other, as well as relatives involved in temporary works, provision of services and goods as part of the project. Such project applications, regardless of the amount, are subject to final approval by the Foundation Board.

For the purposes of this policy, a wife (husband), children, father, mother, brothers, sisters, as well as father, mother, brothers, sisters, children of the wife (husband), in-laws, daughters-in-law, sons-in-law, as well as other persons living together and sharing a common household with a person related to the activities of the Foundation for decision making and implementation of approved projects shall be considered as close relatives.

1.2 Addressing a conflict of Interest

1.2.1 At the Level of the Board

In the event of a conflict of interest, a member of the Board shall be obliged to declare existence of a conflict of interest.

A conflict of interest situation is resolved if a member of the Board leaves the Foundation Board, or his/her relative leaves the organization applying for funding before the decision is made.

When such a decision is undesirable or impossible, and the entire Board determines that an imminent conflict of interest exists, then it should decide which of the following steps should be taken to mitigate the situation:

  • A member of the Board is obliged to assure that he/she or his/her relatives do not receive any financial benefit from the grant provided by Foundation. This may mean, for example, that he/she does not receive any salary, or support for personal research, payments from administrative funds and no support for business trips, or
  • if a Board member or a relative receives financial support, its size should be clearly equal to or lower than he/she would normally receive if the funding was provided from other sources.

A member of the Board, whose interests are in conflict, shall ensure that the degree of his/her financial interest in the situation is clearly defined. He/she shall take steps to ensure that other members of the Board can freely and confidentially discuss the issue. This should be expressed at least by refraining from any discussion or vote, and he/she shall be absent in the discussion of the issue.

According to Management Principles, in case of a conflict of interest, the issue shall be submitted for decision to the Committee of the Open Society Foundations on conflicts of interest. The decision shall be accompanied by a recommendation of the Foundation’s Board, an explanation of the mitigating actions to be taken, as well as an analysis of potential negative impact on the business reputation of the Foundation.

1.2.2 At the Level of Expert Committees

In the event of a conflict of interest or if there is a suspicion that conflict of interest may arise, the Expert, whose interests are in conflict, shall refrain from discussing the issue and inform the Program coordinator and the Program Director.   

The conflict of interest situation shall be reflected in the relevant minutes of the expert committee meeting, documented in a program memorandum, and submitted to the Foundation’s Board, which shall act as an arbitrator and resolve the conflict of interest. 

If there is no conflict of interest, each expert shall declare it in writing in the form established by the Foundation.

Experts shall not be entitled to participate in the Foundation's competitions and programs to avoid conflicts of interest.

1.2.3 At the Level of Employees

In the event of a conflict of interest, an employee of the Foundation, whose interests are in conflict, shall immediately inform the Executive Director in writing and refrain from any discussion of the matter, in which the employee has an interest. In all cases, the employee shall inform the Executive Director about the conflict of interest or circumstances that may give rise to the conflict of interest before taking such actions.   

If the Executive Director determines that a conflict of interest or a situation with signs of a conflict does exist, he/she shall submit the matter to the Board for review.

In the event of a conflict of interest in relation to the Executive Director, he/she shall immediately inform the Foundation's Board in writing and refrain from discussing the matter.

The Board shall be authorized to resolve all issues related to conflicts of interest of the Foundation's employees, and members of expert committees. In the event of a situation of conflict of interest in relation to the Executive Director, the Board shall review the issue and, if necessary, makes a decision, the Chairman of the Board shall send the issue to the headquarter of the Open Society Foundations.

1.2.4 At the Level of Applicants or Grant Recipients

When a conflict of interest arises within the organization applying for a grant, or a grant project from the Foundation, the head of the organization or project shall indicate this in the Annex B of the grant application.

When a conflict of interest arises within the organization, or project financed by the Foundation, the head of the organization or project shall immediately inform the Foundation in writing.

The Board of Directors shall be authorized to resolve all issues concerning conflicts of interest of the Foundation applicants or grantees. 

2.Definition of (“Self-dealing”)

2.1 Definition of a “self-dealing”

Self-dealing is the deliberate use of the Foundation budget for personal purposes. This could mean signing contracts, purchasing equipment, renting premises, or awarding grants whereby employees of the Foundation, Board members, members of expert commitees, grantees or their close relatives, or friends receive unfair personal or business benefits. Thus, self-dealing is possible when persons related to the Foundation provide the latter with the services or goods for which they themselves, their relatives or close friends receive money. Therefore, the relevant steps shall be taken to ensure that goods and services are provided in a competitive manner.

2.2 Addressing the “self-dealing” situation

Self-dealing shall not be permitted under any circumstances. The Foundation shall terminate all contractual relations with persons involved in self-dealing etc.

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