-Conflict of Interest -

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"Whoever is careless with the truth in small matters cannot
be trusted with important matters."

– Albert Einstein
For a business to be successful
in the long term it has to create
value, not only for its
shareholders but also for
society.

We call this Creating Shared

Value. It is not philanthropy or
an add-on, but a fundamental
part of our business strategy.

Taken from Alcatel-Lucent CSR

Copyleft by Ahmad Rizki Sridadi Report 2007 3
© 2008
• do the right thing— following the law, acting honorably, and treating
co-workers with courtesy and respect.

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• to improve social welfare by ensuring efficiency in the market. With
our technology, we strive to spread positive social impact by
increasing the earnings of GOJEK partners and ensuring a better
standard of living for themselves as well as their families.
Why is it necessary for Morality (Ethics) in
Management ?
• Moral dilemma;
• Fundamental Ambiguity
of Human Existence;
• Human nature and
nature;
• Social order.
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Models of Morality in Management
immoral management,
moral management,
amoral management
Carroll (1987,h.8)
Immoral Management
• Management whose motives are for self-interest or only for the
organization;
• Because the goal of management is to gain profits and the success of
the company even though it has to violate the law (there is a violation
of the law / fraud)
• Question: what do I get when I make a decision?
Moral Management
• Moral (oriented) management, which rests on ethical norms and
professional standards, based on law;
• This type of management will not exchange profits with laws and
ethical standards, because law is the minimum standard of ethical
conduct
• Lynn Sharp Paine (1994, 110) calls it "integrity strategy", the
conception of ethics as a driving force (driving force) in organizations.
Immoral Management
• Immoral management takes two forms: unintentional and intentional.
Managers who are accidentally immoral, meaning they are
insensitive, have no awareness of the fact that stakeholders suffer
losses as a result of their actions.
• A manager who is deliberately immoral, means that he takes action
only for his personal life, and not for business. Currently most
managers are unintentional (Carroll, 1987)
 Managers in organizations face ethical issues
every day of their working lives

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Why do managers need to be ethical?

• Because society expects managers to put forward ethical

norms and at the same time managers can fulfill these
expectations if they want to maintain their legitimacy as
agents in society (Kidder, 1997).

• Against whom?
Definition…
• Situation where an individual or the entity for which they
work, whether a government, business, media outlet or civil
society organisation, is confronted with choosing between
the duties and demands of their position and their own
private interests.
transparency.org
The causes…
• Goals are not clearly defined.
• Powers and authorities obtained
from statutory regulations
• Concurrent positions
• Affiliate relationship
• Gratuities
• Weaknesses of organizational
systems,
• Lack of cooperation / trust (lack
of cooperation / trust).
• Vested interest
• Competition of scarce resources
• There are unclear roles / lack of
job descriptions
Forms of Conflict of Interest:
• Situations that cause someone to receive gratuities or give / receive
gifts for a decision / position.
• Situation that causes the use of a position / agency for personal /
group / group interests.
• Situation that causes confidential information of position / agency to
be used for personal / group interests.
• Concurrent positions in several institutions / agencies / companies
that have direct or indirect relations, of the same type or not
• Situations where the authority can provide special access to certain parties,
for example in the recruitment of employees without following the proper
procedures.
• Situations that cause the supervisory process to not follow procedures due
to the influence and expectations of the party being supervised.
• Situations where there is an opportunity for abuse of office.
• A situation in which an official determines the amount of salary /
remuneration by himself.
• Moonlighting or outside employment (other work outside of the main job).
• Situations that allow the use of discretion that abuse power.
Sample Case
• The institution you work for contracts many of the published
materials that are printed each month. The three printing companies
had already completed the previous printing work with good results
and were quite efficient in terms of price.
• A close relative of yours recently purchased a printing company. Your
job in procurement is to process all tenders for printing contracts. You
have access to all the detailed information of the bidding company, in
which case your brother who owns the printer asks you to disclose
information about the bid price so that he can quote at a lower price.
Your institution has also recently launched a major program to cut
costs. You know that companies can save you millions of dollars in
printing costs over the course of a year if you follow your relative's
requests.
Questions :
• Does the problem contain a conflict of interest?
• Why ?
• What is your response and how should the condition be managed
properly?
• You are one of the Directors in a pharmaceutical company
called "Sehat". You also have a business in the distribution of
pharmaceuticals. In this company you serve as a
commissioner. These drug distribution companies are often
participants in bids for product distribution in “healthy”
companies where you are the Board of Directors.
Question:
• Does the problem contain a conflict of interest?
• Why ?
• What is your response and how should the condition be managed
properly?
• You are an Inspectorate officer who is authorized to carry out the
supervisory function of organizational performance. You are responsible
for evaluating operational performance, budget efficiency, and
compliance with applicable systems and regulations.

• The condition that occurs is that you and your team are often invited to
have lunch, receive gifts, and other facilities, as a banquet that is
considered normal by every department / agency you come to for
supervision. These incidents often happen and the party you supervise is
a close friend who often plays golf together and has attended training or
education during the early days of employment.
• Does the above problem contain a conflict of interest?
• Why do the above problems contain a conflict of interest?
• What actions / responses are needed and how should they
be taken so that conditions that contain conflicts of interest
can be managed properly?
• You work in a government agency that has a main task in the field of
infrastructure development. As a project supervisor, you are required
to work more often outside the office to oversee the implementation
of construction projects that are currently being worked on. Your
main task is to supervise the projects carried out according to
predetermined plans and costs. As a government employee, your
working hours have been determined from 8:00 a.m. to 5:00 p.m. for
five working days.
• In addition to working in a government agency, it turns out that you
also work side by side as a marketing agent (side job) for a property
brokerage company. As a marketing agent, you are required to get as
many clients as possible who will buy your company's products. For
that, you often take advantage of your work time in government
agencies to also carry out your side job at the same time. Your boss
doesn't know this, because you are often assigned outside the office
to oversee projects.
• Does the above problem contain a conflict of interest?
• Why do the above problems contain a conflict of interest?
• What actions / responses are needed and how should they
be taken so that conditions that contain conflicts of interest
can be managed properly?
• A driver at an EPC company has a duty to deliver spare parts and
equipment to be used in a project that is being worked on. Another
task is to deliver and pick up employees assigned by the office. On the
sidelines of carrying out his duties, it turned out that the driver was
often asked by his superiors to take his in-laws for treatment at the
hospital.
• Does the above problem contain a conflict of interest?
• Why do the above problems contain a conflict of interest?
• What actions / responses are needed and how should they
be taken so that conditions that contain conflicts of interest
can be managed properly?
• A director in an oil and gas company is given the task and authority to choose a
company to be assigned to carry out building maintenance. Because there are still
weaknesses in the partner selection system in the company, the director is given
the right to take advantage of his discretionary authority to appoint the company
in question. It turned out that the director's son worked for a cleaning service and
building maintenance service company. Knowing this opportunity, the director's
son asked his father to appoint a company where he worked as a building
maintenance partner. The son said he had been promised a promotion if his
company was appointed as a partner. In selecting a building maintenance partner,
the director of the Oil and Gas company did not explain the situation to the board
of directors. This is done because he thinks that his actions are in accordance with
applicable regulations, and he may make any decisions related to the appointment
of a building maintenance partner.
• Does the above problem contain a conflict of interest?
• Why do the above problems contain a conflict of interest?
• What actions / responses are needed and how should they
be taken so that conditions that contain conflicts of interest
can be managed properly?
Thank You