Mohammed Muigai LLP

LEGAL ALERT!CONFLICT OF INTEREST: WHAT IS IT AND WHATIS BEING DONE ABOUT IT?


Introduction
In 1939, Winston Churchill, the then First Lord of Admiralty of his
Majesty’s Government, described the Soviet Union as, “A riddle wrapped in
a mystery inside an enigma.” I believe that were he alive today, he would not
object if I used the same words to describe the Kenyan understanding of
conflict of interest. In fact, Churchill’s words may be more suited to our
situation than its original target.
We have, in this Country, an issue with the term – conflict of interest. It is
not a knowledge issue for most learned people have heard of the phrase. It
is also not a moral issue since everyone seems to agree that ignoring
conflict of interest is reprehensible, and something needs to be done
about it. What we have is a definition issue. We cannot seem to agree on
what conflict of interest means exactly or more precisely, what it covers.
The same questions concerning conflict of interest illicit different answers
depending on who you ask and when you ask. The answers to questions
such as, what should it cover, who should it cover and what situation
should it apply to are sometimes unclear. For instance, supporters of the
government and members of the opposition would disagree on the
political engagements that state officials and public servants can
participate in. A supporter would say, ‘The government was elected on a
political manifesto. It is important that these officials acquaint themselves with the
manifesto and those who developed it so that they understand what they are
supposed to do.” This sounds like a reasonable argument but the opposition
will call it nonsense, invoke Lincoln, and declare that, ‘The Government is, of
the people, by the people, for the people. Public servants, who rely on and use public
resources, should not associate themselves with one side to the exclusion of the
other.’ I suspect these same individuals would have a different answer if we
had asked them the same question last year in July.
The Existing Legislation
This uncertainty is not caused by a lack of legislation addressing conflict
of interest for the legal landscape is filled with laws that speak to it.
Conflict of interest is even addressed by our venerable Constitution.
Articles 73 and 74 provide that state officials should declare and avoid any
personal interests that conflict with their public duties. It is also not a new
.
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Mohammed Muigai LLP – Dispute Resolution Practice Group, August 2023
Contribution by: David Angwenyi
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term in our legislation. The Public Officer Ethics Act which was enacted 20
years ago deals with conflict of interest in section 12. Since then, various
Acts addressing conflict of interest have been enacted. For example, the
Leadership and Integrity Act defines it in section 16 and provides for
situations when it may arise, the Competition Act says that employees of
the Competition Authority should disclose their conflict of interest and the
Procurement and Public Disposal Act talks about a bidder’s duty to
disclose conflict of interest.
The definition of conflict of interest given by the Constitution and most
Acts of Parliament is fairly the same. Your personal interests should not
conflict with your public duties. This is not a technical definition and
should be easy to interpret. Identify the public duty and determine if your
personal interest conflicts with it. Simple enough. The steps public officers
are directed to take when they detect conflict of interest is also always the
same. Declare it and avoid it. These are not issues which should cause
uncertainty or confusion. But they sometimes do. Why?
The Problem
I believe that there are two reasons for this uncertainty. The first is that the
range of behaviours which fall within the orbit of conflict of interest is
wide. It involves business interests, gifts and complimentary services, board
appointments, officer recruitment, personal acquisitions, just to name a
few. This is a very large target, and it brings us to the second reason for the
confusion.
As modes of doing business develop and transactions become more
complicated, the list keeps on growing and evolving. Our elusive target
keeps on getting larger and is constantly on the move. What may not have
been considered a conflict of interest in the past now falls within its
definition. The activities of children and spouses of a public officer are now
considered when assessing if there is a conflict of interest. The veil of
incorporation and shares held in trust are no longer an adequate shield for
the term beneficial ownership has directed a bright and blinding beam on
what was once dark, shrouded and obscure.
The Conflict of Interest Bill 2023, a solution?
The uncertainty surrounding conflict of interest did not go unnoticed.
Some years back, it was realised that the legislation in place was not
sufficient to deal with so wide and so obscure a target. Government drafters
began working on a Bill which was to make certain the uncertain. In 2019,
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we were informed that a Conflict of Interest Bill, 2019 was ready and public
participation was encouraged. Newspaper articles were done, thinktanks
were assembled and the views of the public were invited.
The Bill was however a dud. It never made it to the floor of the House and
was put on ice. We did not hear much about it until this year when word got
out, ‘The Conflict of Interest Bill is Back!’ It has been revamped with the title –
Conflict of Interest Bill, 2023. The year signifying that it is fresh. This time
the Bill has made it to the House and is proceeding to its second reading.
But what does it contain?
Quite a lot apparently. The Bill goes further than any legislation we have on
conflict of interest. It expands the existing definitions of conflict of interests
to include perceptions of impaired objectivity and goes over a range of
situations where conflict of interest may arise and makes it clear that a
public official cannot use their powers to further either their own interest or
that of another person, his family, or associates. The Bill states that a public
officer should not only avoid making decisions in situations where they
know they will be in conflict, it includes situations where the officer ought
to know they will be in conflict. One cannot hide behind a shallow excuse
such as, ‘I did not know I was conflicted.’
The Bill deals with new areas of conflict such as use of confidential
information to further private interests, avoiding gifts and complimentary
treatments from entities dealing with public entities, influencing
recruitment in the entities and gives public officers a firm and legal reason
to leave WhatsApp Contribution Groups. The Bill bars them from
participating in the collection of funds from the public. The mchango
jurisdiction of the aunt is now limited to those in the private sector. The Bill
makes it clear that public officials should not act for or against the interests
of a political party or political candidates. This section curiously excludes
Cabinet Secretaries and Members of the County Executive Committees.
The reason for their exclusion is not indicated or explained. It is difficult to
understand why a Cabinet Secretary should act for a political party while a
Principal Secretary is prevented from doing so.
The Bill expands the information required in the wealth declarations
submitted by public officials to the Ethics and Anti-Corruption
Commissions. Section 26 of the Public Officers Ethics Act only required
Public Officers to declare their income, assets and liabilities every two years.
The Bill includes a requirement to provide information on any
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Legal Pulse Check: Your guide to staying legally informed
Mohammed Muigai LLP – Dispute Resolution Practice Group, August 2023
Contribution by: David Angwenyi
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material changes affecting income, assets or liabilities. Material change is
defined as 25% increase or decrease in income, assets or liabilities, disposal
or acquisition of an asset or liability, change in matrimonial status, change
of relationship with any legal entity, club or trusts.
A curious observation is on the changes the Bill makes on who can access
the wealth declarations. Previously, under the Public Officer Ethics Act
only a person with a legitimate interest and good cause would be allowed
to access the information. This is retained but the Bill now gives law
enforcement agencies unrestricted access to the information. We should
be cautious as the Bill is still in the House and any of these provisions may
be amended and other provisions may be included.
Conclusion
I began by questioning our understanding of conflict of interest in this
country. Will the Conflict of Interest Bill make it clearer? I believe it will.
The Bill is a positive step forward. It gives clarity on issues which were
previously vague or were left to the sole determination or discretion of the
Court. Will we have a complete understanding of conflict of interest in all
situations? No. But we will be better equipped to deal with it. The law, with
the aid of judicial interpretations from the Court, can be refined over time.
Rt. Hon Lord Justice Laws in his 2013 lecture on the Common Law
Constitution had the following to say on the importance of refinement of a
principle of law:
‘I have described the common law’s genius: the refinement of principle over time.
Its elusive strength is that it reflects and moderates the temper of the people as age
succeeds age. It is especially fit for a democratic state, for it builds on experiences
of ordinary struggles. It enshrines a cardinal principle of the Enlightenment: that
people should think for themselves.’
By itself, the Bill addresses new areas where conflict of interest may arise,
and it is much easier for public officials and enforcement agencies to know
where the line is. The clause on material changes is welcome as it will assist
in detecting changes in the wealth of public officials and assist agencies
such as the Asset Recoveries Authority in pursuing unexplained or ill-
gotten wealth.
There are areas where the Bill can go further, for instance, involvement of
CSs and CECs in political affairs. Either public officials are being allowed
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Mohammed Muigai LLP – Dispute Resolution Practice Group, August 2023
Contribution by: David Angwenyi
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to be political or they are not. A decision should be made instead of
creating artificial distinction between them. The Bill should also clearly
prescribe sentences where it declares that an act or omission is an offence.
There are several instances where it declares an offence and leaves it at
that. The unrestricted access by law enforcement to what is otherwise
private information is worrying and the fine for disclosing this
information without permission should be steeper than what is provided.
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