Conflict of Interest: Case Study #2

How real estate markets inflate

In February, I promised three case studies in professional conflict of interest, derived from personal experience. Here is the second one. Although I suspect you may find these examples rather mundane, it is their very mundaneness that I find interesting. I keep coming across issues of conflict of interest in my everyday professional life, so in that sense, they are literally mundane. And they arise from the actions of people who should know better. This I find interesting. People that are intelligent and not otherwise immoral seem unable to identify conflicts of interest in their own conduct. This may be because examples presented to them in various resources on the subject tend to be more dramatic than the situations in which they are most likely experience it. So, mundane examples might be more helpful than very dramatic ones that people are less likely to encounter in their daily lives.

Here is the situation. There was a certain research funding competition, with the following two characteristics:

1.    Applications were institutional, meaning that the university was technically the applicant, rather than an individual researcher, though the latter would still be the project leader.

2.    There was a certain “envelope” of funds allotted to each institution by the funding agency, meaning roughly that there was a limited amount of funding a given institution could apply for.

Under these circumstances, it was in the university’s interest to make sure that they put forward the best quality projects so that they could capture as much of their allotted funding envelope as possible. It was also in the university’s interest to not put forward too many projects, since doing so would mean that the university’s own projects were essentially competing against each other, while wasting the resources that go into putting together unsuccessful applications (the application process for this competition is remarkably onerous and difficult).

With all this in mind, the university devised a process whereby interested applicants were required to submit an internal notice of intent (NOI) — through their faculty’s Dean — to the university’s Vice-President Research. The Vice-President would then make decisions about which projects would go forward to the application stage.

If a faculty was forwarding more than one NOI, the Vice-President required that faculty’s Dean to rank them. In our faculty’s case, we had a problem: we had two NOIs being submitted, one of which belonged to our Dean (the other belonged to a high-performing researcher who also was a prima donna — but that’s another story). To his credit, our Dean immediately recognized the conflict of interest this put him in with respect to ranking. Clearly it would have violated the fundamental principle of justice that nemo iudex in causa sua (“No one ought to be a judge in his own case”).  I phoned the Vice-President’s office to explain the situation and find out if this requirement still applied to us. I was told that it did. Furthermore, I was told that it was the prerogative of the Dean, by virtue of his office, to rank his own application higher if he wished.

Not even the Crown’s prerogative extends to violating the principles of fundamental justice. A large and burgeoning branch of law — administrative law — is predicated on the idea that there are limits to such prerogative. But apparently, high-ranking university administrators do not have such a limited prerogative.

It is not difficult to see that it would be wrong for the Dean to take part in his own ranking. If he had ranked his own project higher, his competitor would naturally believe that the fix was in, even if the Dean ranked honestly. And if he had ranked himself lower, his competitor might still conclude that he had done so only to avoid controversy, even if the Dean had ranked honestly. The issue is not about the Dean’s honesty, but about justice being done and, as importantly, being seen to be done. In this case there would have been no way for justice to be seen to be done, even if it had been done.

Beyond the principle that justice must be done and seen to be done, conflict of interest also has the corrosive effect of lessening respect and trust in legitimate authority. (Illegitimate authority, however, deserves no respect or trust; but legitimate authority may become illegitimate precisely because it is prey to systemic conflicts of interest, also known as corruption.)

Another way to look at the wrongness of conflict of interest is by looking to the objective supposedly being served by a process or system: if the objective is good, and if the conflict of interest thwarts the process and/or undermines the objective it serves, then the conflict of interest is bad. In this case, a process was put in place to serve the objective of efficient use of resources, by a) not duplicating effort, and b) making maximal use of the available envelope — i.e. not “leaving money on the table”. This required that those projects be identified which are of the highest quality, and hence, most likely to succeed. The Dean’s participation in his own ranking would have muddied the waters in this last regard. The Vice-President would not be able to rely on the rankings he received. This makes the Vice-President’s attitude all the more puzzling. He was essentially asking our Dean to undermine his (i.e. the VP’s) own process.

The Vice-President’s insistence on the Dean’s prerogatives at first troubled me most because it caused problems for us that are best described as “political”. A prominent and accomplished researcher with an ego to match would have been rightly angered at being cheated, with predictable internal repercussions down the road for our faculty. But aside from politics, there was the greater ethical problem conflict of interest represents. Laudably, our Dean simply forwarded both NOIs without providing the required ranking. But if he had provided it, and especially if he had ranked himself higher, his action would have the effect of:

1. Undermining reasonable goals.
2. Undermining institutional trust.
3. Advancing personal interests at the expense of the common good.

Therein lies the wrongness of conflict of interest in this case.