ETHICAL MATTERS
Is the Chair
in Conflict?
Three months ago,
my chair proposed that a contract for Board training be
signed with a friend’s firm. He did not vote, but our
voting is often informal. He didn’t declare a conflict
of interest either. As Executive Director, I think I
could have found suppliers offering better value, but
this idea was a surprise at the board meeting. I did
not have alternatives ready to propose. The Board
accepted his idea and the firm facilitated a couple of
OK training sessions last month. The contract covers up
to four more sessions.
Last week, I found
out the chair was appointed to the Board of the training
firm. The appointment was made a few weeks after our
Board meeting where he proposed the contract. The
training company pays significant compensation to its
board members. I do not know if the other board members
are aware of this appointment. Should I take any action?
Jane’s Response
At this point, you are
missing some key facts that would help you know how to
proceed. The chair seems to be in conflict now, but maybe
just in a short-term situation that could be resolved by
recusing himself from any decision about the supplier for
future training. Recusing implies removing oneself from
all discussion and deliberation, not just declining to
vote. Back-room lobbying is inappropriate, and it is much
better for the person to be absent so others feel safe
voicing their opinion.
Your bigger issues are
whether the chair has been concealing a conflict
situation. What did he know at the time of proposing his
friend? And what do other board members know about the
subsequent appointment?
I suggest a direct
approach. Set up a meeting as soon as possible with the
chair – preferably in person so you can see his face. Did
he have any advance knowledge of the position on the
friend’s board? If so, why didn’t he declare a conflict?
Better still, if he saw a need for board training, he
could just raised the issue rather than getting involved
in supplier selection.
Just as reducing waste
is much better than recycling waste, avoiding conflicts is
always much better than having to declare one.
Similarly, ask him
whether or not he told the other board members know about
the appointment. When? Perhaps you were inadvertently
left out of the loop. You may also wish to ask other
officers directly.
If the Chair did
conceal, or is still concealing, evidence of personal
benefit from his board position at your nonprofit, review
your Conflict of Interest policy with him. I suggest a
“better late than never” approach in getting him to bring
the issue forward now. He must declare a conflict now
even if there was no conflict at the time of the original
decision. The firm where he is on the board is currently
the supplier of record for board training.
The Board must decide
how to deal with the situation, and should assume the
information will become public. If knowledge of the
conflict will harm the image of the organization in the
eyes of its stakeholders and community, it may be
appropriate for the chair to step down. Or they might
decide that the Conflict of Interest policy is inadequate
and decide to strengthen it for the future. Or they may
believe that no conflict existed three months ago; maybe
only the current supplier situation is relevant. The
chair, of course, should not participate in the discussion
or decision. He could attend long enough to answer
questions. Another director has act as chair. The
directors may also need to take the credibility of the
chair into account, as it is very difficult to confirm
what someone did or did not know.
As far as the supplier
goes, a nonprofit should never waste the time of its board
volunteers at OK training sessions. Handle the quality
issue concurrent with the current conflict and cancel the
contract. The perception of past conflict should preclude
just letting them replace the trainer. Other trainers are
available in this field.
In summary, yes, you
should take action. Your primary goal is to ensure that
the board is informed quickly of the facts of the
situation, so you can help them make the necessary
decisions.
 Jane
is Principal Consultant of Mills Garthson &
Associates, dedicated to strengthening Canada's
nonprofit sector through enhanced leadership and ethics.
She is a founding member and former Chair of the Ethics
Practitioners’ Association of Canada, and was
Executive Director of a provincial federation. She has
provided ethics training to organizations such as the
United Way of Greater Toronto, International Institute
of Public Ethics and CSAE. Jane can be reached at www.millsgarthson.ca
or 1-877-645-5417.
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