6.5 Ethics Rules and Conflicts of Interest

A major component of effective and transparent telecommunications regulation is the management of conflict of interest issues between private interests and public service duties.1 Regulators must be fair, impartial and transparent, and just as importantly, the public must perceive them as such in order for the regulators to inspire confidence of the industry and of investors. For instance, in order to maintain the public confidence and address the conflict of interest over the roles of the Telecom Regulatory Authority of India (TRAI) as a regulator and an adjudicator, TRAI amended the telecommunications legislation in 2000 to create an independent Telecom Disputes Settlement and Appellate Tribunal (TDSAT), transferring to it all powers for dispute resolution in the sector. (For a more detailed analysis, see the practice note on the case of India in Section 7.4.1 in the online module.) The ability of a regulator to govern legitimately and effectively is based on the real and perceived integrity, honesty and ethical behavior of its officials and employees and their decisions. Thus, it is necessary for regulators to implement an ethics framework to govern the activities of their employees and ensure the adherence to minimum standards of professional and ethical behavior. Box 6-3 below provides an example of the core values of civil service for Hong Hong (SAR).

At the heart of any ethics framework is the prevention of conflicts of interest, which can jeopardize the ability of a regulator to make an objective and transparent decision. One way to establish the core values and standards of conduct that should govern public service is to adopt and enforce a code of ethical conduct that binds all employees. A code of ethics can be part of a more comprehensive administrative code, such as the United Kingdom’s Civil Management Code,3 or it can be promulgated as separate legislation, such as Canada’s Conflict of Interest and Post-employment Code for Public Office Holders.4 Other regulators, such as Bahrain’s TRA, include conflict of interest provisions in the telecommunications legislation. In general, the ethics codes for the public service sector in most countries serve as general ethical guidelines for all government agencies, including independent regulatory entities, although different departments, agencies and regulators may develop supplemental guidelines to take into account their specific functions and circumstances. Ethics codes can vary in content, but should generally address the following:5

• Establishing provisions for disclosure of personal and financial conflicts of interest (which include provisions regarding gifts, impartiality in performing official duties, and seeking outside employment);
• Rules for maintaining confidentiality of information;
• Setting procurement rules;
• Rules on staff relations (such as prohibitions on sexual harassment);
• Establishing methods to report and handle misconduct and what the proper grounds are for disqualification or dismissal; and
• Safeguarding agency assets through rules on spending and financial reporting.

Generally, ethics rules prescribe four approaches to avoiding or mitigating ethical conflicts, whether real, potential or apparent: (1) avoidance, (2) disclosure, (3) divestment or resignation, or (4) recusal.6 A code of ethics may encourage employees to take precautions to avoid situations that may result in a potential conflict of interest or give the appearance of impropriety. For example, the Hong Kong (SAR) Civil Servant’s Guide provides the following guidelines: “avoid being placed in a position of obligation to anyone by accepting excessive entertainment or favors” and “avoid putting yourself in a position that may arouse any suspicion of dishonesty, or of using your official position to benefit yourself, your family, relations or friends.”7 Employees are also typically required to disclose any conflicting financial interests or personal interests or the receipt of any gifts over a certain monetary value. Where a conflict of interest is identified, the employee may be asked to resign or to divest the conflicting interest. Another resolution may be the recusal, the disqualification or removal, of the employee from the particular matter that involves a conflict of interest. The Organisation for Economic Co-operation and Development (OECD) provides guidelines in dealing with conflict of interest situations (Box 6-4).

The main issues regulators encounter regarding ethics can be grouped into three broad categories: (1) acceptance of gifts; (2) personal and financial conflicts of interest; and (3) post-employment prospects.

ENDNOTES

1 The OECD Guidelines for Managing Conflict of Interest in the Public Service defines “conflict of interest” as follows: “A conflict of interest involves a conflict between the public duty and private interests of a public official, in which the public official has private-capacity interests which could improperly influence the performance of their official duties and responsibilities.” Organisation for Economic Co-operation and Development, Recommendation of the Council on Guidelines for Managing Conflict of Interest in the Public Service, June 2003 [hereinafter OECD Guidelines], available at
http://www.oecd.org/dataoecd/13/22/2957360.pdf.

2 Hong Kong (SAR) Civil Service Bureau, Civil Servants’ Guide to Good Practices, 2005, available at http://www.csb.gov.hk/hkgcsb/doclib/civil_e_rev.pdf

3 United Kingdom, Civil Service Management Code, available at http://www.civilservice.gov.uk/iam/codes/csmc/index.asp

4 Canada, Conflict of Interest and Post-employment Code for Public Office Holders, 2004, available at http://www.parl.gc.ca/oec-bce/site/content/coi_2004_e.pdf.

5International Telecommunication Union, Trends in Telecommunications Reform 2002: Effective Regulation, Chapter 6, Section 6.3.1 (2002).

6 See Irene Wu and Cathleen Xue, Decision-making procedures and ethics rules: the practical enablers of integrity and impartiality in telecommunications regulation, published by the Federal Communications Commission International Bureau, August 15, 2002, at 3,
available at http://www.infodev.org/files/1275_file_FCC_Paper2.pdf.

7 Hong Kong (SAR) Civil Service Bureau, Civil Servants’ Guide to Good Practices, Section 6, (2005).