Conflict of interest occurs if an individual has a financial or other interest in a company doing business with his or her employer. For example, a person working for a government agency that awards contracts to private industry may have a financial interest in a company bidding for these contracts. A conflict of interest occurs if the government employee favors the company in which he or she has an interest. The conflict-of-interest issue often arises when business executives take positions in government. Full-time government employees must give up all outside financial interests that might conflict with their duties. In 1977, the United States Congress enacted a strict code of ethics, which included provisions to discourage conflicts of interest. Although conflict of interest is most often seen in governmental settings, it can also occur in private businesses when a person has financial interests in more than one company.
See also Business ethics.
