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Procurement Perspectives: Understanding conflict of interest policy is complicated

Stephen Bauld
Procurement Perspectives: Understanding conflict of interest policy is complicated

Generally, municipal purchasing bylaws in relation to conflict of interest are far less detailed than the corresponding rules and regulations set out in the Ontario Business Corporations Act (OBCA) and the bylaws of a business corporation with respect to conflict of interest.

It is possible, of course, the purchasing bylaw may provide only part of the picture. Quite possibly the provisions of the typical purchasing bylaw are supplemented by the general human resource policies of the municipalities in question.

As an example, in the case of the City of Windsor, the previous policy relevant to conflict of interest was set out in section 54 of Purchasing By-law No. 400-2004. It provided the following:

All elected officials, officers and employees of the City of Windsor shall not have a pecuniary interest, either directly or indirectly, in and contract with the City of Windsor or with any person acting for the City of Windsor in any contract for the supply of goods and/or services for which the City of Windsor pays or is liable, directly or indirectly to pay unless such interest has been pursuant to the City of Windsor’s Conflict of Interest Policy as approved by council, Section 31 of this policy or other policy currently in force.

All staff and others participating in the evaluation of proposals shall disclose a conflict of interest prior to the evaluation process.

All consultants awarded a contract by the City of Windsor shall disclose to the City of Windsor prior to accepting an assignment, any potential conflict of interest. If such conflict of interest exists, the City of Windsor as directed by the department head may, at its discretion, withhold the assignment from the consultant until the matter is resolved. And furthermore, if during the conduct of a City of Windsor assignment, a consultant is retained by another client giving rise to a potential conflict of interest, then the consultant shall so inform the City of Windsor.

In my opinion this is a well written policy. However, many aspects of section 54 are ambiguous. Consider the following, for instance:

A city councillor has a $300,000 mortgage with the Bank of Burlington. The mortgage is in good standing and is on ordinary commercial terms. If that bank is being considered for a contract with the city, must that councillor declare that mortgage and is it permissible for the councillor to participate in any debate related to the proposed contract?

The city manager invests heavily in mutual funds, one of which holds a substantial stock interest in ABC Co. If this corporation applies for a contract with the city, what would be the city manager’s responsibility with respect to that contract? What if the city manager does not know of the relationship between the mutual fund and ABC Co.?

A city staff member who is administering the city contract with X Co. applies for and is interviewed for a job with X Co. while still working on the contract. One interview takes place during dinner at an expensive restaurant. Is there a conflict of interest?

It is worthwhile to contrast provisions such as section 54 of the Windsor bylaw with the rules in force at a typical widely held business corporation.

Many business corporations rely entirely on section 132 of the OBCA, which contains detailed rules relating to conflict of interest. As with the Municipal Conflict of Interest Act, the primary obligation in relation to conflict of interest is to disclose and to refrain from acting where such conflict exists. Thus subsection 132(1) of the OBCA provides that a director or officer of a corporation must disclose in writing to the corporation or request to have in the minutes of meetings of directors the nature and extent of his or her interest.

Stephen Bauld is a government procurement expert and can be reached at

Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.

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