Article originally published in the Philadelphia Business Journal on January 10, 2022.
Avoiding a conflict of interest should be intuitive. Unfortunately, this is not always the case.
Bobby Henon was a member of the Philadelphia City Council while he was on the payroll of Local 98 of the International Brotherhood of Electrical Workers union. Henon received a salary of $70,000 per year for what has been described by federal prosecutors as a “no show” job. Johnny Dougherty, the business manager of Local 98, was accused of using this employment relationship to benefit his union.
This was a clear conflict of interest. Dougherty and Henon were indicted on numerous counts of corruption, bribery and honest services fraud. On Nov. 15, 2021, Dougherty was found guilty on eight out of 11 counts, and Henon was found guilty of 10 out of 18 counts.
After the verdict was announced, Jennifer Williams, acting U.S. attorney general for the Eastern District of Pennsylvania, stated, “Today’s verdict is a strong message to the political power players of this city, and any city, that the citizens of Philadelphia will not tolerate public corruption as business as usual.”
Dougherty said, “What Councilman Henon and I were found guilty of is how business and politics are typically and properly conducted.” Properly conducted? Oh really?
If this is typically the way business and politics are conducted in the City of Philadelphia, it needs to change. Why should the voters tolerate corrupt practices of their elected political leaders when the same practices would not be tolerated by the judiciary or in corporate America?
In his 2021 year-end report on the federal judiciary, Supreme Court Chief Justice John Roberts wrote about the importance that the judiciary avoid conflicts of interest. He stated, “We are duty bound to strive for 100% compliance [of our rules by judges] because public trust is essential, not incidental to our function.” Why don’t all law-makers hold themselves to the same standard?
Companies have conflict of interest policies that employees must adhere to. In my experience serving as a CEO and as a director on the boards of numerous organizations, avoiding conflict of interest is taken very seriously. Why? It exposes you to liability if it can be shown that you were not acting in the best interests of your organization.
A conflict of interest situation may be unavoidable due to the multiple organizations a board member serves. In corporate America, board members must annually disclose their potential conflicts of interest, usually to the board’s governance committee.
When an issue is brought to the board for discussion and vote, a board member must disclose their conflict of interest and recuse themself from not only from voting on the issue, but also from the discussion and debate. What they say may influence the vote of others. Failing to do so damages their reputation and personal integrity in the eyes of their fellow board members.
In his departure comments from the U.S. State Department, Rex Tillerson, former chairman and CEO of Exxon Mobil and former secretary of state under former President Donald Trump, said, “Never lose sight of your most valuable asset, the most valuable asset that you possess – your personal integrity.”
Tillerson continued, “Only you can relinquish [your integrity] or allow it to be compromised. Once you’ve done so, it is very, very hard to regain it. So guard it as the most precious thing you possess.” This is a lesson that all of us need to remember when facing a conflict of interest situation.
Stan Silverman is founder and CEO of Silverman Leadership and author of “Be Different! The Key to Business and Career Success.” He is also a speaker, advisor and widely read nationally syndicated columnist on leadership, entrepreneurship and corporate governance. He can be reached at Stan@SilvermanLeadership.com.