May/June 2017

On Ethics: You Be the Judge
A Question of Motives

An engineer wants a piece of a local power plant project. But where do his interests lie?

What Do You Think?
Was it ethical for Chance to submit a proposal to serve as the owner’s representative for the utility on the project?

What the Board of Ethical Review Said
As a general matter, a conflict of interest is considered to occur when an individual or organization is involved in multiple interests, one of which could possibly corrupt the motivation for an act in another. The presence of a conflict of interest is independent from the execution of an impropriety. Therefore, a conflict of interest can be discovered and voluntarily defused before any corruption occurs.

A widely used definition of a “conflict of interest” is a set of circumstances that creates a risk that professional judgment or actions regarding a primary interest will be unduly influenced by a secondary interest. Primary interest refers to the principal goals of the profession or activity, such as the protection of clients, public health and safety, and the duties of public office. Secondary interest includes not only financial gain but also such motives as the desire for professional advancement and the wish to do favors for family and friends, but conflict of interest rules usually focus on financial relationships because they are relatively more objective, fungible, and quantifiable. The secondary interests are not treated as wrong in themselves, but become objectionable when they are believed to have greater weight than the primary interests. The conflict in a conflict of interest exists whether or not a particular individual is actually influenced by the secondary interest. It exists if the circumstances are reasonably believed (based on experience and objective evidence) to create a risk that decisions may be unduly influenced by secondary interests.

The key to understanding this case, according to the Board, relates to the fundamental question as to whether Chance’s professional judgment and actions regarding his primary interest (i.e., serving as a director of the public utility) was unduly influenced by a secondary interest (being retained to serve as the owner’s representative on the contract for the new power plant). It is the Board’s view that Chance’s actions in serving as a director of the public utility, voting to approve financing for the new power plant, and then resigning and submitting a proposal to serve as the owner’s representative on the power plant project at a minimum creates the appearance of a conflict of interest and suggests more improper motives.

Chance may have intended to resolve the conflict of interest by resigning from the board of the utility prior to submitting his proposal to provide engineering services for the project, as would be proper under Section II.4.e of the Code of Ethics. However, at the time Chance formed his own company, he had particular and specialized knowledge (see Section III.4.a of the Code) as a board member of the utility that the utility would likely engage in a project that would need engineering services, which he could provide. The facts of the case do not indicate whether Chance had informed the board at the time of the vote that he had started his own engineering firm, as could have been required by Section II.4.a of the Code.

In any case, Chance’s actions could result in public suspicion that he had created a competitive advantage for himself due to the particular and specialized knowledge of the project he had acquired during his service to the utility. While arguably Chance’s objectives as a director of the public utility who voted to approve financing for the new plant may have been completely pure, his decision to resign from the board following the vote and thereafter submit a proposal to serve as the owner’s representative for the utility on the project at the very least calls into question his objectives and suggests possible impropriety on his part.

Conclusion
It was not ethical for Chance to submit a proposal to serve as the owner’s representative for the utility on the project.

NSPE Code References
Section II.3.a., Section II.4.a, Section II.4.d., Section II.4.e., and Section III.4.a.

For more information, see Case No. 13-1.