Defining conflicts of interest in mining

According to Gingras and Gosselin, the term “conflict of interest” evolved from describing simultaneous competing events to clashes between groups with opposing interests, and finally to cases where an individual, group, or institution is accused of illegitimate influence. According to Boatright's key definition that is often referred to in business ethics, a conflict of interest occurs when “a personal interest interferes with a person’s ability to promote the interests of another when the person has an obligation to act in that other person’s interest” (2017, p. 95). While many relationships can involve competing interests, the key element of a conflict of interest is the obligation present on one side. For example, consider a government contractor who is responsible for conducting environmental impact assessments while also owning shares in the company being evaluated. In their capacity as a government contractor, they are required to deliver an impartial and unbiased assessment, but they also have a direct financial stake in the company's success. The foundations of such conflicts of interest are best examined through principal-agent theory, which was developed by Jensen and Meckling (1976). In this theory, a principal hires an agent to perform a certain task. Because both act in their own self-interest, and due to asymmetrical information (where agents typically have better knowledge than principals), a problem of moral hazard can arise. In this scenario, the government serves as the principal, engaging the contractor as the agent to perform tasks like the environmental impact assessment.

This perspective highlights the objective factors that pose a risk of undue influence, rather than centering on an individual's mindset or decision-making process. In our mining example, conflicting interests represent an objective reality, regardless of whether the government contractor engages in any inappropriate actions. By shifting the spotlight from an individual’s mental state to analyzing objective circumstances, it becomes easier to pinpoint potential conflicts of interest proactively, before any misconduct occurs. This proactive approach enables the implementation of preventive measures, such as allowing the government contractor to recuse from the case when a possible conflict of interest arises. It is crucial to distinguish between potential and actual conflicts of interest, since determining the existence of an actual conflict often relies on subjective factors, including the agent’s level of integrity.