Conflict of Interest Investigations

Conflict of Interest Investigations

A conflict of interest occurs when an employee or agent—someone who is authorized to act on behalf of a principal—has an undisclosed personal or economic interest in a matter that could influence his professional role.

These schemes involve self-dealing by an employee or agent and can occur in various ways. For example, a conflict might occur when an employee accepts inappropriate gifts, favors, or kickbacks from vendors, or when an employee engages in unapproved employment discussions with current or prospective contractors or suppliers.

Conflict of interest schemes generally constitute violations of the legal principle that an agent or employee must act in good faith, with full disclosure, and in the best interest of the principal or employer.

Conflicts of interest do not necessarily constitute legal violations, as long as they are properly disclosed. Thus, to be classified as a conflict of interest scheme, the employee’s interest in the transaction must be undisclosed.

There are a number of ways in which an employee can use his influence to benefit a company in which he has a hidden interest.

Common conflict schemes include conflicts in:

• Purchase schemes
• Sales schemes
• Delayed billings
• Business diversions
• Resource diversions
• Financial disclosures

Detection of Conflict of Interest

Conflicts of interest are probably one of the most difficult schemes to uncover. There are no fast and easy detection methods for this type of fraud. Some of the more common methods by which conflicts are identified include tips and complaints, comparisons of vendor addresses with employee addresses or subsequent employers, review of vendor ownership files, review of exit interviews, policies requiring certain employees to provide the names and employers of immediate family members, and interviews with purchasing personnel regarding the favorable treatment of one or more vendors.

How Can A Private Investigator Help in Conflict of Interest Investigations?

A private investigator can help in conflict of interest investigations by gathering information and evidence about a possible conflict of interest. A conflict of interest occurs when an individual or organization is involved in multiple interests and serving one interest could harm the other.

Some ways that a private investigator can help in conflict of interest investigations include:

• Research: Private investigators can conduct research on an individual or organization to gather information about their business and financial interests.
• Interviews: Private investigators can conduct interviews with individuals who may have knowledge of a possible conflict of interest, such as employees, business associates, and customers.
• Records search: Private investigators can search through public records such as business registrations, patents, and trademarks to gather information about an individual or organization’s business and financial interests.
• Surveillance: Private investigators can conduct surveillance to observe an individual or organization’s business activities and interactions with other individuals or organizations that may be involved in a possible conflict of interest.
• Social media and online search: Private investigators can use social media and online search engines to gather information about an individual or organization’s business and financial interests.

It’s important to note that private investigators must comply with all relevant laws and regulations, such as those related to privacy, and must not use illegal or unethical methods to gather information. It’s also important to have a professional who has the experience and resources to conduct an effective and efficient investigation, and also to comply with the laws and regulations of the jurisdiction where the investigation is taking place.

Our experienced Private Investigators and Certified Fraud Examiners utilize a multi-faceted approach to detect, collect evidence, and prevent such schemes from damaging your business.  Furthermore, we will assist you in establishing policies that define what constitutes a conflict of interest and prohibiting any such entanglements by officers, directors, employees, or other agents of the organization.