A few months ago, Ram Guha’s quit the Committee of Administrators of the Board for Control for Cricket in India – the BCCI. His reasons brought back that term that Indians just don’t seem to understand – Conflict of Interest! And the great Gavaskar’s response, that Ram was questioning his integrity, just confirms that education and good breeding has nothing to do with this lack of understanding.
So, what is conflict of interest? I am sure there are very clever and erudite definitions that scholars of governance have come up with. But as I am no scholar, I am not going there. To me, it’s simply asking the question – am I in a position of power where I have the POTENTIAL to unfairly favour or put at a disadvantage any person or institution I am associated with independently? If the answer is “yes” or even a “maybe”, I am clearly in a position where my interests are in conflict. And why is conflict of interest bad? Simply because it muddies the waters by getting in extraneous factors other than pure merit in decision-making and further skewing an inherently non-level playing field!
There are a few keys assumptions or considerations that form the basis of the idea of conflict of interest. One, human beings by nature are emotional beings and so when we make decisions, we struggle to be completely objective. And this is particularly relevant for us Indians as kinship ties based on caste, college, club, golf (doesn’t seem to extend to other games, somehow), language etc. somehow seem to trump all other considerations, especially merit! Two, those that believe in objectivity and impartiality in decision-making understand that this should not be just a matter of fact (which is anyway hard for an external observer to verify) but also a matter of perception. And three, and a consequence of two, it is critical to put in place policies and processes to minimise conflicts of interest so that these can be uniformly applied to all individuals – this is the process of institutionalisation.
Gavaskar’s bafflement is a bit understandable though because I too am unclear on what the conflict of interest is in his case but to say that he is a man of integrity and is therefore beyond this is problematic because conflicts are sometimes not obvious. The argument perhaps is that as his company represents some players, as a commentator, he can potentially praise “his” players more than they deserve, influencing their selection and perhaps getting them (and hence his company) better advertising deals. It doesn’t matter if he is actually praising them fairly or not because the perception that he may be doing so is as important as the fact. And that he is an honourable man is irrelevant because institutionalising a process means to minimise the chance that tomorrow someone else of lesser integrity than him gets into the same position!
Ram’s revelation also brought to the fore, the conflict that plagues Dravid’s position as coach of India U19 and India A, and mentor (whatever that means!) of IPL team, the Delhi Daredevils. I am an unabashed Dravid fan and believe he can do no wrong, but I have to agree with Ram on this – he can potentially favour selection of a Daredevils player to the India A team and so there is a conflict! My own soft spot for Dravid did not pick this conflict, which is the point – conflicts of interest are sometimes not easy to spot!
Governance – corporate or otherwise – is replete with potential conflicts of interest and it is often very difficult to create conditions where this can be minimised, let alone avoided. One of the mostbaffling ones in corporate governance is the position of a Chairman and Managing Director! How can a board, whose key role is to exercise oversight over management, play this role when its chair is also the subject of this oversight? In NGOs where I have been the CEO or where I serve on the board, this conflict is resolved simply by not having the CEO a member of the board but as an invitee. Companies seem to prefer combining these 2 functions.
So, how does one deal with conflicts of interest? The easy solution is to avoid conditions that create them. So, in the case of cricket, don’t allow Gavaskar to do commentary or Dravid to mentor the Daredevils (which he, to his credit, did). But that will deprive us of Gavaskar’s insights and the Daredevils of someone like Dravid. It is these dilemmas that make institutionalising the prevention of conflict of interest so difficult. I believe that the answer lies in a combination of (a) separating governance from management (b) ensuring everyone concerned understands what constitutes conflict of interest, (c) being transparent about potential conflicts, especially to the body responsible
for governance (d) persons recusing themselves from any decisions that could be impacted by the conflict and (e) formally recording all conflicts that were brought to the governance body and how they were resolved. So, if Dravid’s job as coach requires him to sit in a selection meeting for an Under 19 team, he should definitely not be a mentor of the Daredevils. Gavaskar perhaps should completely recuse himself from any discussions with sponsors of the players his company manages, though this will not pass the perception test. And have CEOs of NGOs and companies as invitees to boards, not as members!
And if all else fails, apply the Precautionary Principle – if in doubt, don’t do it!
June 2017