Conflict of interest policy directive for colleges of applied arts and technology

Overview

This binding policy directive is intended to protect the integrity and ethical standards of college boards and, as importantly, protect the integrity of a board member who may face a conflict of interest.

The intent of a conflict of interest policy is to assist individual board members to fulfill their duties in the interest of the public and to demonstrate high personal standards of moral responsibility, character, and ethics, which also protect the integrity of the board of governors as a whole.

The binding policy directive is issued pursuant to the authority in the Ontario Colleges of Applied Arts and Technology Act, 2002, which gives the Minister of Colleges and Universities the authority to issue binding policy directives in relation to the manner in which colleges carry out their objects or conduct their affairs.

Purpose and application

The purpose of this Minister’s Binding Policy Directive on Conflict of Interest is to enable a college board of governors to:

• assist an individual governor in determining when their membership on the board has the potential to be used for personal or private benefit, financial or otherwise
• protect the integrity of the board as a whole and its individual governors who follow conflict of interest provisions
• ensure that an individual is not disqualified from being nominated for or running for a board position because of a potential for conflict of interest
• protect the integrity and ethical standards of college boards and, as importantly, protect the integrity of a governor who may face a conflict of interest

This binding policy directive does not apply where:

• the interest is so remote or insignificant that it cannot reasonably be regarded as likely to influence the governor
• a pecuniary or other interest is in common with a broad group of which the governor is a member (for example, students, support staff, academic staff, administrative staff)
• where the issue is one of general or public information

Principles

Governors are expected to act honestly and uphold the highest ethical standards.

Governors are obligated to perform their official duties and conduct themselves in a manner that will bear the closest public scrutiny because colleges are part of the broader public sector and subject to more public scrutiny than private organizations.

Governors shall not have private interests, other than those permitted pursuant to this binding policy directive, laws, or statutes, that would be affected particularly or significantly by college decisions or actions in which they participate.

When appointed, governors must arrange their private interests to prevent conflicts of interest. If a conflict does arise between the private interests of a governor and the official duties of that individual, the conflict shall be resolved in favour of the public interest.

Each governor, regardless of how they become a member, has a responsibility first and foremost to the welfare of the institution and must function primarily as a member of the board, not as a member of any particular constituency.

Glossary

Actual conflict of interest:

A situation where a governor has a private or personal interest that is sufficiently connected to their duties and responsibilities as a governor that it influences the exercise of these duties and responsibilities.

Governor:

A member of a college board of governors.

Internal governor:

One student, one academic staff member, one administrative staff member, and one support staff member elected to a college board of governors from their constituent group in accordance with procedures and conditions established by the board of governors in consultation with the college students and staff. The president of the college is also an internal governor by virtue of their position in the college.

Perceived conflict of interest:

A situation where reasonably well-informed persons could properly have a reasonable belief that a governor has an actual conflict of interest, even where that is not the case in fact.

Potential conflict of interest:

A situation where a governor has a private or personal interest that could influence the performance of a governor’s duties or responsibilities, provided that they have not yet exercised that duty or responsibility.

Binding policy directive

1. A conflict of interest arises when a governor’s private or personal interest supersedes or competes with their official duties and responsibilities as a member of a college board of governors. This could arise from an actual, potential, or perceived conflict of interest of a financial or other nature.
2. Each governor is to complete an annual Conflict of Interest Declaration form which is to be reviewed by the chair of the board.
3. At the beginning of every board meeting, the chair of the board of governors is to ask and have recorded in the minutes whether any governor has a conflict to declare in respect to any agenda item when.
   • The agenda item arises in the open portion of the board meeting, the governor(s) with an actual conflict of interest may remain in the room for the duration of the discussion and not participate in the vote on this item. The minutes are to record that the governor(s) in conflict of interest remained in the room for the discussion and did not vote on this item. Should the matter occur in the in-camera portion of a meeting, the governor(s) should withdraw while the matter is being discussed or voted on and the minutes should reflect this.
   • The conflict of interest is perceived or potential, the board of governors will determine whether the governor(s) remain for the discussion and vote on agenda items. The minutes should reflect what takes place.
4. In cases where a conflict cannot be avoided, a governor is to declare a conflict of interest at the earliest opportunity and, at the same time, should declare the general nature of the conflict. Where a conflict of interest is declared prior to a board meeting, the declaration is to be made to the chair of the board and the board is to be informed.
   • Where a governor is unsure whether they are in conflict, the said governor is to raise the perceived or potential conflict with the board, and the board is to determine by majority vote whether a conflict of interest exists. The said governor must refrain from voting on whether a conflict of interest exists.
5. Where a conflict of interest is discovered after the board’s consideration of a matter, it is to be declared to the board and appropriately recorded at the first opportunity. If the board determines that involvement of said governor influenced the decision of the matter, the board is to re-examine the matter and may rescind, vary, or confirm its decision.
6. Any governor who perceives another governor to be in conflict of interest in a matter under consideration is to raise this concern with the chair of the board. The chair, in turn, is to discuss the matter with the governor who is perceived to be in conflict and, as appropriate, to hold further discussion with the reporting governor. If the discussions do not lead to a resolution, the matter is to be brought to the board and the board is to determine by majority vote whether a conflict of interest exists. The governor perceived to be in conflict is to refrain from voting.
7. Where there has been a failure on the part of a governor to comply with this binding policy directive, unless the failure is the result of a bona fide error in judgment, the board is to:
   • Issue a verbal reprimand or written reprimand or request that a governor resign and/or remove the governor through processes established in board by-laws.
   • Note that Lieutenant Governor in Council (LGIC) appointees cannot be removed by the board. If the governor is an LGIC appointee, the board chair is expected to notify the Minister of Colleges and Universities.
8. Each board chair is to submit an attestation to the ministry to confirm the board’s compliance with this Minister’s Binding Policy Directive on an annual basis.

Summary of responsibilities

Colleges of Applied Arts and Technology

The board of governors is responsible for:

• opening each meeting with a call for disclosures of actual, potential, or perceived conflicts of interest
• ensuring that governors complete annual Conflict of Interest Declaration forms, and that all forms are reviewed by the Board Chair
• submitting an attestation to the ministry to confirm the board’s compliance with this binding policy directive on an annual basis

Ministry of Colleges and Universities

The ministry is responsible for:

• maintaining a current and relevant binding policy directive regarding conflict of interest
• reviewing, in consultation with college boards, in a regular and timely manner the effectiveness of this binding policy directive and issuing amendments as considered necessary
• collecting attestations of compliance with this directive from college boards of governors on an annual basis

Examples

Conflict of interest is something all corporate boards need to address in a proactive manner. The intent of the binding policy directive is to promote a consistent approach to conflict of interest situations across the college system and to establish the standards expected for colleges as public sector institutions.

Here are some examples of situations where conflict of interest commonly occurs in the operation of a college board of governors and suggestions for the best practices in dealing with such situations.

These examples are not intended to be an exhaustive or complete list. They serve as a guideline for colleges to assist boards in managing conflict of interest situations and to support relative consistency in the application of this binding policy directive across colleges.

1. Example of an actual conflict of interest situation for internal governors

A conflict of interest for a student governor would occur when an agenda item addresses an increase in the tuition fees for the particular program in which the student is enrolled.

For staff, an example is when an agenda addresses an item where a faculty member would be faced with a decision to eliminate the program in which the faculty member taught.

Another example is staff being involved in a discussion about providing confidential advice to the management collective bargaining position during the negotiation of a new collective agreement for the particular bargaining unit of which the staff person is a member.

Conflict of interest would not occur when the discussion of tuition fee increases was of a general nature or when the collective bargaining position being discussed was public information such as the discussion occurring during the public part of the board meeting.

2. Faculty, support staff, and administrators (internal governors) as part of the president’s evaluation or performance review

This is an example of a perceived or potential conflict of interest. It would be up to the board to establish how to proceed. It is recommended that college boards of governors discuss such issues in advance of the actual situation arising and establish a protocol or approach to use.

If it is the college’s practice to involve college staff in the evaluation of the president through instruments such as surveys submitted anonymously and of which the results are collated electronically, it is not a conflict of interest situation to involve college staff board members in a discussion of the results of the survey, as this would fall within the area discussed in the Purpose and Application section of this binding policy directive, where it references that conflict of interest does not apply where a pecuniary or other interest is in common with a broad group of which the governor is a member.

It is not considered in the best interests of the college for staff to play a role in the actual writing or delivery of the president’s evaluation.

3. Students taking part in the president’s evaluation or performance review

It is recommended that boards address the issue of perceived or potential conflict of interest in advance, and that similar principles as in the response to example 2 above, be applied as they are with respect to other internal members.

4. Actual conflict of interest with respect to the college president’s evaluation or performance review

The president’s involvement would be considered an actual conflict of interest when matters relating either directly or indirectly to their compensation, perquisites, and/or benefits are being discussed and/or decided upon. The president should neither participate in any way in nor be present for any such discussions. The board may require certain information from the president to assist their deliberations, but these queries must be of a general nature or relate to providing performance-related information concerning the president’s success in meeting agreed to objectives and must not in any way, either directly or indirectly, influence decisions on their compensation, perquisites, and/or benefits.

5. What to do if a fellow governor is in a conflict of interest but they have not declared it

It is the responsibility of the chair to ask and record in the minutes whether any governor has a conflict of interest to declare with respect to the agenda.

It is the responsibility of each governor to declare a conflict of interest and its general nature at the earliest opportunity. If a conflict is declared prior to a board meeting, the declaration should be made to the chair of the board. It is the responsibility of the governor with the conflict or the chair to declare the conflict at the board meeting.

If a governor does not declare a conflict when other board members believe one does exist, Section F of the binding policy directive makes it the responsibility of those who perceive that there is a conflict of interest to raise the issue with the board chair. It is the chair’s responsibility to discuss the conflict of interest with the governor perceived to be in conflict. If the chair and the governor in question cannot resolve the issue, the matter must be brought to the full board for resolution and the issue be decided by a majority vote.

6. Recording declarations of conflict of interest in the board’s minutes

Recording declarations of conflict of interest protects both the integrity of the individual member and the board as a whole and is a matter of public record. As well, the board minutes should record that the member in conflict did not participate in any discussions or voting and, if applicable, left the room.

7. Governor leaving the room after having declared a conflict of interest

As outlined in Section C of this binding policy directive, the governor’s presence or absence will depend on the nature of the conflict and whether the board is in closed or open session. Where there is an actual conflict (a situation where a governor has a private or personal interest that is sufficiently connected to their duties as a governor that it influences the exercise of these duties and responsibilities) and the board meeting is in-camera or is a closed session, the binding policy directive requires that the board member not participate in the discussion by leaving the room. In the open portion of the meeting, the governor may stay but not participate in the vote.

Where a perceived or potential conflict of interest arises in a closed session, the board will decide whether the individual should remain in the room.

8. A member of a board of governors owns a company and submits a tendering proposal to the college

A governor may submit a tendering proposal to the college. However, at the point in time when a governor becomes aware that their company might submit a tender, the governor should make the intention to do so known to the board chair. This situation could lead to either a perceived or actual conflict of interest, as the governor might have information not available to competitors in the tendering process. The board of governors will need to consider how to proceed to ensure an open, fair, and transparent process.

Should the governor’s company actually submit a tender, the situation would then need to be treated as an actual conflict situation should the board be involved in a decision relating to the tender.

9. Governors applying for a position within the college

The individual’s position as a board member could be perceived as being of benefit in the competition for a position with the college. A board member would need to resign from the board before applying for a position at the college. They cannot apply as an active member of the board in the hopes of protecting their position on the board if they are not the successful candidate.

10. Governors or members of their families taking courses or programs without paying tuition

Governors are not entitled to any personal benefits from their participation on a board.

11. Boards allowing funds to be spent on special mementoes to governors retiring from the board.

Small incidental gifts may be appropriate in recognition of the services provided by governors. These mementoes should be appropriate as a common expression of courtesy, within the normal standards applicable to the use of public funds and acceptable upon public scrutiny.

12. Politicians sitting on a college board

When the colleges were first established, one seat was reserved for municipal politicians. However, as there may be instances in which the person may be in an actual, potential, or perceived conflict of interest, the board would need first to carefully consider whether the benefits outweigh the costs of losing one board member’s input and vote from time to time.

13. Remaining members able to pass a motion when there is a quorum at the beginning of a board meeting but, due to an actual conflict of interest, a governor has to withdraw. This leaves the board without the designated number of members present for a quorum.

Each college is responsible for seeking its own legal advice on legal issues of board governance. However, it is noted that the general rule is that quorum is required for voting purposes.

14. The board of governors is discussing an external appointment to be made to a subcommittee. Two governors declare that they know the person being discussed because the person is a neighbour and question

There is no conflict of interest here because the interest is remote and generally cannot be regarded as likely to influence the board member. The situation would be different if the person being discussed were a close family member or business partner of the identified governors.