Introduction
The discussion around conflicts of interest (“COI”) in corporate organizations has recently moved beyond the realm of compliance into mainstream public debate, following a series of high-profile cases. Beyond the headlines, these cases have raised questions regarding the effectiveness and enforcement of COI policies in practice.
In Brazil, Federal Decree No. 11.129/2022, which regulates Law No. 12.846/2013 (“Brazilian Anti-Corruption Law”), provides an overview of the parameters for an effective compliance program. In this regard, the Office of the Comptroller General (“CGU”) further detailed these parameters, providing guidance for implementing integrity measures aligned with market best practices - among which conflicts of interest policies stand out as a key components of effective integrity programs.
This article aims to analyze the challenges organizations face when implementing COI policies, the potential risks involved and how to prevent them.
Case study and consequences
A conflict of interest occurs when personal motivations or external relationships interfere – or appear to interfere – with an individual’s duty of seek the organization's best interests, i.e., when they may compromise one judgment in fulfilling their responsibilities. Practical examples include favoring suppliers due to personal gain, engaging in romantic relationships between superiors and subordinates, or maintaining undisclosed financial ties with competitors.
In early 2025, a global scandal involving conflict of interest within a prominent company garnered worldwide attention after its exposure in an unexpected public setting – a concert. Although the case attracted international interest due to the circumstances of its exposure, it also revealed the inappropriate relationship of two senior executives in a direct reporting line. In another very similar popular case, the company was compelled to take both internal and external measures, which resulted in the suspension and subsequent resignation of both members, alongside with a public statement on its website about the dismissal of executives for breaching the integrity program and reaffirming its commitment to ethics and compliance
This is one of several cases which demonstrate how non-compliance with COI policies can lead to serious repercussions, affecting the organization’s reputation and undermine governance structures and work environment. For listed or regulated companies, it may even trigger regulatory scrutiny or market devaluation.
Practical measures
When developing COI policies and internal controls, companies should tailor their policies to their business profile, risk exposure and cultural context to ensure effectiveness of these controls. Broadly, these initiatives fall into two categories: awareness and control.
Regarding awareness, practical initiatives may include periodic training sessions that use clear, accessible language and real-life examples tailored to the audience. In addition, companies can offer onboarding sessions addressing conflicts of interest topics; and internal communication campaigns explaining how to identify and respond to potential conflicts, as well as practical workshops on how to properly fill and update a COI disclosure form.
As for control, it can be implemented through an integrated platform that consolidates all COI disclosures records in a single database and, therefore, track updates. This system could trigger automated alerts to the Human Resources Department, employee’s manager and/or to the Compliance Department whenever an employee changes position or responsibilities and/or a promotion occurs, prompting a quick review of potential new conflicts. In addition, establishing periodic reviews and renewed disclosures from key decision-makers, as integrate COI assessments into procurement, hiring, and promotion processes ensure consistent oversight by organizations.
These mechanisms foster transparency, traceability, accountability, and proactive risk management across the organization.
Conclusion
Conflict of interest policies and controls constitute part of a broader set of measures within a compliance framework that operates much like a system of checks and balances. Each policy and mechanism – from disclosure forms to whistleblowing channels – acts as a safeguard ensuring the overall effectiveness of the integrity program when another control fails.
In this sense, one of the case studies illustrates this check and balances system: although the COI disclosure form was not properly filled by the employees, the misconduct was reported through company’s whistleblowing channel, which allowed for the proper internal investigation that led to the incident being remediated. One control failed, but the other succeeded – demonstrating the resilience of a well-structured compliance program.
Although no compliance program can guarantee absolute prevention, under Brazilian Anti-Corruption Law, effective integrity programs not only mitigate regulatory sanctions but also reduce the risk of reputational damage. To address these complex issues, many organizations rely on specialized firms or external counsel – whose independent expertise adds value to the compliance framework – to design, test and/or enhance their programs, ensuring impartiality and continuous improvement.
Ultimately, the effectiveness of COI management lies in the balance between awareness and control. While awareness builds understanding, control ensures enforcement and consistency. Together, they uphold the integrity framework alongside the other controls and policies of an integrity program. In this regard, in an environment in which integrity has become a decisive competitive advantage, companies that institutionalize these practices are better positioned as trusted players.
Authors: Salim Saud, Caroline Rosa, Leonardo Kozlowski, Giovanna Candal.