7.2 General law
Fiduciary duties are obligations of trust and confidence owed by a fiduciary to another person. The law usually recognises certain relationships, including those of director and company and employer and employee, to be fiduciary relationships. The courts may also find other relationships to be fiduciary in nature, particularly where one party stands in a position of trust and confidence in relation to the other, and is bound to place the interests of the other before his or her own personal interests. As Government Board members will often be in an similar position to a company director, they may be subject to fiduciary obligations.
Company directors, and other Government Board members acting in a fiduciary capacity, have an obligation to:
- act honestly and to exercise powers for their proper purposes
- avoid conflicts of interests
- act in good faith
- exercise diligence, care and skill.
Act honestly and to exercise powers for their proper purposes
Members of Government Boards must act openly and honestly at all times in the performance of their duties. They must ensure that they do not use information acquired by virtue of their position to gain directly or indirectly an advantage for themselves or any other person.
Avoid conflicts of interest
Members of Government Boards should avoid actual or potential conflicts between their duties to the Government Board and their personal interests or their duties to others. Members of Government Boards should also be aware of possible perceived conflicts of interest. The Cabinet Handbook states that:
Departments are to ask the proposed nominee(s) to declare whether there are any reasons why they should not be appointed to the relevant Government Body. Specifically, proposed nominees are to be asked to consent to disclose whether, if successful, there would be any conflicts of interest, i.e. any private interests that may affect or appear to affect the appointee's public duty.
Members of Government Boards who have or acquire directly or indirectly personal or pecuniary interest in a matter decided or under consideration by the Government Board must:
- as soon as reasonably practicable, prior to the Government Board meeting, disclose to the Government Board full and accurate details of the interest
- not take part in any discussion by the Government Board relating to the matter1
- be absent from the room when any such discussion or voting is taking place
- not have access to information of the Government Board in relation to the matter in which he or she has the conflict
- not seek, directly or indirectly, to influence the outcome of any deliberations by the Government Board or any of its officers in relation to any matter to which he or she may have a conflict
- disclose interests in contracts with the Government Board and potential conflicts arising from offices or property held by the member or his/her family members.
Disclosure of this information should be recorded in the minutes of the meeting of the Government Board and reported to the Minister as soon as possible after the meeting. Particular Government Boards may require members to make prior declarations of interests through completion of a Registration of Personal Interests Form (an example appears as Attachment 4).
If there is any doubt as to whether a conflict of interest exists the relevant member should err on the side of caution and declare the interest and excuse himself or herself from the room when any discussion or voting on the particular issue the subject of the conflict is taking place. Further, certain officers defined as ‘designated persons’ under the Integrity Act 2009 can seek the confidential advice of the Integrity Commissioner about conflicts of interest (see Chapter 7.9 of this Guide).
Act in good faith
Because of their position of trust, member's actions and standards of behaviour are required to be exemplary. Members should always act bona fide in the interests of the Government Board and never in their own interest or to pursue personal agendas. Members are expected to act in the best interests of the Government Board, the state and the community.
Exercise diligence, care and skill
Members of Government Boards have to ensure that they exercise diligence, care and skill in the performance of their duties. They must also take reasonable steps to inform themselves about the functions of the Government Board, its business and activities and the circumstances in which it operates. A member must give close attention to Government Board affairs. A member should obtain sufficient information and advice, and exercise an active discretion at all times to enable him/her to make conscientious and informed decisions. A member should also maintain confidentiality of Government Board discussions and of information made available to them, such as Government Board papers.
- Section 119 of the State Development and Public Works Organisation Act 1971 provides an exception to this rule, stating that a project board member must disclose to a meeting any direct or indirect financial interest that the member has in a matter being considered and must not take part in any vote on the matter but may participate in discussion.