8.2 Incorporated Government Bodies - Conflicts of Interest

The role of public service employees as Government representatives appointed to incorporated bodies differs significantly to that detailed at 8.1. In relation to incorporated Government bodies, public service employees need to be mindful of the need to avoid a conflict of interest between their duties as a government officer and their duties as a board director.

As discussed at 7.8, the duties imposed on directors by common law and the Corporations Act 2001 (external link) stipulate that a director is to act honestly and in the interests of the company as a whole rather than to the benefit of sectional or third party interests. While the public sector employee;s role might be to represent the Government at board meetings, it would be contrary to the legal duties of a director to act, or cause the board to act contrary to the interests of the corporate entity.

Where a public sector employee attends meetings as an observer (ie without formal appointment as a director), the Corporations Act 2001 (external link) will deem the employee to be a director if the board;s directors become accustomed to acting in accordance with the observer;s instructions or wishes. The observer will then attract the legal duties imposed on directors.

The related issue of indemnity of crown employees for actions taken as board members is discussed at 9.1.

Last reviewed: 17 July, 2009

Last updated: 22 July, 2009

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