Have you ever thought what exactly a conflict to interest is? When did it appear and why is this phenomenon so negative and needless?
A conflict of interest is a phenomenon that mostly appears in commercial, formal and administrative relations. It is related to a so-called ‘double loyalty’ or situations when a given object or a person cannot stick to objectivity, because their main interest is not compared to the interest of other people, with whom they are somehow connected.
We should look at the example to understand this phenomenon completely. And now the situation between the manager and the Residents Community can help. Commercial relationships between the Złota 44 Residents Community and the Magnus Facility Management company, managing the building of Złota 44 is a classic example of a conflict of interest.
Conflict of Interest in Złota 44
Relationship between the manager and the Residents Community is a literary example of a conflict of interest, mostly because of personal connections. In this case, we can see two independent objects that maintain commercial relations and are under the leadership of one and only person.
The Magnus Facility Management company provides the service of managing the house and also many others, such as cleaning, concierge, technical supervision. The Residents Community of Złota 44 represent the interests of everyone living in this building. As any community, they can act individually or trust the managing to a representative or a company, having signed a contract of real estate management or a power of attorney. In case of Złota 44, managing is realized via a power of attorney, which is a general practice, and also via a contract of real estate management. Unfortunately, it is the worst of all possible options, limiting competition, causing different ‘pathologies’ and conflicts of interest.
What is the conflict of interest between the community and Magnus?
Bartosz Marmol, the manager of the Residents Community in Złota 44, trusted the managing to the Magnus Facility Management company, Bartosz Marmol being the director of it. Tell me it’s not a reason to talk about the conflict of interest yes. That would be terribly wrong!
There is no balance in conflict of interest
Imagine commercial relations between the Residents Community and the company. It is the executive and responsible party for providing services in favor of the Residents Community. Imagine hypothetically that there was some sort of conflict between these objects. For example, the Residents Community receives complaints about the cleaning that Magnus provides. Residents require an urgent correction of the level of cleanliness in the building. In this situation, after checking the complaints, the community management, which cares for the comfort of the residents, should interfere and improve the tidying and cleanliness of the house. If the service executive does not listen to the comments, the community should take the following steps to change the company responsible for tidying and cleanliness. Will this be the case with Złota 44? I doubt it! And I’ll immediately explain why. Imagine that you are the director of a company A and director of a company B. You occupy the same position in two different companies. The company A is a Residents Community. The company B is an authorized manager who manages and administers houses, and also provides services such as technical supervision, cleaning, concierge and many others.
As the director of the company A, you are to provide the availability of basic services for residents whose interests you represent. As the director of the company B, you manage the company that actually provides such services to residents communities, you want to get another profitable contract and increase the company’s profit. Nothing prevents you from signing a contract as the director of the company A with the company B. Being in the position of director of the company A, you are in an vantage point, considering that it is your company B that will receive this dream contract. Accordingly, as the director of the company A, you choose a service representative – namely the company B. Everything is very simple, right? Isn’t it too much? That is how it happens and have actually happened in Złota 44. Now, is it in the interests of the company A (the Residents Community) to change the manager and administrator because of the complaints from the residents? Of course not, because the decision to replace the manager because of services, that are provided not properly, is made by the director of the executive’s company. And as you may have guessed, it is not in his interest.
Conflict of interest consequences
Now when you can see using the example how a conflict of interest looks like, you should find out what consequences this phenomena has.
The case of Złota may serve as an example of monopoly. We have one executive and one client, who is to continue commercial cooperation bypassing complaints, defects or problems with provided services. Remember that it is one and only person, who represents interests of different independent objects. In case of any conflict (which may appear in such a situation), the Community will suffer losses, as well as residents.
You can read more about a conflict of interest on http://antykorupcja.gov.pl/ak/konflikt