NHS Scotland: Standards of Business Conduct

4. Guidance to Organisation – Managing the Risk of Conflicts of Interests

Transparent, impartial, and honest decision-making processes enable the Expectations of NHS Scotland Staff (see Section 2) to be implemented in practice. The best way of dealing with conflicts of interest is to prevent them arising in the first place. Health bodies must have systems of control in place, to reduce the risk of fraud, bribery, corruption, and misconduct in public office, and exercise any specific legal duties. Relevant law includes the Bribery Act 2010, and the Economic Crime and Corporate Transparency Act 2023.

Those systems of control must cover activities such as:

• How the organisation is governed and makes decisions.
• Recruitment, selection, and appointment of staff.
• The delegation of authority from the Board to officers.
• The procurement of goods and services.
• When and how the organisation will receive funding or other support from external organisations and individuals.
• How the organisation involves stakeholders and exercise accountability.

The Accountable Officer of a health body is responsible for appointing an individual as the ‘designated officer’ for the system of interests.

Responsibilities of the ‘Designated Officer’

• Promoting awareness of the Principles of Conduct in the NHS in Scotland.
• Developing any policies, procedures, guidance, and systems to enable the implementation of the Principles.
• Putting in place a system to identify all individuals whose interests the organisation will have to publish (as defined in Box 1 on page 6).

4.1 Managing Risk at Departmental or Directorate Level

Staff need to implement their health body’s systems, policies, and procedures, and manage risk locally. The table below sets out how risks to the Expectations of NHS Scotland Staff can arise:

Aim

The interests of patients always remain paramount.

Some potential risks

A department buys equipment or supplies from a supplier which provides poor quality supplies, or is unable to reliably meet the department’s needs, which compromises the continuous delivery of care.

A department allows its staff members to undertake other activities without ensuring that there is sufficient cover in place. This leads to some clinical activity being unnecessarily re-scheduled to the detriment of the patient, or additional cost being incurred to pay for bank or agency staff.

A member of staff has outside employment which requires them to work at a time when the NHS Board may require him or her to work, or work at a time which will give them insufficient rest.

Aim

Being impartial and honest in the conduct of their official business.

Some potential risks

A department does not follow the Board’s established processes for procurement and recruitment & selection, leading to a potential supplier or individual receiving preferential treatment.

Aim

Using public funds to the best advantage of the service, always ensuring value for money.

Some potential risks

Staff do not know when and how to declare an interest, leading them to taking part in an activity or decision that they should not have.

Aim

Staff do not abuse their official position for the personal gain or to the benefit of their family or friends.

Some potential risks

A member of staff has a close relationship to a candidate in a recruitment exercise, and recommends or appoints that candidate, even though the candidate may not be the best person for the position.

A member of staff prioritises the clinical treatment of his or her family/friends/associates ahead of other patients, without any clinical justification to do so.

Aim

Staff do not seek to advantage or further their private business or other interests in the course of their official duties.

Some potential risks

Staff not declaring any relevant interests, leading to safeguards not being put in place to prevent that business being unfairly advantaged.

Staff use their position to promote the use of a supplier that they have a close relationship with.

4.2 Holding Any Meeting

The Chair of a meeting should ask participants to declare interests that are relevant to the business at the start of the meeting. A standard prompt in the meeting agenda would help, for example:

“Staff are reminded that they must declare any interests they have in the items of business for consideration, identifying the relevant agenda item and the nature of the interest.”

Staff should always declare interests at the start of the meeting, and the item(s) of business which the interests are relevant. This will make those present aware of the interests before the item is discussed. For example:

• I declare an interest in item (X) for the following reason(s)…

Staff should provide enough information for those present to understand why there is an interest to declare. Any declarations made should respect the need to protect the confidentiality of another person’s business or financial interests when making a declaration of interest. For example: “I declare an interest as my partner is a member of the organisation making the application.” In this example, there is no need to name the individual, or provide details about how long the individual has been a member and in what capacity.

When staff have declared an interest in an item, the Chair of the meeting should determine the appropriate and proportionate action to take to avoid a conflict of interest affecting decision-making. The factors the Chair can consider include:

• The significance of the declared interest to the item that is being discussed, and how this may influence the individual’s actions.
• The extent that the individual, or their associates, will personally benefit from the decision.
• The extent that it is essential for the individual to participate in the discussion, even if this is just to offer specialist or professional advice that will inform the quality of decision-making.

There is a range of options available when an interest is declared. If the individual’s presence is not essential to the discussion and decision of the item, they may elect to recuse themselves from the meeting for the item. The Chair could conclude that the interest is not significant, and the individual can fully participate, or alternatively take measures that limit or prevent their participation in the decision or the associated process altogether. Regardless, the decision on what action was taken in response to the declaration should be recorded in the minutes of the meeting, and any relevant papers associated with the decision on the item.

If the Chair has an interest, they should pass the role of chair of the meeting to someone else for the affected item of business, who should in turn follow the above steps.

4.2.1 Meetings with Industry Representatives

Every effort should be made to avoid face-to-face meetings with industry representatives which produce health-harming products. However, on occasions this may be necessary, for example, to enable the effective regulation of industry or the implementation of law or Government policy.

When considering a meeting with any industry representatives, staff should consider the following questions:

1. What is the role of industry or representative in the meeting?

2. What is the health body’s role at the meeting?

3. Who is involved in organising the meeting?

4. Who is providing funding for the meeting?

5. Who is attending the meeting?

6. Where is the meeting being held?

7. What is the scope for informal, unstructured engagement with the industry, and how can this be avoided?

8. How could the interaction be perceived by other external stakeholders?

9. How can transparency be maintained throughout the meeting?

4.3 Recruitment and Selection of Staff

If staff are involved in a recruitment & selection process, and they know an applicant, then they should declare this to the recruiting manager at the start of the process.

The recruiting manager should assess the nature of the declared relationship, for example whether the candidate a ‘close associate’ of the member of staff (see Indirect Interests in Section 3), or someone whom the staff member has met occasionally, or only knows in the workplace.

Where a member of staff has made a declaration that suggests that the candidate is a ‘close associate’, then the member of staff should not be involved in the decision-making that either shortlists candidates or makes the appointment.

The recruiting manager may, depending on the nature of the declaration, allow the member of staff to be involved in the recruitment process, such as:

• Providing a recommendation or a reference for an applicant.
• Providing feedback on test results and other aspects of the selection process.
• Being a member of an interview panel or someone supporting the panel.

The recruiting manager and panel must assess the merits of supporting information provided by staff in the light of any declared interests.

If a candidate is a close associate of the recruiting manager, then the recruiting manager should remove themselves from the process. The responsibility of recruiting manager should be passed to someone of at least equivalent authority who does not have an interest.

4.4 Procurement of Goods and Services

No supplier or potential supplier should have an unfair advantage over other suppliers. Regulation twenty-five of The Public Contracts (Scotland) Regulations 2015 requires a contracting authority, such as a health body, to take appropriate measures to prevent, identify, and remedy conflicts of interests arising in the conduct of procurement procedures. The reason for this is to avoid any distortion of competition and ensure equal treatment of all potential suppliers of goods and services in the market. Regulation 58 (8) (e) allows a contracting authority to exclude an organisation from taking part in a procurement exercise if the conflict of interest cannot be remedied with less intrusive measures.

Health bodies should assure themselves (through their systems of governance and management) that there are systems in place to implement the above regulations.

Staff can protect the integrity of procurement processes by:

• Never informally sharing with potential suppliers the prices that are currently paid for goods or services, or other sensitive commercial information.
• Always declaring any relevant interests whenever they are involved in any procurement activity, and following the procedures that the health body puts in place to identify any interests within the procurement process.

Site Visits/Inspections to Inform the Procurement Decision

It is possible that officers may be required to inspect the functioning of equipment or other goods or services at separate locations, to undertake an assessment to inform a contract award. The costs of such visits must be borne by the NHS body carrying out the procurement, and not the bidders.

A robust procurement project will ensure that the evaluation process prioritises, identifies appropriate site visits, and treats all bidders fairly.

The normal controls for arranging and approving travel and accommodation before any visits should be applied.

Site Visits to a Contractor After a Procurement Decision

Staff may be required to visit the premises of contractors after the contract is awarded. An example would be training or familiarisation with equipment or software that the health body has already agreed to purchase. In these circumstances it is acceptable for the contractor to pay for the costs of such visits. This is because this is not conferring a gift to the individual member of staff, and the contractor will have anticipated the need to pick up such costs when bidding for the contract.

In all cases however it is good practice to require a manager who is not involved in the relationship with the contractor to approve the acceptability of any such visits. This is to protect the integrity of any future procurement decisions which may involve that contractor. For example, there could be the perception of corruption if such the frequency of such visits were excessive and conferred to the recipients an unwarranted level of hospitality and luxury, such as in overseas locations.

Ongoing Contract Management Relationships

Once a contract of supply has been established, certain individuals will have responsibilities to monitor the performance of the supplier and ensure that the supplier is delivering to the standards required under the contract. Those individuals should not have an interest in the supplier whose performance they are monitoring.

The procuring organisation should take corrective action in the presence of declared interests. This can include:

• Removing the individual from monitoring responsibilities for that supplier and assigning the task to another employee. The individual with the interest should also not be allowed to authorise any orders or payments for the supplier concerned.

Corruption is commonly defined as “The abuse of trusted power for private gain.” Ongoing contractual relationships can increase the risk of corruption, as personal relationships will naturally develop with contractor staff. The expenditure associated with the contract can become ‘business as usual’ and may not attract any particular scrutiny (compared to new expenditure). Similarly, once personal relationships and working practices have been well-established, there is a risk that is harder for a new contractor to win a contract through a procurement process.

In this context, the system for declaring interests may not flag any concerns or have any practical effect on responding to the risk of corruption. It is possible that staff may have concerns about the actions of other staff, but do not know what to do, particularly if the concerns relate their managers or other senior staff.

Within NHS Scotland there is a host of systems, arrangements, and policies in place, which if properly implemented, will significantly reduce the risk of corruption. Each Board and its Accountable Officer need to assure themselves that their local systems of control are working effectively in practice.

Key issues to consider include:

Staff Training and Awareness

Three of the specific responsibilities of the Board’s Accountable Officer are:

“3.1.12 ensure that managers at all levels have a clear view of their objectives, and the means to assess and measure outputs, outcomes, and performance in relation to those objectives.

3.1.13 ensure that managers at all levels are assigned well defined responsibilities for making the best use of resources (both those consumed by their own commands and any made available to third parties) including a critical scrutiny of outputs, outcomes, and value for money.

3.1.14 ensure that managers at all levels have the information (particularly about costs), training and access to the expert advice which they need to exercise their responsibilities effectively.”

The Accountable Officer will need assurance that the organisation has access to the level of financial knowledge, skills, and experience it requires. This may require working with other parts of NHS Scotland. This includes working with NHS Scotland Counter Fraud Services, which produces training and learning materials for the prevention of fraud, bribery and corruption.

Financial Control

The Board’s Scheme of Delegation, and controls relating to procurement, ordering, and delegated authority are operating as intended. For example:

• Is there appropriate segregation of duties between the steps of requisitioning, ordering, receiving, and the payment for goods & services?
• Do management monitor actual spend against expect spend? If a department’s budget is merely its share of the Board’s resources based on an allocation model, then the budget itself is not a helpful tool for monitoring expenditure.
• How sophisticated are routine financial reports? Who looks at them? Are there reports which can detect unusual or unexpected spend, and identify who is authorising transactions?
• When a contract comes to an end, is a fresh procurement exercise always run or is the contract routinely extended?

The Board should be effectively implementing all elements of the Counter Fraud Standard.

Reporting Mechanisms

Staff know how and when to contact their Fraud Liaison Officer, or alternatively Counter Fraud Services. If the issue relates to a member of the Board, how to contact the Board Chair, or alternatively the Ethical Standards Commissioner.

Staff are aware of, and know how to use the Once for Scotland whistleblowing policy and procedures should they wish to use that process.

4.5 Secondary Employment

Approval of secondary employment must be managed in accordance with the Once for Scotland Secondary Employment Policy.

Employees should also notify their manager of any volunteering or unpaid work if it has the potential to have an impact under the categories outlined above.

Individuals should discuss any proposed or existing secondary employment with their line manager, and if it is acceptable, then there are two options.

Option 1: The individual carrying out secondary employment during his or her core working hours.

There should be a relationship between your public body and the secondary employer, underpinned by a written agreement setting out the terms of the secondary employment.

The individual will carry out the work at a time agreed with your public body, and there is no change to his or her remuneration.

The individual must declare this secondary employment, as a Category 2 interest.

The individual may also be required to declare the interest when it is relevant to a matter that the public body is dealing with.

Option 2: The individual carrying out secondary employment in his or her own time.

The term of the employment is a matter between the individual and the secondary employer, however the individual should ensure that secondary employment satisfies the criteria listed above.

If the individual is required to declare interests, then the work could be a financial or a non-financial interest, depending on whether it is remunerated or not.

The individual may also be required to declare the interest when it is relevant to a matter that the public body is dealing with.

4.6 Commercial Sponsorship or Donations to the Public Body

Category 1: Direct Financial Interests, Sub-Category 1E, summarises the rationale and principles to be followed for commercial sponsorship. Further details on the controls to be followed are below:

• The health body must first enter into a formal sponsorship agreement with the commercial organisation, setting out the terms and conditions of the sponsorship.
• The sponsorship agreement should benefit both the sponsor and the public sector body, and uphold the principles set out Sub‑Category 1E: Sponsored Events, and not include a commitment for the NHS body to procure goods or services from the sponsor or any other supplier.
• The health body’s signatory to the agreement should be different and more senior to the individuals who will be involved in the sponsored activity.
• The commercial sponsor should pay the health body the amount set out in the agreement before any arrangements are made.
• The commercial sponsor should not directly arrange any bookings or hospitality for anyone attending the event. The health body should organise, approve, and pay for delegates’ attendance at the event through its procurement system, and arrange and pay for any associated travel and accommodation that is not covered by the course or delegate fee.
• The health body should publish the sponsorship agreement on a website.