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 Chapter 8.1. If appointed to an incorporated Government Board, 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 Government Board director.

As discussed at Chapter 7, the duties imposed on directors under the common law and the Corporations Act require a director 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 service employee's role might be to represent the government at Government Board meetings, it would be contrary to the legal duties of a director to act, or cause the Government Board to act, contrary to the interests of the corporate entity.

Where a public service employee attends meetings as an observer (i.e. without formal appointment as a director), the Corporations Act may, in some circumstances, deem the employee to be a director if the Government Board 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 public service employees for actions taken as Government Board members is discussed at Chapter 9.1.