A conflict of interest is a situation in which a person or organisation is involved in multiple interests and serving one interest could involve working against another. Usually, it relates to situations in which the personal interest of an individual or organisation might adversely affect a duty owed to make decisions for the benefit of a third party.

 

An actual conflict of interest exists if the circumstances are reasonably believed to create a risk that a decision may be unduly influenced by another. For example, if a civil servant accepts a valuable gift from a person, he is likely to take decision in the favour of that person.

 

A potential conflict of interest arises where an interest or obligation, whether personal or involving a third party, could conflict with official duties and responsibilities in the future. For example, if a person is directly reporting to his spouse in the office, their personal relationship has a potential to affect their official duties. (160 words)