Most of the time when we hear the term conflict of interest, it is in connection with an elected public official or judge. This is because people in positions of power are more likely to face charges of a conflict of interest at some point in their careers. Many of the decisions they make must not be tainted by the possibility of favoritism or personal gain. It is not unusual for public officials to divest themselves of anything which could even be construed as a conflict of interest, including stocks, pensions, board memberships and former clients.

In order to understand what a conflict of interest means, it may help to examine what we mean by 'interest'. Almost all of us have personal or professional interests, whether it be a hobby, an investment in a business or a desire to help our friends and family members succeed in their own interests. Sometimes we base our decisions on whether or not they will ultimately benefit one or more of these interests. Most of us would not face a conflict of interest situation because our hobbies rarely interfere or intersect with our professional responsibilities.

But people placed in positions of judgement or power must take extra steps to insure that their private interests do not compete with their professional duties. A conflict of interest may arise, for example, if a city councilman awards a lucrative contract to a company owned by his brother. It would not be illegal to award such a contract to the best qualified company, even if that company were indeed owned by a relative, but the councilman himself could not be part of the decision making process. There would be an obvious conflict of interest, because the councilman's own family would benefit financially from his position of power.

Definitions of conflict of interest are often spelled out in contracts or employee manuals. Enforcement of these agreements, however, is not always easy. Elected officials and judges usually fill out extensive disclosure forms which would reveal a potential conflict of interest, but private sector executives may not be so forthcoming. Oftentimes a conflict of interest may not be revealed until the decision has already been made or the contract has been approved. Revealing some personal interests may be more of an ethical responsibility than a legal obligation.

Because there are some legal gray areas surrounding conflict of interest, it often falls on the official or executive to recognize potential problems before they interfere with his or her duties. When Dick Cheney was elected Vice President in 2000, for example, he first had to resign from his own company, Halliburton. If he had kept his financial interest in that company, any future government contracts might have appeared to be a conflict of interest. Because Halliburton did receive lucrative government contracts for war reparations, Mr. Cheney could still be accused of a conflict of interest, but he can demonstrate he has nothing to gain financially from the awarding of those contracts.