I. The Need for A Conflict of Interest Policy Statement
The basis for a Conflict of Interest Policy Statement lies in the very nature of business associations. All business associations, especially nonprofit organizations, require the individuals comprising them to eschew their pecuniary self interest in acting to promote the ideals of a separate business entity. In the case of the American College of Neuropsychopharmacology, the ideals of the group are lofty and highly theoretical in their encouraging and promoting scientific study, teaching and application of neuropsychopharmacology.
In the reality of everyday business practice, it is often very difficult for individuals governing a nonprofit corporation to understand their obligation to act in a fiduciary manner. Some directors bend over backwards even to avoid requesting reimbursement for personal expenditures on behalf of the organization. At the other extreme, potential exists for individual directors construing what is good for their interests as equivalent to being good for the American College of Neuropsychopharmacology.
There are certain legal parameters which encourage the development of the Conflict of Interest Policy Statement. The Articles of Incorporation of the American College of Neuropsychopharmacology require that ” . . . no part of its net revenue or earning shall inure to the benefit of any individual, subscriber, contributor or member.” (Articles of Incorporation, Article 6). The foregoing article merely represents an articulation of a basic element of nonprofit corporation law. Although nonprofit corporations face far less risk of legal exposure for improper diversion of corporate assets or securities manipulation, except for loss of tax exempt status through the Internal Revenue Service, the legal concerns are extant notwithstanding the relatively limited scope of legal liability.
In addition to providing practical guidance to the ACNP directors, officers and members, and the legal concerns, there is a further and perhaps most appropriate reason for the establishment of a Conflict of Interest Policy Statement. The ethical foundation of a non profit corporation is predicated upon the substitution of a long term altruistic goal for short term individual interests. Service as a director or officer of a nonprofit corporation is a voluntary duty which entails fidelity to the highest standards of integrity. The adoption of a Conflict of Interest Policy Statement sends a public message to the members of the group and the community at large that an organization is serious about both the philosophical and business objectives of the professional organization.
II. Components and Structure of a Conflict of Interest Policy Statement
Conflict of Interest Policy Statements are usually concerned with four substantive subject areas: (1) personal financial interest; (2) the acceptance of gifts and entertainment; (3) outside activities; and (4) inside information. The first area relates to those situations where the personal interest of an officer or a member of ACNP would directly conflict with his ability to deal effectively with instances where individual members of an organization abuse their position within the organization for their own benefit.
There are two basic extreme approaches in the structuring of a Conflict of Interest Policy Statement. Some organizations prefer a very general policy statement while others require certain procedural steps to be taken in the event that a particular transaction might raise a conflict of interest. The objective of either is the same. A practical approach to conflict of interest requires individuals to disclose any potential conflicts within a covered class of transactions, and provides for resolution of any potential conflict of interest situation. A sanctioning clause is also required in the event that an individual violates a conflict of interest prohibition. Our conflict of interest policy statement is a mixed approach, containing elements of both the specific and general policy structures.
The Model Business Corporation Act adopts a “disclosure and ratification” procedure for the resolution of conflict of interest transactions. In Maryland, this has been adopted as Corporations and Association 2 419. Our Conflict of Interest Policy Statement is written with the objective of compliance with both Maryland law and federal law regarding nonprofit corporations exempt from federal taxation under 501 (c)(3) of the Internal Revenue Code, but goes beyond the requirements of those statutes.
CONFLICT OF INTEREST POLICY STATEMENT
Part I – Policy
Section 1. The American College of Neuropsychopharmacology (“ACNP” or “College”) is committed to maintaining confidence and integrity in the conduct of its public and private affairs. In order to maintain this high standard, each individual officer and member must conduct his or her official actions with the same degree of confidence and trust which has traditionally marked the conduct of the College. ACNP hereby promulgates the following guidelines which are applicable to all official actions by the College’s officers and members.
Part II – Standards
Section 2. Whether or not specifically prohibited by these provisions, and unless ratified by the procedures set forth in Section 6, all officers and members of the College should avoid any action which might result in or create the appearance of:
(a) giving preferential treatment to any organization or person;
(b) using one’s office for personal gain;
(c) losing complete impartiality or independence; or
(d) affecting adversely the confidence of the public in the American College of Neuropsychopharmacology.
Section 3. No officer or member of the College shall solicit or accept, directly or indirectly, any gift, gratuity, favor or entertainment or any other thing of non trivial monetary value (more than $10.00) from any person, corporation or group which:
(a) has, or is seeking to obtain, consultative or other business relationships with the College; or
(b) has an interest which may be substantially affected by the performance or nonperformance of his official duty.
Notwithstanding this provision, an officer or member may accept food or refreshments available in the normal course of a luncheon or dinner or any other meeting or engagement where the member or officer is properly in attendance.
Section 4. An officer or member shall not directly or indirectly make use of, or permit others to make use of, official privileged information not available to the public for the purpose of furthering a private interest. Written reports do not constitute such information unless they are marked “confidential.”
Section 5. Officers and members of the Council of the College shall not have undisclosed direct or indirect financial interests which conflict substantially with, or appear to conflict substantially with, their responsibilities and duties to this College or engage in, directly or indirectly, financial transactions as a result of or primarily relying upon, information obtained through their status as officers or members of the College. This section does not contemplate the massive disclosure of employment, business, academic, governmental and professional affiliations commonly held by members of a scientific professional group such as ACNP, but is directed instead at proprietary interests which are not listed in the ACNP Directory and which may involve a personal financial conflict between the affected person and ACNP.
Part III – Enforcement
Section 6. Any officer or member of the College who has, or may have, a direct or indirect financial interest, as defined in Section 5, in any matter or transaction affecting the College shall so inform the College’s governing Council, and shall state the nature of such interest, at the time when it first occurs or at such time that it bears a substantial relation to a matter affecting the College.
Section 7. If, after a potential conflict of interest is disclosed, the College’s governing Council shall determine by majority vote that an actual conflict of interest exists, it shall:
(a) ask the officer or member to abstain from voting or otherwise influencing the outcome of any vote on a matter affecting such interest, in which event the officer or member shall also not be counted in determining the quorum for such vote;
(b) require a two thirds vote of the disinterested officers or members to take action on a matter affecting such interest; and
(c) document in the minutes of the meeting the basis for taking action on a matter affecting such interest, including without limitation the alternatives, and the relative benefit to the College of taking action on the matter notwithstanding the interest of the officer or member. The minutes shall also reflect the disclosure of the conflict, the abstention from voting, and the quorum.
Section 8. Any member may bring to the attention of the Secretariat a request for a review of an allegation of undisclosed conflicts of interest. The Secretariat will then, in consultation with the President, place this allegation before the Council at its next meeting. The Council may then, at its discretion, refer the allegation to the College’s Ethics Committee for discussion.
Section 9. Any willful violation of sections three through six may, according to the discretion of the ACNP Council, result in forfeiture of any office and/or membership in the American College of Neuropsychopharmacology or any lesser sanction, after any person so charged has been found to engage in such behavior by a four fifths vote of the College’s Council after the circumstances and facts have been reviewed by the College’s Ethics Committee and their recommendation has been received and reviewed by Council. Prior to taking any final action pursuant to this Section, any person charged with a violation including the possible sanctions which may apply, shall have an opportunity to respond to the violations alleged. The same due process shall be provided in conflict of interest proceedings.