Managing Ministers’ and officials’ conflicts of interest: time for clearer values, principles and action Contents

Appendix 1: Annex B from 2006 Civil Service Management Code

4.3 ANNEX B: GUIDANCE FOR DEPARTMENTS AND AGENCIES ON THE RULES ON THE ACCEPTANCE OF OUTSIDE APPOINTMENTS BY CROWN SERVANTS

1. The rules are designed primarily to counter any suspicion that an appointment might be a “reward for past favours” granted by the applicant to the employer, or that a particular employer might gain an unfair advantage over its competitors by employing someone who had access to what they might legitimately regard as their own “trade secrets”.

2. An appointment might also be sensitive because of the employer’s relationship with the department and because of the nature of any information which the applicant possesses about Government policy.

3. While appointments must not only be but also be seen to be free from reproach and departments must therefore take account of public perception, departments should be prepared to defend an appointment which they were otherwise willing to approve when public concern can be shown to be unjustifiable.

The employer and the applicant

4. In most cases problems will occur only if the applicant has had some degree of contact with the prospective employer, giving rise to criticism that the post is a “reward for past favours”. Departments are asked to take the following into account:

a)how much of the contact was in the course of official duties;

b)how significant was the contact;

c)the nature of the proposed employment;

d)the connection between the new job and the applicant’s previous official duties.

5. In order to establish whether the applicant was able to exert any degree of influence over the outcome of contractual or other dealings with the prospective employers, departments are advised to establish:

a)whether the individual was acting as a member of a team, jointly with other individuals in the department or in Government more widely, or taking sole responsibility;

b)whether the employer benefitted substantially from such dealings;

c)whether contact was direct;

d)whether it was indirect (i.e. through those for whom the applicant was responsible, whether or not they normally worked for him or her).

6. Departments are advised to take into account contacts in the course of official duty which have taken place:

a)at any time in the two years before resignation or retirement;

b)earlier, where the association was of a continued or repeated nature.

7. Departments are advised to consider in particular whether the applicant has been:

a)dealing with the receipt of tenders from the employer;

b)dealing with the award of contracts to the employer;

c)dealing with the administration or monitoring of contracts with the employer;

d)giving professional or technical advice about such contracts whether before or after they were awarded;

e)involved in dealings of an official but non-contractual nature with the employer (this is particularly important in the circumstances set out in paragraph 9 below).

8. Departments should consider the circumstances of an applicant’s departure as a component of considering each application on its merits. Staff-reduction policies will not justify reducing standards of propriety, or any weakening of the element of protection which the rules offer to third parties in respect of trade secrets. If a civil servant is asked to retire, or is offered early retirement, at relatively short notice, or is unexpectedly made redundant, any presumption that he or she had been paving the way to subsequent employment by offering favours to potential employers may largely be removed. Conversely a protracted period of uncertainty might heighten concerns that individuals were anticipating redundancy by cultivating potential employers improperly. On balance, where departments and agencies intend to reduce numbers during a relatively short period of a year or so, unexpected departures should normally be considered as a factor mitigating any concerns on grounds of rewards.

The employer and the Government

9. The relationship of the prospective employer to the Government may be a relevant factor in considering applications. Departments are advised to pay special attention to appointments where the employer:

a)has a contractual relationship with the department;

b)is regulated by the department;

c)receives subsidies, loans, guarantees or other forms of financial assistance from the department;

d)is one in which the Government is a shareholder; or

e)is one with which departments or branches of Government or the Armed Services are, as a matter of course, in a special relationship.

Overseas employers

10. The same considerations apply to foreign publicly-owned institutions or companies as to their UK counterparts. If the prospective employer is a foreign government, departments are advised to consider whether the applicant has information that would benefit that government to the detriment of HM Government or its allies. This can arise where the person:

a)has been giving advice to HM Government on policies affecting the foreign government; or

b)would have been in a position to gain special knowledge of HM Government’s policies and intentions concerning the foreign government.

Government policy or business

11. Many Crown servants deal with private interests on behalf of the Government. They have special knowledge of how the Government would be likely to react in particular circumstances. Departments are advised to consider whether the application could be, or could be thought to be, significantly helpful to the employer in dealing with matters where policy is developing or legislation is being prepared in a way which might disadvantage competitors of that employer. This applies in particular to specific areas where:

a)there has been a negotiating relationship between the Department and the employer;

b)the applicant has been involved in policy discussions within the department leading to a decision of considerable benefit to the employer;

c)the applicant has been involved in policy discussions within the department, knowledge of which might give the employer an improper advantage over its competitors; or

d)where there is a risk of public criticism that the applicant might have scope to exploit contacts in his or her former department for commercial purposes.

In such cases, departments are asked to consider the implications of the applicant’s joining the employer, and be guided accordingly.

The employer and competitors’ trade secrets

12. Appointments might be criticised on the grounds that the applicant had access to information about his or her prospective employer’s competitors which they could legitimately regard as “trade secrets”. Concern on this score can arise whether or not the applicant has had previous dealings with the prospective employer. Departments are strongly advised to consult competitors as a matter of course preferably using a standard letter based on the Cabinet Office model letter, to see whether they have any objections to the appointment.

Consultancies

13. Individuals who are to be employed on a consultancy basis (either for a firm of consultants or as an independent, self-employed consultant, competing for commissions in the open market—a “brass plate” consultancy) should be treated in the same way as other applicants under the rules. Extra care is needed, however, in dealing with such applications.

14. In the case of an applicant wishing to take up a salaried appointment with a firm of consultants, the “rewards for past favours” issue will relate almost exclusively to the nature of any previous dealings between the applicant and the firm he or she is seeking to join. Departments will, however, need to consider the “trade secrets” question both from the point of view of any competitors of the consultancy firm and then, more generally from the point of view of the service which the applicant will be offering on behalf of the consultant. It may be necessary to impose conditions on the appointment to protect the “trade secrets” of firms with which the applicant or the department had dealings.

15. Where an applicant wishes to set up a “brass plate” consultancy, the question of “rewards for past favours” does not arise in the usual way. But departments will wish to keep in mind the need:

a)to counter any suspicion of impropriety that might arise if such individuals were to be given lucrative contracts by clients with which they or their former departments had dealings; and

b)to protect “trade secrets” to which such individuals may have had access. There may be circumstances in which it would be undesirable for an independent consultant to offer services to a particular client where he or she has had access to the trade secrets of a competitor of the client. The fact that the competitor might also be free to use the same consultant, but did not choose to do so would not make the information any less sensitive or negate the potential advantage which could be gained by the client.

In approving applications to set up “brass plate” consultancies departments will, therefore, need to consider carefully the imposition of conditions in cases where such considerations apply.

16. Departments will also need to consider whether to apply conditions limiting contacts between applicants proposing to work as consultants and their former departments. This may be particularly relevant in the case of staff at senior levels, where there is a risk of public criticism that they could be exploiting contacts in their former departments for commercial purposes.





21 April 2017