What is conflict of interest, and how does it fit into law? - explainer

Following Prime Minister Benjamin Netanyahu's speech on Thursday night, Attorney-General Gali Baharav-Miara warned the Israeli leader that he was in violation of a conflict of interest agreement.

For some, the matter of conflict of interest is esoteric, and the repercussions of Netanyahu's violation of the agreement not readily apparent.

Conflict of interest is when a person trusted with power has a potential clash of motivations for the use of the power. The High Court of Justice has previously identified two types of conflict of interest, personal and institutional.

Personal conflict of interest is when a public servant has an interest, such as the potential for winning of business tenders of a company they own, clashes with the vested interest of the public body that they control, such as a ministry seeking the best tenders for a public project.

Institutional conflict of interest can arise when a public servant has two institutional duties at the same time, and they come into conflict with one another.

The idea of a conflict of interest is present in business, criminal and administrative law, said Assaf Priel, Partner at Arnon, Tadmor-Levy, who specializes in administrative litigation. In a company, an employee can pursue personal interests over that of his employer or organization, explained Priel.

An example of a violation of conflict of interests in a business includes company officers committing insider trading. Sometimes these actions can be illegal, or are internal matters dealt with by the company.

Priel explained that its manifestation in criminal law is largely fraud or breach of trust.

What is the conflict of interest in today's coalition?

Fraud or breach of trust was brought into Israeli law from English common law, and adopted into Israel's 1977 penal code. The crime leaves much open to interpretation, but largely centers on a public servant harming the public interest or leveraging his power and trust to benefit themselves. The action undertaken to benefit the public servant doesn't necessarily need to directly be a crime on its own to be a breach of trust. Similarly, there might not necessarily need to be harm to the public if the civil servant gains using their position. The punishment for fraud or breach of trust is three years imprisonment.

Perhaps more relevant to the Netanyahu scenario is the field of administrative law. To avoid fear of conflict of interest, special limitations on powers can be made. 

The High Court ruled that Netanyahu's forming of a government was condition on a conflict of interest agreement organized by the previous attorney-general that restricted several prime ministerial powers that could impact his ongoing corruption trial.

When the High Court makes a ruling, or when the Attorney-General issues an opinion, it is considered a matter of law, noted Priel. Baharav-Miara declared the conflict agreement in effect and later that Netanyahu could not involve himself in the judicial reforms. It violated one of the conditions of his conflict of interest agreement, interfering in the appointment of law officials who could later attend to his case. The flagship bill of judicial reform changes the composition and rules of the Judicial Selection Committee.

Acting in contradiction to these legally binding rulings and opinions opens up a public servant like Netanyahu to petitions to the court, fines, or even criminal investigation, said Priel.

Another mechanism that could be triggered is contempt of court, another vestigial legal tool from British rule. The Movement for Quality Government in Israel filed a petition calling on the court to use this tool on Sunday.

Contempt of court is not a punitive mechanism, but an enforcement tool to push people to follow a ruling or other administrative rule. Those in contempt of court can be imprisoned for up to one month or fined. For those that continue to violate a legally binding rule, corrective measures like fines can escalate until the order is followed.