In this edition, we explore a case where an employee’s undisclosed business partnership, involvement of family members in related work, and lack of transparency led to the breakdown of trust in a high-integrity organisation.
—
Enjoy our second episode of ‘On the Case’ – Real stories, real risks, real lessons for employers. Don’t miss this monthly series – click on the link bellow to subscribe.
—
While the individual saw their involvement as an extension of the organisation’s mission, their failure to disclose critical information—and their assumption of informal approval—created a clear conflict of interest.
The Situation
The employee in question was a long-serving, trusted team member, deeply involved in the social outreach and development arm of a nonprofit organisation. She became involved in an external initiative that aligned with the organisation’s broader mission.
What began as support for a community development project evolved into something more:
- She accepted a 50% shareholding and directorship in the external organisation.
- She failed to disclose this arrangement for over 16 months.
- She later recommended family members for paid work through this entity.
When the external partnership eventually began to sour, the truth came out—and so did the employer’s concern.
The Lessons
This case brings up several critical principles often misunderstood in workplaces that operate on goodwill and trust:
“But I Didn’t Gain Personally” Isn’t a Defence
Whether or not the employee received direct financial benefit, her role as a Director and shareholder meant she stood to benefit—and that creates a legal and ethical obligation to disclose.
Silence Is Still a Decision
The employee argued that she didn’t believe disclosure was necessary, but her 16-month silence suggested otherwise. In fact, the delay in disclosure only occurred after the external relationship began to break down—undermining any claim of transparency or integrity.
You Can’t Use One Hat to Justify the Other
The employee frequently blended her two roles, treating her external and internal work as “one and the same.” This lack of separation blurred boundaries and created confusion, risk, and ethical dilemmas—especially when she began approving work for her own family members.
Trust Isn’t Just About Behaviour—It’s About Openness
Even if there was no clear misconduct in her day-to-day work, the employer made it clear: her role was one built on absolute trust. Once that trust was broken, particularly by concealment, the relationship became irreparably damaged.
The Outcome
The chairperson found the employee guilty on all counts:
- Failing to disclose a personal business interest
- Recommending family for paid work without disclosure
- Compromising the organisation’s ability to engage with a key external partner
Although the employee had performed well historically, summary dismissal was recommended. The decision cited the long duration of the concealment, the blurring of ethical lines, and the breakdown in trust as the basis for dismissal.
Key Takeaways for Employers
1. Conflict of interest policies must be explicit
Don’t assume employees know what to disclose. Be clear about outside interests, related-party involvement, and financial transparency.
2. Disclosure must be immediate and proactive
Waiting until things go wrong—or until a conflict is discovered—is too late. The damage to trust may already be done.
3. “Mission alignment” does not justify breaking the rules
Even if a side project shares your organisation’s purpose, employees must act within the policies and expectations of their role.
4. Trust is fragile, especially in high-trust workplaces
Where day-to-day operations depend on integrity and independent decision-making, withholding information is as damaging as dishonesty.
How We Help
We support organisations in:
- Drafting and enforcing conflict-of-interest policies
- Training leadership and staff on ethical boundaries
- Conducting independent disciplinary hearings
- Clarifying roles and expectations in hybrid or purpose-driven environments
Need guidance on navigating trust and ethics in your team? Contact us at [[email protected]]
COMING NEXT in “On the Case”
A Business Built on Lies – When a trusted senior employee uses charm and manipulation to finance a side hustle at the expense of subordinates, trust, and the employer’s reputation.