Engineer's Disclosure of Potential Conflict Of Interest - Case No. 85-6:
Facts:
Engineer A is retained by the state to perform certain
feasibility studies relating to a possible highway spur. The
state is considering the possibility of constructing the
highway spur through an area that is adjacent to a residential
community in which Engineer A's residence is located. After
learning of the proposed location for the spur, Engineer A
discloses to the state the fact that his residential property
may be affected by the new spur and fully discloses the
potential conflict with the state. The state does not object to
Engineer A's performing the work. Engineer A proceeds with his
feasibility study and ultimately recommends that the spur be
constructed. The highway spur is constructed.
Question:
Was it ethical for Engineer A to perform the feasibility
study despite the fact that his land may be affected
thereby?
References:
Code of Ethics- Section II.4.:"Engineers shall act in
professional matters for each employer or client as faithful
agents or trustees."
Section II.4.a.:"Engineers shall disclose all known or
potential conflicts of interest to their employers or clients
by promptly informing them of any business association,
interest, or other circumstances which could influence or
appear to influence their judgment or the quality of their
services."
Discussion:
This Board has noted on numerous occasions that the ethical
duty of the engineer in areas of conflict of interest is to
inform the client of those business connections or interests
that may influence the judgment and quality of the engineering
services. Those decisions have been consistent with the
provisions of Section II.4.a. of the NSPE Code of Ethics cited
above.
While that provision of the Code has been interpreted many
times over the years, it is, as are all Code provisions,
subject to constant examination and reinterpretation. For any
code of ethics to have meaning, it must be a living, breathing
document which responds to situations that evolve and
develop.
This Board has generally interpreted that Code provision in
a strict manner. In BER Case 69-13, the Board reviewed a
situation where an engineer was an officer in an incorporated
engineering consulting firm that was engaged primarily in civil
engineering projects for clients. Early in the engineer's life,
he had acquired a tract of land by inheritance, which was in an
area being developed for residential and industrial use. The
engineer's firm had been retained to study and recommend a
water and sewer system in the general area of his land
interest. The question faced by the Board under those facts
was, "May the engineer ethically design a water and sewer
system in the general area of his land interest?" The Board
ruled that the engineer could not ethically design the system
under those circumstances.
The Board acknowledged that the question was a difficult one
to resolve, pointing to the fact that there was no conflict of
interest when the engineer entered his practice but that the
conflict developed in the normal course of his practice when it
became apparent that his study and recommendation could lead to
the location of a water and sewer system that might cause a
considerable appreciation in the value of his land depending
upon the exact location of certain system elements in proximity
to his land. The Board stated that while the engineer must make
full disclosure of his personal interest to his client before
proceeding with the project, such disclosure was not enough
under the Code. Said the Board, "He can avoid such a conflict
under these facts either by disposing of his land holdings
prior to undertaking the commission or by declining to perform
the services if it is not feasible or desirable for him to
dispose of his land at the particular time." The Board
concluded by saying: "This is a harsh result, but so long as
men are in their motivations somewhat 'lower than angels,' it
is a necessary conclusion to achieve compliance with both the
letter and the spirit of the Code of Ethics. The real test of
ethical conduct is not when compliance with the Code comports
with the interests of those it is intended to govern, but when
compliance is adverse to personal interests."
We agree with much of what was stated in BER Case 69-13
considering the Code then in effect. In its reading of the Code
of Ethics, the Board took a strict view of the meaning of the
Code provisions then in force, which stated:
- "8. The Engineer will endeavor to avoid a conflict of
interest with his employer or client, but when unavoidable,
the Engineer shall fully disclose the circumstances to his
employer or client."
- "8. (a) The Engineer will inform his client or employer
of any business connections, interests, or circumstances
which may be deemed as influencing his judgment or the
quality of his services to his client or employer."
It is clear from a reading of BER Case 69-13 that the Board
focused its attention on the first clause of Section 8 stating
that "The engineer will endeavor to avoid a conflict of
interest with his employer or client." Undoubtedly, the Board
reasoned that this was the basic obligation of the engineer in
this context, and that any qualification of that obligation
would dilute the essential meaning and intent of that
obligation. Therefore, the Board did not choose to rely upon
the remaining provisions contained in Sections 8 and 8(a) in
reaching its decision. Instead, the Board determined that under
the facts it would not be sufficient for the engineer to make
full disclosure of his personal interest to the client in order
to properly address the potential conflict-of-interest
question.
While the reasoning of the Board in BER Case 69-13 is
extremely important in understanding the ethical dimensions of
the instant case, the decision becomes less significant in view
of the fact that the Code provisions under which the decision
was rendered have been crucially altered. (See Code Sections
II.4. and II.4.a., the successor provisions to Section 8.)
As one can readily see, the phrase "engineer will endeavor
to avoid a conflict of interest with his employer or client. .
. " is no longer contained in the applicable Code provision.
Clearly, the reason for that omission is certainly not out of a
lack of desire within the engineering profession for an ethical
proscription relating to conflicts of interest. Truly, ethical
dilemmas relating to conflicts of interest are some of the most
significant issues facing the engineering profession today.
Nevertheless, the provision in the Code relating to
conflicts of interest was amended and those changes impact upon
the manner in which this Board regards BER Case 69-13 as well
as the manner in which the Board interprets the Code. It is
evident that had Sections II.4. and II.4.a. been in effect at
the time the Board decided BER Case 69-13, the Board may well
have reached a different result.
While it is not our role to speculate upon the intent of
this significant change in the NSPE Code of Ethics since BER
Case 69-13 was rendered, we do think that some expression by
this Board in that regard would assist readers in understanding
the basis for the change. In no sense should this change be
interpreted in any way to suggest a retreat by this Board or
the Code of Ethics from a deep concern for dilemmas relating to
conflicts of interest. Rather, it is our view that the
modifications in the Code reflect recognition of the fact that
conflicts of interest emerge in a multitude of degrees and
circumstances and that a blanket, unqualified expression
prohibiting engineers to avoid all activities that raise the
shadow of a conflict of interest is not a workable
approach.
It is often a question of degree as to what does and does
not constitute a significant conflict of interest. Obvious and
significant conflicts of interest are easily identifiable and
should always be avoided. These difficult, multifaceted
situations require discussion and consideration as they are
complex and sometimes irresolvable. A code should address and
provide guidance for these kinds of conflicts of interest. We
believe the new Code provisions sought to establish the ethical
obligation to engage in dialogue with a client or employer on
the difficult questions relating to conflicts of interest. We
think that it was for this reason that the Code provisions were
altered.
Turning to the facts of the instant case, we are of the view
that the ethical obligations contained in Section II.4.a. do
not require the engineer to "avoid" any and all situations that
may or may not raise the specter of a conflict of interest.
Such an interpretation of the Code would leave engineers with
neither any real understanding of the ethical issues nor any
guidance as to how to deal with the problem. The basic purpose
of a code of ethics is to provide the engineering profession
with a better awareness and understanding of ethical issues
that impact upon the public. Only through interacting with the
public and clients will engineers be able to comprehend the
true dimensions of ethical issues. We believe that holds true
in the area of conflicts of interest.
We add that the Board assumes that under the facts of this
case, the state agency involved has a fully qualified staff
which will ultimately review the recommendation of the
engineer.
Therefore, we are of the view that Engineer A's discussion
with the client prior to performing the services and disclosing
the possible conflict of interest came within the ethical
guidelines of the Code and was a proper course to take in
dealing with the conflict. We are not willing to state as we
did in BER Case 69-13 that the engineer can only avoid such a
conflict either by "disposing of his land and holdings prior to
undertaking the commission or by declining to perform the
services if it is not feasible or desirable for him to dispose
of his land at the particular time." We do not read the current
Code to require such action.
Conclusion:*
It was not unethical for Engineer A to perform the
feasibility study despite the fact that his land may be
affected thereby.
Board of Ethical Review:
- F. Wendell Beard, P.E.
- Robert J. Haefeli, P.E.
- Ernest C. James, P.E.
- Robert W. Jarvis, P.E.
- James L. Polk, P.E.
- Everett S. Thompson, P.E.
- J. Kent Roberts, P.E., chairman
*Note: This opinion is based on data submitted to the
Board of Ethical Review and does not necessarily represent all
of the pertinent facts when applied to a specific case. This
opinion is for educational purposes only and should not be
construed as expressing any opinion on the ethics of specific
individuals. This opinion may be reprinted without further
permission, provided that this statement is included before or
after the text of the case.
1996 NSPE Code of Ethics
This is the version of the code archived in the OEC. An earlier
version may have been used in this case.