Self-dealing
Encyclopedia
Self-dealing is the conduct of a trustee
, an attorney
, a corporate officer, or other fiduciary that consists of taking advantage of his position in a transaction and acting for his own interests rather than for the interests of the beneficiaries of the trust
, corporate shareholders, or his clients. Self-dealing may involve misappropriation
or usurpation of corporate assets
or opportunities
. Self-dealing is a form of conflict of interest
.
One of the more current and widely agreed on definitions is from political scientists Ken Kernaghan and John Langford in their book “The Responsible Public Servant”. They define self-dealing as “a situation where one takes an action in an official capacity which involves dealing with oneself in a private capacity and which confers a benefit on oneself."
Michael McDonald, Ph.D, Chair of Applied Ethics at The University of British Columbia
provides examples based from this book:
“You work for government and use your official position to secure a contract for a private consulting company you own” or “using your government position to get a summer job for your daughter”.
Where a fiduciary has engaged in self-dealing, this constitutes a breach of the fiduciary relationship. The principal of that fiduciary (the person to whom duties are owed) may sue and both recover the principal's lost profits and disgorge
the principal's wrongful profits.
Trustee
Trustee is a legal term which, in its broadest sense, can refer to any person who holds property, authority, or a position of trust or responsibility for the benefit of another...
, an attorney
Lawyer
A lawyer, according to Black's Law Dictionary, is "a person learned in the law; as an attorney, counsel or solicitor; a person who is practicing law." Law is the system of rules of conduct established by the sovereign government of a society to correct wrongs, maintain the stability of political...
, a corporate officer, or other fiduciary that consists of taking advantage of his position in a transaction and acting for his own interests rather than for the interests of the beneficiaries of the trust
Trust law
In common law legal systems, a trust is a relationship whereby property is held by one party for the benefit of another...
, corporate shareholders, or his clients. Self-dealing may involve misappropriation
Misappropriation
In law, misappropriation is the intentional, illegal use of the property or funds of another person for one's own use or other unauthorized purpose, particularly by a public official, a trustee of a trust, an executor or administrator of a dead person's estate or by any person with a responsibility...
or usurpation of corporate assets
Asset
In financial accounting, assets are economic resources. Anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value is considered an asset...
or opportunities
Corporate opportunity
The corporate opportunity doctrine is the legal principle providing that directors, officers, and controlling shareholders of a corporation must not take for themselves any business opportunity that could benefit the corporation...
. Self-dealing is a form of conflict of interest
Conflict of interest
A conflict of interest occurs when an individual or organization is involved in multiple interests, one of which could possibly corrupt the motivation for an act in the other....
.
One of the more current and widely agreed on definitions is from political scientists Ken Kernaghan and John Langford in their book “The Responsible Public Servant”. They define self-dealing as “a situation where one takes an action in an official capacity which involves dealing with oneself in a private capacity and which confers a benefit on oneself."
Michael McDonald, Ph.D, Chair of Applied Ethics at The University of British Columbia
University of British Columbia
The University of British Columbia is a public research university. UBC’s two main campuses are situated in Vancouver and in Kelowna in the Okanagan Valley...
provides examples based from this book:
“You work for government and use your official position to secure a contract for a private consulting company you own” or “using your government position to get a summer job for your daughter”.
Where a fiduciary has engaged in self-dealing, this constitutes a breach of the fiduciary relationship. The principal of that fiduciary (the person to whom duties are owed) may sue and both recover the principal's lost profits and disgorge
Disgorgement (law)
Disgorgement is the forced giving up of profits obtained by illegal or unethical acts. A court may order wrongdoers to pay back illegal profits, with interest, to prevent unjust enrichment...
the principal's wrongful profits.