Governance Reminder: Managing Conflicts of Interest and Procurement Risks

The first matter concerned a club official who was found to have not appropriately managed conflicts of interest connected to building and construction work undertaken by businesses the official partly owned.

The regulator determined that conflicts of interest were not adequately disclosed or recorded and appropriate procurement and tender processes had not been followed. This resulted in disciplinary action against the individual, including a period of disqualification from holding club office, financial penalties and the payment of investigation costs.

A second regulatory matter involving a club property transaction also demonstrates the importance of complying with governance requirements, member approval obligations and directors' duties when making significant decisions on behalf of a club. While no disciplinary action was established, the party was required to pay a significant penalty to the club.

While the circumstances of every club are different, these cases serve as a useful reminder that directors and club officials are expected to:

• Identify and disclose actual, potential and perceived conflicts of interest.
• Ensure conflicts are properly recorded in meeting minutes and registers.
• Remove themselves from discussions and decisions where required by law.
• Follow approved procurement, quotation and tender processes.
• Demonstrate that decisions are made in the best interests of the club and its members.
• Maintain accurate records supporting key decisions and expenditure.

Why It Matters

Club directors and officials are stewards of members' assets and are responsible for ensuring club funds are managed appropriately.

Regulators have repeatedly emphasised that a lack of good governance is not a defence where obligations have not been met.

These decisions highlight the significant consequences that can arise from poor conflict management, procurement practices and record keeping. Regularly reviewing compliance with the Registered Clubs Accountability Code, procurement procedures and governance frameworks can help clubs identify and address risks early.

Key Takeaway

Clubs should take this opportunity to review their governance and procurement practices to ensure they remain fit for purpose. Consider:

• Reviewing your conflicts of interest policy and register.
• Confirming directors and senior staff have made current conflict declarations.
• Checking procurement and tender procedures, particularly for capital works and major purchases.
• Ensuring meeting minutes properly record disclosures, discussions and decisions.
• Club member approval is sought where required.
• Reviewing compliance with the Registered Clubs Accountability Code.
• Providing governance training and refresher sessions for directors and senior management.

Good governance is more than compliance. Clear processes, transparent decision-making and proper management of conflicts of interest help protect members' funds, strengthen confidence in the club sector and demonstrate that the club is acting in the best interests of its members.

If your club is reviewing its governance framework, policies or procurement processes, contact ClubAssist on 1300 730 001 or [email protected].