POLICY NO. 1:02:03:10
SUBJECT: Conflict of Interest
Section 1 Objectives of this Policy
Members of the Tennessee Board of Regents and all employees of the TBR and its constituent Institutions all serve the interests of the State of Tennessee and its citizens, and have a duty to avoid activities and situations which, either actually or potentially, put personal interests before the professional obligations which they owe to the State and its citizens. This policy is intended to 1) define the general principles which should guide the actions of members of the Board and of employees, 2) offer illustrations of activities which potentially constitute a conflict of interest, 3) make Board members and employees aware of disclosure requirements related to conflicts of interest, 4) describe the process by which those disclosures shall be evaluated and decisions rendered, and 5) describe the appeals process regarding such decisions.
Section 2 Pertinent Federal Regulations, State Laws, and TBR Policies
The following lists are intended to indicate sources of information which may provide additional guidance regarding conflict of interest situations. This policy is intended to be consistent with all pertinent Federal and State laws, regulations, and policies, as well as with other TBR policies. To the extent that conflicts arise, Federal and State laws, regulations, and policies shall take precedence. The lists are not intended to be exhaustive, and additional laws, regulations, and policies may be implicated in a given conflict of interest situation.
Section 2.1 Federal Regulations
The National Science Foundation (NSF) and the Department of Health and Human Services (HHS), acting through the Public Health Service (PHS) (which includes the National Institutes of Health (NIH)), have promulgated policies and regulations regarding conflicts of interest and disclosure of financial interests by investigators who receive funding from these Federal agencies. The NSF policy regarding researcher conflicts of interest is contained in Section 510 of NSF Publication 95-26, the Grant Policy Manual. The PHS regulations, upon which the NSF policy is modeled, are contained in the Code of Federal Regulations at 42 CFR 50.601 et seq. and 45 CFR 94.1 et seq.
Other Federal agencies (e.g., the Veterans’ Administration or the Food and Drug Administration) may require as a condition to a contract disclosure and management of conflicts of interest (see, for example, Veterans’ Administration Acquisition Regulation 852.209-70).
Section 2.2 Tennessee State Law
Various statutes contained in the Tennessee Code Annotated (T.C.A.) (2001) are pertinent to the issue of conflicts of interest within the TBR System, including:
T.C.A. § 8-50-501, Disclosure statements of conflict of interests by certain public officials
T.C.A. § 12-2-208, Purchase by officer unlawful – penalty for violation
T.C.A. § 12-2-415, State surplus property disposition regulation
T.C.A. § 12-2-416, Violation of § 12-2-415
T.C.A. § 12-2-417, State employee violation -- punishment
T.C.A. § 12-3-106, Conflict of interest – Rebates, gifts, etc., from contractors
T.C.A. § 12-4-101, Personal interest of officers prohibited
T.C.A. § 12-4-102, Penalty for unlawful interest
T.C.A. § 12-4-103, Bidding by state employees prohibited
T.C.A. § 12-4-104, Penalty for unlawful transactions
T.C.A. § 49-8-203(d), Powers and duties (of the Board of Regents)
It is significant to note that violation of some of these statutes may lead to criminal penalties (e.g., violation of T.C.A. § 12-4-103 is a Class E felony).
Section 2.3 TBR Policies
The following TBR policies and guideline deal with issues which implicate conflict of interest situations:
TBR Policy 4:02:10:00, Purchasing Policy and Procedures
TBR Policy 4:02:20:00, Disposal of Surplus Personal Property
TBR Policy 5:01:05:00, Outside Employment
TBR Policy 5:01:06:00, Intellectual Property
TBR Guideline P:090, Nepotism
Section 3 Definitions
A “conflict of interest” occurs when the personal interests, financial or otherwise, of a person who owes a duty to the Tennessee Board of Regents and its constituent Institutions (Regents and all employees) actually or potentially diverge with the person’s professional obligations to and the best interests of the TBR and its Institutions.
A “conflict of commitment” occurs when the personal or other non-work related activities of an employee of the TBR and its constituent Institutions impair the ability of that employee to meet their commitments of time and energy to the TBR and its Institutions.
“Family member” includes the spouse and children (both dependent and non-dependent) of a person covered by this policy.
Section 4 Supplementary Institutional Policies and Regulations
As each Institution may deem necessary and appropriate, TBR Institutions are authorized to develop additional Institution-specific policies, regulations, and procedures relating to conflicts of interest and conflicts of commitment, provided such policies and regulations are consistent with Federal and State law and with this and other policies of the Tennessee Board of Regents.
Section 5 Applicability
This policy shall apply to all persons serving as members of the Board of Regents and to all persons employed (either as full-time, part-time or temporary employees) by the Tennessee Board of Regents and its constituent Institutions.
Section 6 General Principles
It is the policy of the Tennessee Board of Regents that employees should avoid external commitments which significantly interfere with the employee’s duties to the TBR and its constituent Institutions (conflicts of commitment). See also TBR Policy 5:01:05:00, Outside Employment. Disclosures of conflicts of commitment shall be made as required under Policy 5:01:05:00 and evaluated as indicated in that policy.
It is the further policy of the Tennessee Board of Regents that both Regents and employees should avoid situations where the self interests of the Regent or employee diverge from the best interests of the TBR and its Institutions (conflict of interest).
The mere existence of either a potential or actual conflict of interest does not mean that such conflict must necessarily be eliminated. Where the potential detriment to the TBR and its Institutions is at most minor and inconsequential, and the conflict does not indicate violation of Federal or State law, regulation, or policy, those persons charged with evaluating disclosures should allow the activity to proceed without interference. For those situations which do not implicate Federal or State law, regulation or policy, the standard by which it should be determined whether a conflict of interest should be managed, reduced, or eliminated is whether that conflict would appear to a reasonable person to call into question the integrity or judgment of the affected Regent or employee.
Section 7 Situations and activities creating a conflict of interest
In the following situations and activities, there is at least the appearance, and possibly the actuality, of an employee allowing his or her personal interests, and not the best interests of the TBR and its constituent Institutions, to affect that employee’s judgments. This list is illustrative, and not exhaustive.
Section 7.1 Self-dealing
Situations in which a Regent or employee can appear to influence or actually influence an Institutionally-related decision from which that person or a member of that person’s family stands to realize a personal financial benefit is self-dealing, and a conflict of interest. Examples of self-dealing activities are numerous, and include those listed below.
Section 7.1.a Purchase of State-owned property by an employee absent fair and open bidding
It is unlawful for any state employee to purchase surplus state-owned property absent a fair and open bidding process (see T.C.A. § 12-2-208 and T.C.A. § 12-2-417). Such purchases are also prohibited under TBR Policy 4:02:20:00.
Section 7.1.b Institutional purchases from businesses in which an employee or family member has a financial interest
1. T.C.A. § 12-4-103 declares that it is unlawful for any state official or employee to “bid on, sell, or offer for sale, any merchandise, equipment or material, or similar commodity, to the state of Tennessee” or “to have any interest in the selling of the same to the state” during that person’s term of employment and for six months thereafter. Disclosure of any such transaction by an employee or member of the employee’s family or by a business in which an employee or member of the employee’s family has any significant (more than 4%) ownership interest or for which an employee or employee family member serves as an officer is required by this policy.
2. T.C.A. § 12-3-106(b)(2003) declares that it is a conflict of interest for any person or any company with whom such person is an officer, a director, or an equity owner of greater than 1% interest to bid on any public contract for products or services for a governmental entity if such person or a relative of such person is a member of a board or commission having responsibility for letting or approving such contract. For purposes of this section only, "relative" means spouse, parent, sibling, or child.
Section 7.1.c Use of educational materials from which a faculty member derives financial benefit in that faculty member’s teaching activities
Any faculty member who wishes to use in his or her teaching activities educational materials (e.g. a textbook) which he or she has authored, or in which he or she otherwise stands to benefit financially from such use, a conflict of interest disclosure shall be made per Section 8 of this policy. Whether the use of such materials shall be permitted shall be evaluated either under the terms of Institutional policy, or in the absence of such policy, by the Review Committee established under Section 11 of this policy. Such evaluation shall include consideration of suitable substitute materials and ensure that the needs of students are best served by use of the materials in which the faculty member has an interest.
Section 7.1.d Acceptance of gifts, gratuities, or favors
Gifts. No employee shall knowingly solicit or accept, directly, or indirectly, on behalf of himself or herself or any member of the employee’s household, for personal use or consumption any gift, including but not limited to any gratuity, service, favor, food, entertainment, lodging, transportation, loan, loan guarantee or any other thing of monetary value, from any person or entity that:
i. Has, or is seeking to obtain, contractual or other business or financial relations with the institution in which the individual is employed; or
ii. Has interests that may be substantially affected by the performance or nonperformance of the employee.
Section 7.1.e Exceptions
The prohibition on accepting gifts in Section 7.1.d does not apply to:
i. A gift given by a member of the employee’s immediate family, or by an individual if the gift is given for a non-business purpose and is motivated by a close personal friendship and not by the position of the employee;
ii. Informational materials in the form of books, articles, periodicals, other written materials, audiotapes, videotapes, or other forms of communication.
iii. Sample merchandise, promotional items, and appreciation tokens, if they are routinely given to customers, suppliers or potential customers or suppliers in the ordinary course of business, including items distributed at tradeshows and professional meetings where vendors display and promote their services and products;
iv. Food, refreshments, foodstuffs, entertainment, or beverages provided as part of a meal or other event, including tradeshows and professional meetings, if the value of such items does not exceed fifty dollars ($50.00) per occasion; provided further, that the value of a gift made pursuant to this subsection may not be reduced below the monetary limit by dividing the cost of the gift among two or more persons or entities identified in Section 7.1.d;
v. There may be circumstances where refusal or reimbursement of a gift (such as a lunch or dinner) may be awkward and contrary to the larger interests of the institution. In such circumstances, the employee is to use his or her best judgment, and disclose the gift including a description, estimated value, the person or entity providing the gift, and any explanation necessary within fourteen (14) days to their immediate supervisor;
vi. Food, refreshments, meals, foodstuffs, entertainment, beverages or intrastate travel expenses that are provided in connection with an event where the employee is a speaker or part of a panel discussion at a scheduled meeting of an established or recognized membership organization which has regular meetings;
vii. Participation in institution or foundation fundraising and public relations activities, i.e. golf tournaments and banquets, where persons or entities identified in Section 7.1.d provide sponsorships; and
viii. Loans from established financial institutions made in the ordinary course of business on usual and customary terms, so long as there are no guarantees or collateral provided by any person described in 7.1.d.
Section 7.2 Inappropriate use of students or support staff
Employees shall ensure that the activities of students or support staff are not exploited for the benefit of any external activity of the faculty member. Prior to assigning any such non-Institutionally related task (which is more than incidental or de minimus in nature) to a student or member of the support staff, an employee shall disclose such proposed activities and obtain approval.
Section 7.3 Inappropriate use of State owned resources
Employees may not make significant use of State owned facilities, equipment, materials or other resources, not otherwise available to the public, in the course of activities which are not related to the Institution and which are intended for personal benefit, without prior disclosure and approval.
Section 7.4 Failure to disclose intellectual property
TBR Policy 5:01:06:00 governs the rights and responsibilities which persons affiliated with the TBR and its Institutions have regarding intellectual property developed during the term of their affiliation with the TBR. Among the responsibilities enumerated in the policy is that of disclosure of inventions and those copyrightable works which may be reasonably expected to have commercial value which they have jointly or solely developed or created during their affiliation with the TBR and its Institutions.
Section 8 General disclosure requirements
Persons to whom this policy applies who believe that a conflict of interest may exist either personally or with respect to another person covered by this policy shall make a written disclosure of the facts and circumstances surrounding the situation. No particular format is required, but the disclosure should adequately describe the pertinent facts and circumstances. For members of the Board, disclosure shall be made to the General Counsel. Employees of the Central Office shall make disclosure to either their immediate supervisor or to the General Counsel. At the Universities and Community Colleges, disclosures shall be submitted to the employee’s immediate supervisor or other person designated by the President to receive such disclosures. At the Technology Centers, disclosures shall be submitted to the Center Director. Disclosures made by a President or Director shall be submitted to the General Counsel.
Section 9 Special disclosure requirements for researchers applying for or receiving NSF or PHS funding
Under the policies and regulations indicated under Section 2.1 herein, investigators seeking funding from either the National Science Foundation or the Public Health Service are required to disclose to the investigator’s employer all significant financial interests of the investigator 1) that would reasonably appear to be affected by the research or educational activities funded or proposed for funding by the NSF or PHS or 2) in entities whose financial interests would reasonably appear to be affected by such activities. Such disclosures must be submitted prior to the time the proposal is submitted to the Federal agency. Further, such disclosures must be updated during the period of the award, either annually or as new reportable financial interests arise. The Institution is responsible for eliminating or managing such conflicts prior to receipt of the award. To facilitate such disclosures, the accompanying disclosure form (Attachment A) is available.
Each Institution is responsible for determining if a grant, services, or other contract with Federal agencies other than the Public Health Service or the National Science Foundation requires disclosure and / or management of conflicts of interest, and for ensuring that any such requirements are met.
Disclosure of financial interests made pursuant to this Section 9 notwithstanding, such disclosure does not eliminate the responsibility for making disclosures under Section 8, when specific conflict of interest situations arise.
Section 10 Special disclosure requirements for Regents and certain TBR employees
Members of the Board of Regents, the Chancellor of the TBR, members of the senior staff of the TBR Central Office (all Vice Chancellors and the General Counsel), the Presidents of all TBR Universities and Community Colleges, the Directors of the Tennessee Technology Centers, coaches, assistant coaches and employees of athletic departments who are exempt from the provisions of the Fair Labor Standards Act are required to file a financial disclosure form within one month of their initial appointment and annually thereafter in January. Disclosure of financial interests made pursuant to this Section 10 notwithstanding, such disclosure does not eliminate the responsibility for making disclosures under Section 8, when specific conflict of interest situations arise.
10.1 Members of the Board of Regents shall make their disclosure using a form as indicated in Attachment B submitted to the TBR Office of General Counsel.
10.2 Disclosures from Central Office personnel, Presidents, and Directors shall be made using a form as indicated in Attachment C. and submitted to the TBR Office of General Counsel.
10.3 Disclosures from coaches, assistant coaches, and exempt employees of athletic departments shall be made using a form as indicated in Attachment C and submitted to the Institution’s Human Resource Officer or other person designated by the Institution’s President.
Section 11 Review of disclosures
Disclosures made under Section 8 of this policy by a member of the Board of Regents, the Chancellor, or by a President or Director shall be evaluated by the Board or a duly appointed committee thereof. A member of the Board making a disclosure shall not be entitled to vote regarding disposition of the disclosure.
Disclosures made under Section 8 of this policy by a person employed by the TBR Central Office shall be evaluated by a committee composed of the General Counsel, the Vice Chancellor for Administration, and the Vice Chancellor for Business and Finance. If the disclosure is made by one of those three persons, that person shall not be entitled to vote regarding disposition of the disclosure.
Each TBR Institution shall establish at least one Review Committee comprised of no fewer than three persons to receive and evaluate disclosures generated under Sections 8 and 9 herein by employees of the Universities, Community Colleges, and Technology Centers. Policies and procedures regarding such matters as selection of members, duration of membership, frequency of meetings, etc. shall be adopted by each Institution. A template Institutional policy is included herein as Attachment D. An Institution which fails to explicitly adopt a policy shall be expected to follow the terms of the template policy provided as Attachment D. Following evaluation of the disclosure, the Committee shall render a decision regarding the issue(s) presented by the disclosure. Any disclosure which indicates an actual violation of law shall be forwarded to the President or Director of the Institution along with the Committee’s findings.
Persons potentially committing a conflict of interest violation under consideration by a conflict of interest review Committee shall receive notice of the Committee’s evaluation, and be given an opportunity to appear before that Committee.
Section 12 Sanctions
Failure to observe restrictions imposed as a result of review of a conflict of interest disclosure or a knowing failure to disclose a conflict of interest may result in disciplinary proceedings under TBR and Institutional policy.
Section 13 Appeals
Decisions made by the Board of Regents may not be appealed. Decisions made by the Central Office Review Committee may be appealed to the Chancellor. Decisions of the Chancellor shall be final and binding. Decisions made by an Institutional Review Committee may be appealed to the President or Director of the Institution. Decisions of the President or Director shall be final and binding.
Source: TBR Meeting March 20, 1992; TBR Meeting December 11, 1992; TBR Meeting June 11, 1998; TBR Meeting June 28, 2002; TBR Meeting September 26, 2003; TBR Meeting June 11, 2004.
Attachment A
Financial Conflict of Interest
Disclosure Form
For Proposals to the Public Health Service (including National Institutes of Health) or to the National Science Foundation
Tennessee Board of Regents
Financial Conflict of Interest Disclosure Form for Proposals made to the Public Health Service (including the National Institutes of Health) or to the National Science Foundation
Disclosure by each investigator of all significant financial interests (including those of the investigator’s spouse and dependent children) which a) reasonably appear to be affected by the research or educational activities funded or proposed for funding, or b) exist in entities whose financial interests would reasonably appear to be affected by such activities.
“Investigator” means the principal investigator, co-principal investigators, and any other person at a TBR institution who is responsible for the design, conduct, or reporting of research or educational activities funded or proposed for funding.
“Significant financial interest” means anything of monetary value, including, but not limited to, salary or other payments for services (greater than $10,000 per year from sources other than the employee’s TBR Institution), equity interest (greater than $10,000 in value or more than 5% of the ownership interest in a single entity), and intellectual property rights.
Project title:
________________________________________________________________
I
certify that I do not have any significant financial interests associated
with the aforementioned proposal / project.
I
do have a significant financial interest associated with the aforementioned
proposal / project. I have disclosed this interest in accordance with TBR
System and Institutional policy.
Investigator:
____________________________________
Printed name
____________________________________
Signature
____________________________________
Date
ATTACHMENT B
TENNESSEE BOARD OF REGENTS
DISCLOSURE FORM
TENNESSEE BOARD OF REGENTS
DISCLOSURE FORM
INSTRUCTIONS: This form must be used by members of the Tennessee Board of Regents to report all interests required to be disclosed under Tennessee Board of Regents Policy 1:02:03:10. Terms used are defined in the Policy. In paragraphs 4, 5, and 6 below please specify which relationships or business affiliations could reasonably constitute a conflict of interest with the TBR system.
Disclosure statements must be filed annually in January with the Secretary of the Board.
The disclosure statement must be signed and the signature attested to by a witness. Attach additional pages as necessary. Please type or print all information legibly.
1. Date of Disclosure _____________________________________________
2. Name of Board Member _________________________________________
3. Street or Rural Route No. City State Zip Code Phone
_____________________________________________________________
4. Please list all relationships or business affiliations where you are, or a member of your immediate family is, an officer, director, trustee, partner, employee or agent of such organization.
5. Please list all relationships or business affiliations where you are, or a member of your immediate family is, the actual or beneficial owner of more that 4% of the voting stock or controlling interest in such organization.
____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
6. Please list all relationships or business affiliations where you have, or a member of your family has, any direct or indirect dealings with such organization (other than those listed in #4 and #5 above) from which you knowingly materially benefit (i.e., through receipt directly or indirectly of cash or other property in excess of $4,000 per year exclusive of dividends or interest).
______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
______________________________________________________________
7. ADDITIONAL INFORMATION: List any additional information you wish to disclose.
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
8. Signature (must be attested to by witness).
I certify that the information contained in this disclosure is true and that it is a complete and accurate report of all matters that I am required to disclose by the TBR Policy 1:02:03:10.
___________________________________________
Signature Date
I, the undersigned, do hereby witness the above signature which was signed in my presence.
___________________________________________Signature of Witness Date
Attachment C
Financial Interests Disclosure Form
Tennessee Board of Regents
Financial Interests Disclosure Form
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1. Date of Disclosure |
2. Name of Official
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3. Address and Phone
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4. Title of Office Held
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5. Sources of Income. List major sources of your private income of more than $1,000 and that of your spouse or of dependent children. “Major sources of private income” includes, but is not limited to, offices, directorships, and salaried employments. No dollar amounts need be stated.
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6. Investments. List any investment by you, your spouse, or minor children in any corporation or other business organization in excess of ten thousand dollars ($10,000) or five percent (5%) of the total capital. It shall not be necessary to state specific dollar amounts or percentages of such investments.
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7. Lobbying. List any person, firm, or organization for whom or which compensated lobbying is done by you, your spouse, or dependent children. Also, list any firm in which you, your spouse, or dependent children hold any interest for whom or which compensated lobbying is done. Explain the terms of any such employment and the measures to be supported or opposed.
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8. Professional Services. List in general terms (by areas of the client’s interests) the entities to which professional services, such as those of an attorney, accountant, or architect, are furnished by you or your spouse.
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9. Retainer Fees. List any retainer fee you receive from any person, firm, or organization who is in the practice of promoting or opposing, influencing, or attempting to influence directly or indirectly, the passage or defeat of any legislation before the Tennessee General Assembly, the legislative committees, or the members thereof.
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10. Bankruptcy. List any adjudication of bankruptcy or discharge received in any United States district court within five (5) years of the date of this report.
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11. Loans. List any loan or combination of loans for more than one thousand dollars ($1,000) from the same source made in the previous calendar year to you, your spouse, or dependent children. Loans need not be disclosed on this report if they are: 1) From spouse, parent, sibling, or child. 2) From a federally insured financial institution or made in accordance with existing law in the ordinary course of doing business of making loans. The loan must bear the usual and customary rate of interest, be made on a basis which assures repayment, evidenced by a written instrument and subject to a due date and amortization schedule. 3) Secured by a recorded security interest in collateral, bearing the usual and customary interest rate of the lender and made on a basis which assures repayment, evidenced by a written instrument and subject to a due date and amortization schedule. 4) From a partnership in which you have at least ten percent (10%) partnership interest. 5) From a corporation in which more than fifty percent (50%) of the outstanding voting shares are owned by you or by your spouse, parent, sibling, or child.
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12. Additional Information. List any additional information you wish to disclose.
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13. No Changes Option (only for officeholders who have previously filed a disclosure report).
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14. To be signed by the reporting Official (must be attested to by a witness):
I certify that the information contained in this disclosure statement is true and that it is a complete and accurate report of all matters that I am required to disclose under the Conflict of Interest Act and / or Tennessee Board of Regents Policy.
___________________________________________ _________________________ Signature of Official Date
I, the undersigned, do hereby witness the above signature which was signed in my presence.
___________________________________________ _________________________ Signature of Witness Date
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Attachment D
Template Institutional Policy
Regarding Conflict of Interest
Disclosure Review Committee
[Name of TBR Institution]
Policy Regarding Conflict of Interest
Disclosure Review Committee
1.0 Establishment of a Conflict of Interest Disclosure Review Committee
A Committee shall be formed from Institution faculty and staff, pursuant to TBR Policy 1:02:03:10. The general responsibilities of this Committee are defined in TBR Policy 1:02:03:10. Additional details associated with the Committee are defined herein.
2.0 Number of Members
The Committee shall consist of three members, with at least one member selected from the faculty and at least one member selected from administrative or support staff personnel.
3.0 Selection of Members
Members of the Committee shall be selected by the Institution President or Director.
4.0 Duration of Membership
Members of the Committee shall serve two year terms. Members may serve multiple, consecutive terms.
5.0 Meetings
The Advisory Committee shall meet as frequently as necessary to conduct its business, but no less than once per semester.
6.0 Duties
As described in TBR Policy 1:02:03:10, the committee shall evaluate conflict of interest disclosures and make determinations regarding what actions may be required to manage, reduce or eliminate conflicts of interest.