Question of law and ethics

[vt100]

I’d like to solicit your opinion or, even better, a definitive answer to the following questions:

I am considering accepting an executive position at a sizable company.  According to the pre-negotiated terms, I will retain the ownership and continue to run part-time my own existing small consultancy and VAR business.

There are products and technologies that I am partial to, because of the level of expertise, results of comparative analysis and some clout with vendors. I am presently reselling some of those.

The question is this: is it legal for me to act as a VAR to the company where I am holding a decision-making authority?

If it is indeed legal, is it ethical for me to provide VAR services to “myself”, given that I may be able to control the costs better and sell products that firm will be using anyway, at a much lower margin? Should I use independent VARs?

P.S.  Their IT is presently billing company units and acting as an internal service provider.

Thank you,

VT100

[vt100]

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@rslade wrote:
> vt100 (Community Champion) posted a new topic in Career on 07-21-2019 01:48 PM

> I’d like to solicit your opinion or, even better, a definitive answer to the
> following questions:

Oh, I doubt you'll get anything *like* a definitive answer. This is an *excellent*
question for courses in ethics and law: mostly because you'll never get a final
answer, but the discussion would be valuable.

>   I am considering accepting an executive position at a
> sizable company.  According to the pre-negotiated terms, I will retain the
> ownership and continue to run part-time my own existing small consultancy and
> VAR business.
>   The question is
> this: is it legal for me to act as a VAR to the company where I am holding a
> decision-making authority?

If you hold decision-making authority about whether you *get* the contract, or
whether the work you do is acceptable, that's a pretty clear conflict of interest.
Even if the terms of your employment contract allow it, you'd put yourself in
legal jeopardy if you don't make provision for someone else to review the decision.

If the contract is for a different division or function, and the decision is made by
someone else, you are probably covered legally, but it's still a bit iffy ethically.

>   If it is indeed legal, is it ethical for me to
> provide VAR services to “myself”, given that I may be able to control the
> costs better and sell products that firm will be using anyway, at a much lower
> margin?

You say it's an "executive" position, although you don't say how far up the food
chain you are. "Executive" positions usually advise and govern, so, in a sense, if
you are charging for VAR services you are, in a sense, double-billing the company.

---

Thank you for your reply. This question was intended as a rhetorical one, as I would rather swallow a fork than consider exposing myself or either of the businesses to even a possibility of  adverse action either internal or external. That being said, I wanted to get a feel of the crowd here for this issue and I'll follow up in a general thread explaining why it was asked to begin with.

[Shannon]

@vt100, you'll have to be concerned about how others perceive the action, and their reaction, which may be initially kick-started based on ethics & later bank on legality.

@CraginS provided a great illustration of what something like this can lead to, while @rslade hinted at some of the legal caveats; I'm sure you've taken a look at all that already.

Even if financial risks are negligible, there's still the risk to reputation and it's potential impact --- you'll want to consider all of that to decide whether what you have to gain beats what you might lose.

Looking forward to reading the follow-up from you,...

[vt100]

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@Shannon wrote:

@vt100, you'll have to be concerned about how others perceive the action, and their reaction, which may be initially kick-started based on ethics & later bank on legality.

@CraginS provided a great illustration of what something like this can lead to, while @rslade hinted at some of the legal caveats; I'm sure you've taken a look at all that already.

Even if financial risks are negligible, there's still the risk to reputation and it's potential impact --- you'll want to consider all of that to decide whether what you have to gain beats what you might lose.

Looking forward to reading the follow-up from you,...

---

Thank you for your reply. As you have pointed out, a lot of good reasons were quoted for not doing this. I am enjoying this conversation tremendously and will give this thread a day or two before writing a general follow-up.

[vt100]

As I have mentioned in the individual replies, I have no desire in subjecting either company or myself to even a possibility of perceived conflict of interest.

The choice, in the absence of the existing applicable Conflict of Interest policy, is really dictated by practicality and will likely result in a sub-optimal outcome. Vendors make profit from their sales and services. Their margins are set to maximize such profit and there is no impetus for them to provide you with preferential treatment.

In case of the described situation, I would’ve been interested in either trimming or eliminating my margins altogether, to maximize the benefits for my employer.

As I am not going to do that for the reasons mentioned in the beginning of the post and understood by all here, it could actually be unethical for me NOT to perform these services.

So, to avoid the dilemma, I have stipulated the inclusion of the clauses prohibiting me and my own company from selling goods and services to my possible future employer and its subsidiaries in the body of the offer.