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Proactive policies can head off board conflicts of interest

Written guidelines, annual agreements signed by board members may avert charges of self-dealing if directors are also vendors

June 21, 2019
By Martin Berman-Gorvine

News of turmoil within the National Rifle Association over alleged self-dealing by members of its board raises a question among trade and professional association executives: Could it happen here?

The short answer, say attorneys who specialize in this field, is that such potential conflicts of interest are rare, but associations should protect themselves with a prudent conflict-of-interest policy.

“I don’t think that it goes on a lot in practice,” Douglas Varley, an attorney at Washington, D.C., law firm Caplin & Drysdale, said of situations like the NRA’s. He said the volume of insider transactions made it “an outlier.” An investigation by The Washington Post found that 18 of the 76 board members received payment from the NRA over the past three years, including $3.1 million to one director’s business for ammunition and other supplies, and $400,000 to another director for public outreach and consulting.