Conflicts of Interest and Public Disclosure

Most representatives think of conflicts of interest as a financial matter: do you hold the token, did you receive the grant. That instinct catches the easiest cases and misses most of the ones that actually damage trust. The interests that surprise delegators are usually not holdings at all - they are the co-founder relationship nobody knew about, the draft you helped write two years ago, the position you argued so publicly that reversing it would cost you something. This lesson widens the search and then narrows the judgement.

• Sweep six families of interest, not one.
• Tell actual, apparent and potential apart.
• Apply the reasonable-delegator information test to a specific decision.
• Handle borderline cases by disclosing them.

Sweeping by family is mechanical on purpose. Asking yourself the open question - do I have a conflict here? - reliably returns no, because the honest answer to whether you will be improperly swayed is almost always no. Asking six narrow questions returns findings.

1. Financial. Holdings whose value the action plausibly affects, grants or payments received from the proposer, revenue share, debt, and any position you would be trading against. Note the direction as well as the existence: an interest that loses value if the action passes is as disclosable as one that gains.
2. Employment. Current or recent employment, contracting, consulting, advisory positions, board or council seats - with the proposer, a competitor, a dependency, or an organisation that would administer the funds. Recent matters; a role ended last month is not a nil.
3. Relationship. Family, household members, close personal friendships, co-founders, business partners, and people whose income depends on the outcome. This family is the one most often skipped, because it feels intrusive to write down and because the connection is invisible to everyone except the people who already know.
4. Authorship. You wrote the proposal, co-wrote it, reviewed a draft, advised on the budget, wrote its predecessor, or built the framework it relies on. Having improved something makes you invested in it, and readers cannot see that from the document.
5. Reputational. You have publicly and repeatedly championed or attacked this team, this category of work, or this position, to the point where changing your mind would cost you standing. Being on record is not a conflict in itself; having something to lose from reversing is closer to one.
6. Future. Discussions about joining, applying for, being funded by, or partnering with a party to the decision. Nothing has been agreed, which is exactly why it feels premature to disclose and exactly why it should be.

The OECD guidelines for the public service use a compatible triad - actual, apparent and potential - and are worth reading for vocabulary. They govern public officials rather than Cardano representatives and nothing in them applies here as a rule, but they are the clearest statement of the point that apparent conflicts matter independently of whether anything improper occurred. Trust is damaged by the appearance and by the concealment, more reliably than by the interest itself.

Materiality is relative to a decision. The same holding can be immaterial to a constitutional amendment and squarely material to a treasury withdrawal that funds a competitor. This is why an annual, decision-independent disclosure statement is necessary but not sufficient: the standing record says what you hold, and the per-action judgement says what it means here.

Three habits make the test usable. Ask it about the specific action, naming the action. Ask it from the delegator's chair rather than your own - the question is not whether you would be swayed but whether they would want the fact in hand while reading your reasoning. And ask it before you know your position, because it is far harder to judge materiality honestly once you have decided how you will vote and the disclosure has begun to look like an obstacle.

The test deliberately sets a low bar for disclosure and says nothing about response. That separation is the core of the whole course. Deciding that a delegator would want to know something is a decision about information; deciding whether to abstain or recuse is a separate decision about participation, covered in lesson three. Conflating them is what makes people under-disclose: if every disclosure implied stepping back, the cost of disclosing would be high enough to encourage silence.

A representative, having taken the sweep seriously, publishes a record listing every ADA holding, every conference attended, every acquaintance in the ecosystem and every opinion ever posted. The record runs to several pages, and its effect is the opposite of transparency: the four entries that matter are buried among two hundred that do not, and no delegator will find them. Over-disclosure is a real failure mode, not a safe default. The corrective is not to disclose less but to disclose against the test - tied to a decision, in the reader's interest, with a nil return written as an explicit nil rather than padded out. If an entry cannot be connected to a plausible reason a delegator would care about it here, it belongs in a standing profile, not in the disclosure for this action.

• Searching only for financial interests and recording a nil for everything else.
• Asking whether you would be improperly swayed rather than whether a delegator would want to know.
• Treating an ended employment or a past authorship as irrelevant because it is historical.
• Skipping the relationship family because writing it down feels intrusive.
• Dismissing an apparent conflict on the grounds that nothing improper occurred.
• Deciding materiality after settling on a voting position.
• Treating disclosure as an admission of wrongdoing, and therefore avoiding it.
• Assuming that disclosing an interest commits you to abstaining or recusing.
• Padding the record with everything, so that the material entries are unfindable.

You can sweep six families of interest against a named action, classify each finding as actual, apparent or potential, apply the reasonable-delegator information test to decide whether it is material to that decision, and resolve borderline cases towards disclosure - while keeping the question of what to disclose separate from the question of whether to participate.

The test is a heuristic, not a boundary: reasonable delegators disagree, and there is no threshold that settles borderline cases for you. Nothing here tells you which response an interest warrants, and nothing here is legal, tax or compliance advice - obligations arising from your jurisdiction, employment or any body you serve are outside this course and outside the Institute's competence. Every fact in the worked example is a fictional composite for training. And a completed sweep tells you nothing whatever about how to vote.

Sweep six families; the open question 'do I have a conflict?' returns false negatives.

A conflict pairs an interest with a specific decision - materiality is never a standing property.

Apparent and potential conflicts are disclosable; nothing improper need have happened.

Disclosure is a decision about information. Participation is a separate decision.