ASK employees what conflicts of interest are, and you’ll get wildly different answers.
Some point to vendor relationships with family members. Others mention workplace romances. In financial institutions, people think of undisclosed stock trades.
All these are valid examples, but the confusion reveals why conflicts of interest are often mishandled and why they erode trust in some of South-east Asia’s most promising startups.
As I see it, a conflict of interest is when personal interests interfere with professional judgment. The danger extends to how it appears to investors, employees and partners.
A conflict of interest can be actual, like a founder awarding a contract to a sibling’s company without disclosure. It can be perceived, like an employee repeatedly pushing a vendor run by an old roommate. Or it can be potential, like a board member exploring an advisory role with a competitor.
These can lead to trouble for any organisation. Even small lapses can spiral into scandals or create subtler problems for startups of all stages.
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The good news: Simple habits of disclosure and documentation can keep founders and their companies out of trouble.
Why early stage founders can’t ignore this
In my work helping companies build integrity systems, I see the same pattern: organisations underestimate the risks arising from conflicts of interest until they explode. They then spend more energy trying to contain the fallout than they ever would have spent preventing it.
In a recent case I worked on, a fintech startup founder held an undisclosed equity stake in a key supplier. Investors uncovered this during due diligence and paused a funding round while external reviewers checked past contracts.
Fundraising was delayed for several months, bridge financing became necessary, and the eventual round closed at reduced terms. The disruption was avoidable, as a disclosure and recusal would have resolved the issue.
Early stage founders often dismiss conflicts of interest as problems for mature companies. That thinking is costly.
As the case with the fintech firm shows, a conflict of interest doesn’t have to spiral into a huge public scandal to affect a business. Friction in the fundraising process can be the death knell for a young company, so why take the risk?
South-east Asia’s conflict accelerators
The region’s startup culture amplifies risks from conflicts of interest in three ways.
First, family and friend networks create the foundation for many of the region’s startups – for example, co-founders are often college friends, former colleagues or relatives. While that personal history builds trust and speed, it also creates blind spots.
I worked with a payments company that faced delays when applying for regulatory licences after undisclosed family connections between senior executives and a key supplier came to light. Regulators did not allege misconduct but asked for more information and performed additional reviews.
What should have been a straightforward process stretched into many months. In that time, competitors advanced in the market, leaving the company at a disadvantage once its licence was finally approved.
Second, cross-directorships and overlapping investments are common in the region. A person can sit on several boards with stakes in suppliers, customers or competitors.
Without clear disclosure frameworks, these overlaps create webs of competing loyalties that become unmanageable at scale.
Third, there is a cultural resistance to disclosure. Raising conflicts of interest is sometimes viewed as questioning loyalty or competence.
In organisations I work with, this cultural dynamic prevents early intervention when conflicts of interest are still manageable.
Detection is prevention
Warning signs for conflicts of interest are rarely subtle, but they require attention for early identification. For startups, these efforts can be simple but effective:
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Keep quarterly registers of vendor and hiring decisions. They should show who made the decision, which alternatives were considered, and why the final choice was taken.
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For material financial commitments, records should show who the beneficiaries are and the other options considered.
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Perform vendor selections with extra scrutiny when family, friends or personal investments are involved.
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Flag financial decisions that appear to benefit individuals more than the organisation.
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Examine strategic pivots when they align with leadership’s personal interests, especially in high-risk sectors like lending or B2B operations.
The most effective systems make reporting conflicts of interest routine rather than exceptional.
From working with companies across different stages, I’ve found that the strongest founders normalise disclosure by treating it as risk management, not as character judgment. How do they do this?
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Model transparency by flagging their own conflicts of interest and recusing themselves from decisions when necessary.
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Document sensitive decisions with enough detail to show what alternatives were considered and why the final choice was made.
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Use simple tools or integrated systems for disclosing conflicts of interest. Some teams rely on basic document templates, others on governance platforms.
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Bring in independent validation from trusted advisers or external experts when the stakes are high.
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Build conflict checks into broader governance so they sit alongside whistleblowing, grievance and audit processes, rather than being managed manually.
The companies that implement these practices early spot issues before they become expensive problems. Those who wait find themselves managing a crisis instead of growth.
The cost of inaction
Scandals arising from conflicts of interest damage what should be the foundation of every business: integrity. The ripple effects of scandals are measurable across industries, as even startups that operate honestly find themselves struggling to attract investment if their sector is tainted.
Founders in South-east Asia should build conflict of interest management into their culture from day one or risk becoming another cautionary tale.
Conflicts of interest are no longer side issues, but the test of whether a company deserves capital. Investors can forgive missed targets, but they rarely forgive compromised integrity. TECH IN ASIA
The writer was the Wirecard whistleblower, and is the founder and CEO of Confide Platform
