Thomas Perdue had built up a successful development company. When he became city commissioner, everyone said it was good to have a businessperson on the commission. They said businesspeople know how to control costs and make sound economic decisions, and Thomas could help the city tighten its belt. One of his first projects was an analysis of the human resources department. He claimed that if the whole function was outsourced, it would save the taxpayers money. A year later, after painful layoffs and a bumpy transition, the new contractor, NewSoft, was in place. Two years later, NewSofts billing rates had steadily increased, and there were complaints about service. After five years, the supposed savings had vanished, and Thomas had moved on to state government, his campaigns fueled by generous campaign contributions from companies like NewSoft.

Questions

Although this case differs from fraud in the usual sense, describe the conflict of interest in this case. Who benefitted, and who did not?

When making business decisions of this sort, some factors are quantitative, and some are qualitative factors. Discuss some of the qualitative factors related to this case.