selfdealing

Self-dealing refers to a fiduciary's use of their position to obtain improper personal benefit at the expense of the organization, its beneficiaries, shareholders, or clients. It occurs when the fiduciary has a duty to act in the best interests of another party but instead prioritizes personal gain or the interests of related parties, creating a conflict of interest that compromises loyalty and care.

Self-dealing can arise in corporate governance, trusts and estates, nonprofits, and public office. Examples include a director approving a contract in which they or a close associate have a financial stake, a trustee directing trust assets to a company they own, or an official steering funds to a project that benefits them personally.

Not all related-party transactions qualify as self-dealing. The critical questions are whether the deal was disclosed, whether independent parties approved it, and whether the arrangement is fair in terms of consideration and benefit. When self-dealing is found, remedies may include voiding or undoing the transaction, disgorgement of ill-gotten gains, civil penalties, removal from the fiduciary position, or criminal charges where fraud or embezzlement is involved.

Prevention relies on governance measures such as conflict-of-interest policies, mandatory disclosures, independent committees or counsel, routine audits, and whistleblower protections. Transparency, arm's-length negotiations, and post-deal reviews help reduce self-dealing risk and provide pathways for accountability.