The Conflict of Interest Act, 2025, officially enacted on 19 August 2025, marks a major overhaul in Kenya’s public sector ethics and compliance framework. The law replaces the Public Officer Ethics Act, introducing tougher restrictions and new compliance standards for both public officers and private sector entities that engage with government institutions.
The Act seeks to redefine the relationship between public duty and private interest by enhancing transparency, introducing mandatory disclosures, and expanding the enforcement powers of the Ethics and Anti-Corruption Commission (EACC).
Why the New Law Matters for Businesses
The Conflict of Interest Act extends beyond public officials — it directly affects companies that contract, supply, or partner with government entities.
Businesses are now subject to stricter ownership disclosure requirements, procurement eligibility rules, and hiring restrictions involving former public officers. Non-compliance could lead to voided contracts, heavy fines, reputational damage, or disqualification from future tenders.
Conversely, companies that comply with the Act may gain a competitive edge by boosting investor confidence and public trust in Kenya’s procurement environment.
1. Restrictions on Government Contracts
The Act bars public officers from participating in or benefiting from government contracts, either directly or through proxies.
For businesses, this means stricter beneficial ownership checks before bidding on public tenders. Firms must ensure no serving public officer — or their relatives — holds any stake in the company.
Failure to identify such links could result in contract cancellation or financial penalties, even in cases where no wrongdoing was intended.
Compliance Tip: Companies should adopt detailed shareholder mapping and disclose all beneficial ownership information to avoid inadvertent conflicts.
2. Ownership and Shareholding Scrutiny
The law closes common loopholes by prohibiting public officers from owning shares in companies that contract with the government — except through passive, publicly traded investments.
Businesses bidding for tenders should expect cross-checks between the Companies Act’s beneficial ownership registry and new conflict-of-interest registers maintained by public bodies.
However, the Act does not specify thresholds for what constitutes a “private interest,” creating potential uncertainty over minor shareholdings or indirect ownerships.
3. Mandatory Disclosure and Public Registers
Each reporting authority — including Parliament, county assemblies, and constitutional commissions — must now maintain public registers of declared conflicts of interest, gifts, and benefits.
For companies, this means every gift, training, sponsorship, or hospitality offered to a public officer will be recorded and potentially accessible to the public.
Action Point: Businesses should immediately review corporate hospitality and sponsorship policies, set monetary limits, and document all interactions with public officers to prevent misinterpretation.
While this promotes transparency, the absence of uniform formats or value thresholds may lead to inconsistent enforcement across government agencies.
4. Two-Year Cooling-Off Period for Former Public Officers
Former public officers are now subject to a two-year cooling-off period, preventing them from joining or advising companies that had dealings with their previous offices.
This aims to prevent “revolving door” risks, but it creates practical challenges for industries reliant on technical expertise — such as energy, infrastructure, and healthcare.
Businesses hiring former regulators or senior civil servants must secure EACC clearance to avoid penalties.
5. Expanded Powers for the Ethics and Anti-Corruption Commission
The EACC now wields broader powers to investigate, verify asset declarations, and initiate inquiries into conflicts of interest — with or without a formal complaint.
Penalties under the Act are severe:
- Individuals face fines up to USD 31,000 or imprisonment of up to 10 years.
- Corporations face fines up to USD 77,500, plus forfeiture of benefits gained through conflicted contracts.
This elevates compliance from a legal formality to a core business risk management issue.
6. Heightened Due Diligence Requirements
Companies engaging in public procurement, PPPs, or government-linked projects must now implement enhanced due diligence systems.
They should conduct:
- Beneficial ownership checks
- Conflict-of-interest declarations
- Internal audits on procurement and recruitment processes
Multinationals may already align with these standards, but local partners will need to upgrade governance systems quickly to remain eligible for tenders.
7. Lessons and Next Steps for Businesses
To comply with the new law, businesses should:
- Review ownership structures and eliminate undisclosed interests involving public officers.
- Update policies on gifts, hospitality, sponsorships, and recruitment.
- Conduct conflict-of-interest checks in procurement and partnerships.
- Establish internal compliance frameworks to respond swiftly to EACC inquiries.
Early adaptation will not only minimize exposure to penalties but also reinforce credibility in Kenya’s evolving public procurement environment.
“Businesses must now treat conflict-of-interest compliance as a strategic priority, not just a legal obligation,” notes a Nairobi-based corporate governance expert.