Artificial Intelligence and the regulation of conflicts of Interest in the corporate space

Abstract

Conflicts of interest in the corporate arena remain a central concern to policymakers and are widely regarded as one of the most complicated issues for boards and executives in the corporate sector. It is becoming increasingly unrealistic to expect human judgment alone to adequately address conflicts without technological support. At the same time, tools exist to address this problem, but the practical approach for implementing these tools remains underdeveloped. Artificial intelligence (AI) offers the potential to significantly influence the manner in which conflicts of interest are addressed. Despite the potential offered by AI, South Africa has yet to meaningfully incorporate AI into its corporate governance framework. The central issue is an absence of a framework that enables the integration of AI technology in a manner that aligns with South African legal principles and values. A properly designed framework enabling the implementation of AI is required to transform how conflicts of interest are addressed. It would allow South Africa to take advantage of emerging AI capabilities, which can be a powerful tool for strengthening transparency and ethical conduct. The findings demonstrate through case studies that AI is capable of delivering benefits for the conflict of interest framework. Despite this, South Africa lacks a legislative framework that can support the integration of AI. This is problematic, and foreign trends seen in the European Union (EU), such as the EU AI Act, provide a clear risk-based model that can guide South Africa in the development of a robust national framework.