Conflict of Interest - How to deal with it

A conflict of interest can be obvious/explicit or subtle/implicit. If one fails to recognize a conflict of interest, one could easily find oneself in a situation that damages one's your credibility, integrity, or reputation.
Merrian Webster (at www.m-w.com) defines the conflict of interest as a conflict between the private interests and the official responsibilities of a person in a position of trust, as outlined in this case.
Refer him to the PMI's Code of Ethics and Professional Conduct and Ethical Decision Making Framework as the aids to recognize, declare, report, and address this conflict where warranted.

Juan -

Could you clarify if the gift was given by a partner who works within the same company or was it from an external company? If it was within the same company and there was no pending decision which your colleague was expected to make thereafter related to the deal, then I wouldn't see that as a conflict of interest, just a nice recognition gesture from the partner.

If the partner worked for a separate company OR your colleague was expected to make a decision at some later point in time related to the deal in question then that would likely be a conflict of interest.

Kiron

Juan, when I first read the post I thought that the partner offering the gift worked at the same organization as your colleague, in which case I would not have seen any immediate conflict of interest. However, if the internal partner then asked your colleague for special favors or worse, to bend the rules or misrepresent the project status, that would be a conflict and your colleague would be obliged to do the right thing for the project even if it meant returning the gift.
On the other hand, if the partner is external, i.e. at a client or potential client, then I would suggest that your colleague politely return the gift as a well-intentioned and much appreciated gesture (even if it isn't either one!), and explain that it might be misunderstood by others. The PM should also report the attempted gift to their immediate manager since this external partner may try this tactic with others at the organization. It might also be an opportunity to suggest that the organization, even if small, should develop and adopt a more formal code of ethics or process for handling external gifts -- they might even want to use the PMI Code of Ethics and Professional Conduct as a model!

Dear Juan,

There is a very thin line between what can be considered as a reward and what can be construed as conflict of interest. When confronted with a situation like this, the first question that comes to mind is, what did I do to deserve this gift from a particular person, in the first place? If it is coming from someone external but doing business with your organization then you definitely have to distance yourself from it because it clearly will put you in a conflict-of-interest situation. However, if that gift is coming from someone within your organization, who is superior to you and thinks you have performed diligently on an assignment and he or she decides to reward your effort, that is a completely different matter. In situations like this, your own conscience will even tell you whether it is right or wrong. You will know it. Any gift, no matter the quantum or form in which it comes, once it can be construed to have the potential of influencing your decision-making process, is definitely a conflict-of-interest situation.

If in doubt, refer to the Code.

My opinion on the subject.

I won't accept any gifts! No matter how much the value is.
If there is no way to reject or..., then you should disclose it to others.
This is what I do.