What Is Self‑Dealing

Self‑dealing is the breach that occurs when someone entrusted to act for another uses that position for personal benefit. This piece defines the fiduciary role, states the core rule, distinguishes self‑dealing from conflict of interest, and offers examples in private trusts and public office.

Fiduciary and the core rule

A fiduciary looks after another’s interests ahead of their own, within the scope of the mandate. The person, or the public, whose interests are served is the beneficiary.

A basic principle of fiduciary law—sometimes described as a precept of natural law—is that a fiduciary must not profit from the position beyond authorized compensation and legitimate, documented expenses. The prohibition is strict. It does not turn on whether the beneficiary was harmed, whether the decision seemed efficient, or whether the gain was small. The point is undivided loyalty: judgment must not be influenced by personal advantage.

What self‑dealing means

Self‑dealing is using a fiduciary position to obtain a personal benefit not authorized by the mandate. The benefit may be direct or indirect; it may be cash, favors, preferential treatment, or other advantages. It includes taking opportunities that belong to the beneficiary, steering business to oneself without authorization, or padding reimbursement beyond what the role permits. The unifying feature is the use of entrusted power for personal gain.

Self‑dealing is a matter of substance, not form. Routing benefits through intermediaries, pass‑throughs, or layered approvals does not make it legitimate; it often signals evasion. Cosmetic redirection does not repair the duty of loyalty; it corrupts records and undermines the reliability beneficiaries must be able to trust.

Conflict of interest vs. self‑dealing

A conflict of interest is a condition that creates divided loyalty. It is the risk that personal interests, or duties to others, could pull judgment away from the beneficiary’s interests. Self‑dealing is the realized breach: the fiduciary acts on that pull and takes a personal benefit. Not every conflict results in self‑dealing, but every instance of self‑dealing rests on a conflict, resolved in favor of the fiduciary rather than the beneficiary.

Private trust examples

In private trusts, self‑dealing appears in familiar forms. Embezzling trust funds is the clearest case. Less obvious, but still a breach, is charging the trust for expenses not reasonably connected to the trust’s purpose—such as personal travel labeled as trust business or inflated “management” fees beyond the authorized schedule. Using trust assets as collateral for a fiduciary’s personal loan, or diverting an investment opportunity owed to the trust, likewise converts entrusted power into private gain.

Public service as public trust

Public office is fiduciary stewardship of a public trust. The same core rule applies. Bribery and quid‑pro‑quo favors are direct forms of self‑dealing: public power exchanged for personal benefit. Misuse of discretion for personal advantage also qualifies, even without cash. Bending rules to advance a career, steering contracts to associates, or shielding a relative from enforcement each uses public authority for private ends. Benefits can be non‑monetary—prestige, access, or future opportunities are still personal gains when obtained through office.

Why it matters

Self‑dealing breaches the duty of loyalty. Once personal gain enters the calculus, decisions cease to be reliable proxies for the beneficiary’s interests. Records lose credibility because they may mask private motives. That erosion has practical costs: it distorts resource allocation, undermines confidence in the institution, and invites litigation or sanction. The strict rule against unauthorized profit, and the demand for clear compensation and documented expenses, exists to preserve trust in the decisions and the record they create.

Clarity and integrity sustain fiduciary trust.