Westpac maintains one of its board members has adequately addressed a conflict of interest created by his directorship of the emerging non-bank rival, Liberty Financial.Peter Hawkins joined the Westpac board in December 2008, when Westpac took over St George Bank, where he was already a director. At that time, Hawkins was also already a director of Liberty Financial.Liberty Financial started life in 1997 as a provider of "low-doc" home loans to borrowers who could not satisfy traditional bank mortgage requirements.However, the low-doc segment has shrunk over the past four years in the wake of the global financial crisis. Liberty has responded by expanding into traditional bank-style home and personal finance, and business lending, as well as investment management.Liberty now competes with Westpac in each of these markets.A conflict of interest is generally defined as a situation that creates scope for a director's judgment about one interest to be skewed or clouded by another interest. The individual's judgment does not have to actually be affected, and Banking Day has seen no suggestion that Hawkins' judgment has actually been affected by his dual roles.Westpac has not denied that Hawkins has a conflict of interest, but says it has told shareholders enough about this.A Westpac senior media relations manager, Danny John, said Hawkins' Liberty directorship has been disclosed to shareholders since his appointment in 2009."Westpac's definition of independence aligns with the ASX Corporate Governance Principles and is consistent with the NYSE definition of independence," John stated in an email."The Board assesses the independence of our Directors on appointment and annually and is satisfied that Peter Hawkins meets our criteria for independence. Peter Hawkins' directorship of Liberty Financial Pty Ltd, a non-bank lender, was fully disclosed when Peter joined the Westpac Board and has been disclosed in our Annual Reports since 2009."Banking Day requested an interview with Hawkins for this article, but John said, in an email, that he was unavailable.Hawkins' membership of the Liberty Financial board has been included - without comment - in each Westpac annual report from 2009 onward.Each of these annual reports has stated that "[a]ll Directors are required to disclose any actual or potential conflict of interest upon appointment and are required to keep these disclosures to the Board up to date".It is not known whether Hawkins has at any point described to other Westpac board members the widening scope of lending and investment of Liberty Financial's business. It is also not known whether he has had any discussions on the issue with his fellow Liberty board members.Westpac has ranked consistently among the best-governed banks in the world, according to most leading global benchmarks.In 2011, Westpac's engagement with stakeholders and its performance in observing corporate governance standards earned it the title of the world's most sustainable and ethical bank in the Dow Jones Sustainability Index.(For additional background, see this story: Liberty becoming a mainstream finance player.)