In today's world, conflict of interest has become so common and accepted that it is rarely even commented upon. Executives from the animal-using industry take posts in the government regulating the very same industry that once wrote their paychecks. Former government regulators take jobs as executives in the industry they used to regulate. Animal advocacy organizations take sponsorship money from corporations that make millions selling animal products, or partner with these corporations in mutually beneficial PR initiatives. These situations create an environment that breeds corruption.
Conflict of interest is particularly damaging in the case of animal advocacy, as animals do not have the ability to speak up when their cause has been exploited. Therefore, it is necessary to err on the side of caution, and scrupulously avoid not only conflicts of interest, but also the appearance of conflict of interest. Some boundaries are healthy. The boundary between the affairs of those who are advocating for animals and those who are making profits from using and killing animals should never be allowed to blur. Only a healthy community of well-informed concerned citizens can ensure this boundary is maintained.
For an exploration for some of the ways conflict of interest issues have arisen in the realm of animal advocacy, see "Project for the New American Carnivore:
From Lyman to Niman in 10 Short Years," and "Compassion for Sale: Doublethink Meets Doublefeel as "Happy Meat" Comes of Age"