Especially with financial sponsors playing such an active role in the deal scene, there are many opportunities for investment banks to seem conflicted. For the most part, people just sort of live with it. The latest example: Citigroup served as both the sole adviser to Whyte & Mackay, A Scottish spirits company, and a lender to United Spirits, the India-based buyer. Obviously, there is the appearance of a conflict. The dual role was once verboten, but no longer. Staple financing has become common. In this case, however, the Citigroup team in the U.K. did not know of Citigroup's role in India. The downside here is what happens if the deal goes sour for the buyer. There may be grounds for a suit of some kind.

For more:
- here's the New York Times article