The Attorney General may refuse to provide for the defense of an action referred to in section 1 if he determines that:
a. the act or omission was not within the scope of employment; or
b. the act or the failure to act was because of actual fraud, willful misconduct or actual malice; or
c. the defense of the action or proceeding by the Attorney General would create a conflict of interest between the State and the employee or former employee.