Monday, 19 May 2014

States of Jersey Development Company: Review of Accounts

I've been perusing the accounts of the States of Jersey Development Company, and some interesting figures emerge.
 
The executive directors, Lee Henry and Simon Neal each got a bonus, respectively of £29,000 and £13,000. Lee Henry's base salary is not insignificant - it is £155,000 with £1,427 extra in benefits.
 
Of the non-executive Directors, Mark Boleat gets the lion's share of £40,000 per annum, while the other four get £15,000 each. The proposition appointing them and it reveals that:
 
Chairman - £40,000 for 24 days' commitment per annum - that is £1,666 per day.
Non-Executive Directors - £15,000 for 15 days' commitment per annum - that is £1,000 per day.
 
I am sure they give good value for money, but it would be good to have a few more details about what they actually do. The actual proposition re-appointing them tells us nothing much at all:
 
"The Minister is advised that the Non-Executive Directors continue to provide relevant experience and strong leadership and oversight of the company, in order to ensure it operates within the agreed policies of the States and delivers projects aligned with the needs of the Island."

Perhaps if the Minutes of their meetings could be made public at some time, this would be useful. Obviously, there may be commercially sensitive information in that, but I would have thought that a moratorium of five years would be sufficient. After all, this is a company acting on behalf of the public.
 
However, we do have this information in the notes:
 
"Risk management is carried out by the Executive Directors under policies approved by the Board of Directors"
 
This involves Credit Risk: "Credit risk is the risk that one party to a financial instrument wiull cause a financial loss for the other party by failing to discharge an obligation""
 
That makes it all the more surprising that Harcourt Developments situation is covered in a note called "Legal Action" which states that the Company will defend the action, and moreover "The Directors do not consider any liability will arise from this action". Indeed! If nothing else, there may well be considerable legal costs. Given the Court case with Harcourt, is it good "oversight" and advice by these well-paid non-Executive Directors to suggest that no provision be made for legal costs?
 
A dividend has been returned to the States of £816,400 for the past two years, an improvement on the Waterfront Enterprise Board, which returned none at all during its lifespan.
 
But this is not the whole picture. As the notes tell us, the SOJDC receives rental income from the States of Jersey for Liberation Station of £78,889, which is money flowing from the States back to the company at market rates. And for a licence to operate the Esplanade Car Park, they receive £759,000 from the States of Jersey. That totals £837,889 making a net flow from the States to the SOJDC of £21,489.  It is a crazy looking glass world!
 
Perhaps they might consider smaller bonuses for the directors, and more dividends remitted to the States of Jersey, so that the net flow would at least break even!
 
Certainly the statement by Lee Henry - 'It remains the position today based on independent professional advice that the JIFC scheme will generate a net return in the order of £50 million for the public.' - begs the question - when?
 
Based on current and past returns, money tends to be swallowed up by the Jersey Development Company, and I, for one, have little optimism about any returns even if the scheme does prove successful.

3 comments:

James said...

Two points:

- the remuneration of non-exec directors is not new, and the level of pay isn't dissimilar to that given to the ex-Director of GCHQ, who got this sort of deal in 2009 to top up his generous pension pot after he retired. In his case, he was acting as a consultant to Gloucestershire County Council. There were the same equally vague definitions of what he would do.

- the question of money flowing in and out is also not limited to SOJDC. It seems crazy that Heritage get a block grant from the States, but then have to pay the Harbours company (historically the States in another guise) a substantial rent for the maritime museum. The only people who benefit under such arrangements are the accountants.

Reg said...

I bet that the above are still better value than many of the states members.

roger benest said...

Perhaps the States should publish similar accounts for Members costs relating to performance.