Jersey Development Company bonus 'not approved' by government

The government-owned body charged with developing land owned by the taxpayer needs to review the pay and bonus it gives its staff, according to Jersey’s financial watchdog.

The Comptroller and Auditor General (C&AG) has been investigating the work of the States of Jersey Development Company (SoJDC), which was responsible for building the International Finance Centre in St Helier as well as a number of housing developments.

A previous pay investigation by the C&AG showed the SoJDC chief executive earned a pay and perks package of around £240,000 in 2018.

Lynn Pamment today (5 June) raised concerns that a bonus structure that saw senior managers of the SoJDC take a share of 5% of the additional profits from the sale of the first finance centre building had not been approved by the shareholder: the government.

It sold for £43.7 million in November 2018.

She was particularly critical of SoJDC not working with private partners on many of its projects, instead taking on the risk itself.

Her report highlighted the quango’s latest project - a luxury apartment development on the St Helier waterfront - as being a good example of sharing the risk on a 50/50 basis with a private property developer.

SoJDC has delivered a range of major projects for the Island with profits available for further developments, public realm projects or dividends for the Government. The Government has not however systematically assessed or reported the benefits to the taxpayer arising from its relationship with and investment in SoJDC. It should do so on an ongoing basis.

Lynn Pamment, Comptroller and Auditor General

She also found the government’s own oversight of SoJDC was not robust enough, with formal systems lacking clarity, and that the government’s Regeneration Steering Group failed to meet for a full year, at one point, and “had not functioned as intended”.

She did, though, point out a number of improvements had been made, or were in the process of being made.

Ms Pammet made 23 recommendations to both SoJDC and the government including calls for a strategic review into whether it was the right way for the public sector to deliver its regeneration plans, which include the transformation of a number of public spaces in St Helier.

The States of Jersey Development Company was formed in 2011 as a company wholly owned by the government, which injected an initial £20 million into it. It has since returned £5.4 million in cash to the government, plus £3.4 million in asset transfers, and £3.2 million in infrastructure.States Treasurer, Richard Bell sent this statement in response:

I would like to thank the C&AG for carrying out the review into SOJDC which is the first to be undertaken since the new company was formed in 2011. The C&AG acknowledges the progress already made by Treasury and Exchequer including the use of expert advice to provide assurance on complex property development schemes and the enhancements that are being implemented to our Memoranda of Understanding with companies wholly-owned by the States.

Richard Bell, States Treasurer

SoJDC managing director Lee Henry, said: “The board was pleased to note that whilst there is room for improvement in certain areas, the C&AG highlighted that SoJDC’s Risk management arrangements are well developed and the Company’s projects are well managed, with successful outcomes, resulting in the Company’s profit and retained earnings growing significantly since 2016.”