Waterfront Enterprise Board Limited - provision of information by the Policy and Resources Committee (P.106-2003) - comments

STATES OF JERSEY

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WATERFRONT ENTERPRISE BOARD LIMITED: PROVISION OF INFORMATION BY THE POLICY AND RESOURCES COMMITTEE (P.106/2003) - COMMENTS

Presented to the States on 22nd July 2003 by the Policy and Resources Committee

STATES GREFFE

COMMENTS

1. T h e Committee considers that the report accompanying the proposition is factually incorrect and misrepresents thenotion of corporate governance.
2. T h e answersto the questionsSenatorSyvretaskedon 11th March and 7thApril were delivered later than had been hoped.However, this was because the questions neededtobethoroughly researched and the answers did indeed need to be carefully and painstakingly crafted. SenatorSyvret was kept informed of this delay andthereasons for it. The Committee could not have done otherwise, given the potential for serious consequences occurring had they been drafted in hasteandbeenfoundtobe inaccurate. The Committee therefore considered it imperative that it carriedout this scrutinytask in a thoroughand businesslike manner.
3. T h e report implies that the answers to the Senator's question No. 6 provide facts [which] largely confirm a shambolic and incompetent approach to the process of re-developing the Island Site; a process which failed to meet the requisite standards of corporate governance and the necessary appearance of impartiality'. The Committee strongly disagrees with this interpretation and, as has been made clear, it has acted to ensure that any corporate governance issues were identified and are beingaddressed.
4. T h e reportalso states that thecost benefit analysis document will be key in gaining an understanding of the judgements arrived at'. In sodoinghedemonstrates a lack ofunderstandingofthe processes adopted by WEB,whichwereclearlyaimedat selecting a development partner rather than a developmentscheme. The reportinquestionwas,of course, onlyonepieceofevidenceamongstmany others, uponwhich WEBbased its decision.
5. A lt hough the PolicyandResources Committee has political responsibility for WEB, the Committee does not - nor should it - involve itself directly inthe detail ofWEB'sindividualschemesor projects. These are matters for the EnvironmentandPublicServices and the Finance and EconomicsCommittees and the appropriate licensing authorities and the Policy andResources Committee hasnopowerto, nor should it, seekto interfere with those authorities.
6. I t s houldberemembered that in adopting P.45/2002 only 15monthsagoinApril2002 and by 45votesto 3, the States:

(i ) a p p roved the leasing by the public to the Waterfront Enterprise Board Limited of the six areas of

land shown outlined in red on drawing No. 1 (Disposal Plan), excluding the areas coloured green, for a period of 150 years, at an annual rental of£1 payable in a lump sum on the passing of the contract, with the land to be used for the purposes agreed with the Planning and Environment Committee and otherwise on such terms and conditions as might be agreed between the Board and the Finance and Economics Committee;

( i i) a g reed that the Waterfront Enterprise Board Limited should be permitted to sub-let or

hypothecate the land or assign the lease of the land referred to in (i) above, on terms to be approved by the Finance and Economics Committee, and with the land to be used for the purposes agreed with the Planning and Environment Committee;

(i ii ) a p proved the sale by the public to the Waterfront Enterprise Board Limited of the parcels of, land

shown coloured in green on drawing No. 1 (Disposal Plan) being areas of land to be used,as agreed with the Planning and Environment Committee, predominantly for the construction of residential accommodation for the sum of £10 for each parcel and otherwise on such terms and conditions as might be agreed between the Board and the Finance and Economics Committee;

(i i i) a g reed that the Waterfront Enterprise Board Limited should be permitted to retain any capital receipts from the sale, leasing or sub-leasing of any of the areas of land referred to in

paragraph  (iii) above and the sub-leasing, assignment or hypothecation of the lease or any part

thereof referred to in paragraph  (i) above for the purpose of funding further infrastructure work in order to

complete the St.  Helier Waterfront developmentas agreed with the Planning and Environment Committee, and, thereafter to allocate any surplus receipts to the sinking fund established by the Finance and Economics Committee to meet the cost of the company's share capital.

7. I t s houldalsoberemembered that the companyWaterfront Enterprise Board Ltd. has two shareholders: the States which has the majority of shares issuedin its name and the Treasurerofthe States whohasone share issued in his name, as nomineeof the States. At meetings of the company the States maybe represented by the Greffier (orlegal substitute) and the Treasurer ofthe States. Theshareholders - the States and the Finance andEconomicsCommittee, can direct WEB and its Directors through normal companyprocesses at meetings attendedby shareholders. The Policy and ResourcesCommitteedoesnot have this direct link to the company.
8. T h u s the States has delegated responsibility for monitoringandinfluencing planning and financial aspects of WEB's activities to the Environment and Public ServicesCommitteeand the Finance and Economics Committee.ThePolicy and ResourcesCommittee rightly maintains an overarching, watching brief as part of its co-ordinating role within its generalterms of reference.
9. I n t he particular case highlighted in the report, theCommittee's duty in scrutinising the selection process for finding a development partner for the Island Site, wasnot to try tosecondguessWEB's decision on whichcompanywas best suited for the role.WEBwassetupby the States tomake these typesof decisions and to then get on with implementing them. What the Committee rightly did wasto establish whether the selection process was appropriateand whether WEBabidedby that process.Asmaybeseen from theanswers provided to Senator Syvret's questions, the Committeefoundsomeminor fault with aspects ofthe process andhas raised thoseconcerns with WEB.However,inarrivingatthese conclusions the Committee also found nothing to indicate that, had those minor shortcomings notoccurred, the Board might have arrived at a differentdecision.TheCommitteealsonoted that this finding was confirmed by all oftheWEB Directors whowereinofficeat the time, both collectively and individually. ThePolicy and ResourcesCommitteehascarriedout a full investigation of the issuesandhasseen the necessary documentation. Ithas reached clear conclusions and has taken action. Thisprocesshas been thorough and robust.
10. T r ustis essential to the commercialprocess.WEBwas set up as a private company precisely so that it could operate in a commercialway and wouldbeon an equal footing with those private sector entities with which it dealt. WEBcouldbe directed todisclosedocumentationby its shareholders (the States). However,thoseshareholders would need to consider issuing any such direction in the full knowledge that should such documentation,whichwould probably contain information which had been provided to WEB on a strictly confidential basis, becomeavailableto persons outside ofthecompany, this would represent not only a breach of corporate governance but would amountto a breach of trust between the Boardand its trading partners. Were this to happen, it could effectively be impossible for WEB to continue. Companies dealing with WEBwould probably notbe as openas hitherto and,inmany cases, would not be preparedtodobusinesswithWEB at all. Such a breach might alsoleave the Directors and the States, as shareholders, open to litigation, if a third party believed its businessor reputation had been damagedby such disclosure.
11. T h e Committeebelieves that the States has set in place sufficient rigorous controls over the actions of WEB and that itwouldbe to the detrimentofWEB and hencethe Island for this proposition tobe approved. The Committee therefore urgestheStatestoreject it.