Comptroller and Auditor-General Lynn Pamment also concluded that greater clarity was needed about policies for the paying of bonuses to JDC executives.
However, in terms of the internal workings and management of the company, she was far more positive.
She commended JDC on its standards of corporate governance, risk management and project management, but recommended that the memorandum of understanding between the JDC and government needed to improved.
JDC chairwoman Nicola Palios welcomed the findings, saying that she was pleased that the CAG had recognised both the high standards of governance and the contribution made to the Island by the company. She added that the recommendations would be acted upon.
In her report, Ms Pamment explained that she had set out to evaluate the extent to which the government and JDC were complying with principles set out in the proposition establishing SoJDC adopted by the States in 2012.
Those areas included internal operations of JDC, the operation of the shareholder function by the government, arrangements for transfer of land from the government to JDC and arrangements for wider accountability of the company.
JDC was set up to redevelop and regenerate publicly-owned land, with profits to be paid as dividends to the government or invested in public infrastructure and housing projects.
Since 2012 the JDC has paid a total of nearly £5.5 million in cash dividends, with a further £3.5 million of ‘in specie’ dividends [asset transfers].
Projects have included the ongoing construction of the Jersey International Finance Centre on the former Esplanade car park and the development of the former JCG building into the College Gardens housing scheme.
The company has also been working in partnership with French building firm Legendre to develop the ‘Horizon’ luxury housing scheme on the Waterfront. Construction on the site was halted due to the lockdown, with French workers forced to return home.
JDC paid £92,545 in bonuses to its directors in 2018, while the total salary costs of its seven-strong board, which includes five ‘non-executive’ advisory directors, that year was £435,500.
In her report, Ms Pamment found that the government lacked an ‘integrated strategic framework’ for asset management and regeneration, but had ‘made progress’ in developing these areas.
She also noted that the government had not undertaken a formal review of the role of JDC since it was established to ‘satisfy itself that the outcomes to date are meeting the objectives set out in the original proposition’.
A recommendation of the report was for the formal memorandum of understanding between the government and the JDC to be im proved.
The CAG also raised concerns over the transparency of the JDC’s remuneration policy, singling out bonus payments for particular attention.
‘There should be greater clarity in remuneration policies, including bonus arrangements at the JDC,’ the report says.
‘There should also be greater transparency in reporting the results of the JDC to reflect overall performance including the impact of land provided by government at no cost.’
It recommends that bonus payments and pay awards for all staff should be ‘supported consistently by a detailed review of each individual’s performance against objectives and targets’.
Ms Pamment said: ‘JDC 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, JDC. It should do so on an ongoing basis.
‘The government should also seek to finalise and implement a coherent estates management strategy as a matter of priority. There should be greater clarity in remuneration policies, including bonus arrangements at JDC.’
The CAG’s work was undertaken and the report was prepared before the coronavirus pandemic and has not referenced or considered its impacts.
The report can be found on the Jersey Audit Office’s website at jerseyauditoffice.je.
Mrs Palios said: ‘SoJDC welcomes the Comptroller and Auditor General’s report and was pleased to note that on the majority of elements reviewed, the company performed well with no recommendations on corporate governance, risk management or project management.
‘The CAG’s report also helpfully recognises the significant financial achievements in the company. Since the establishment of SoJDC in mid 2011, the company’s net assets have increased by 71% with a further £17.2m paid out or allocated as dividends or public infrastructure.
‘Adding these amounts to the net assets gives a cumulative return of 111% on net assets over the eight-and-a-half-year period equating to a return on equity of 13% per annum.’
She added that remuneration was externally benchmarked and agreed with the government as shareholder.
