STATES OF JERSEY
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Jersey Enterprise Board Limited: proposed establishment (P.194/2007) – third amendment
Lodged au Greffe on 19th February 2008
by the Public Accounts Committee
STATES GREFFE
JERSEY ENTERPRISE
BOARD LIMITED: PROPOSED ESTABLISHMENT (P.194/2007) – THIRD AMENDMENT
____________
(1) At the end of paragraph (a) insert the
words –
“except
that before the Memorandum and Articles of Association are signed by the
subscribers they shall be amended to provide that the Company shall not appoint
its own auditors and that, instead, the Comptroller and Auditor General shall
be responsible for ensuring that an audit of the Company’s annual accounts is
completed, to mirror his statutory powers under the Public Finances (Jersey)
Law 2005 in relation to the States’ accounts, and that a report on the audit
shall be presented to the States by the Comptroller and Auditor General each
year.”
(2) After paragraph (b) insert the following new
paragraph –
“(c) to agree that the Comptroller and Auditor
General shall have the power to investigate and report on the economy,
efficiency and effectiveness of the manner in which the Jersey Enterprise Board
uses its resources to mirror his statutory rôle under the Public Finances
(Jersey) Law 2005 in relation to States funded bodies;”
(3) After new paragraph (c) above insert the
following new paragraph –
“(d) to agree that any proposed changes in the
Memorandum and Articles of Association of the Company shall firstly be brought
to the States for approval.”.
PUBLIC ACCOUNTS COMMITTEE
Note: The
Public Accounts Committee has withdrawn its second amendment, lodged on 15th
January 2008, and is lodging this amendment.
REPORT
This proposition will effectively transfer States’
Assets, of a significant value, out of the direct control of the States and
into the ownership of the new company.
Although the sole shareholder will be the States, as
represented by the Minister for Treasury and Resources and the Chief Minister,
the company will be controlled by a Board on which the States Members will not
be in the majority.
Whilst the Chief Minister may issue directions to the
Directors, the Directors will have all the powers of a normal Board of
Directors, including the powers outlined in paragraph 45 of the Memorandum
and Articles of Association. This paragraph allows the Company to mortgage or
charge its undertaking, property and uncalled capital or any part thereof, and
to issue debentures and other securities, whether outright or as security for
any debt, liability or obligation of the Company or of any third party. These
are normal powers for a company. However this company will be receiving assets
of an extremely high value which are the property of the Public of the Island.
It is understood that there will be occasions when
commercial sensibilities will prevent complete transparency regarding the
details of the activities of the company. It is also probable that if there are
financial problems then commercial partners will look to the States rather than
to the company.
The argument might be made that this organisation
should be treated as an “independently audited States body”. The main
organisations to which this applies are the JEC and Jersey Water. These however
are constrained by the strict rules of the London Stock Exchange as they are
publicly quoted companies. The proposed company will not be listed.
Moreover, this particular activity is not one in which
the States has professional experience. It follows that the States is reliant
on the Board of Directors. Whilst the Public Accounts Committee has no doubts
about the levels of probity which will be required in such an organisation, it
is always advantageous to be able to call on an independent opinion.
The Public Accounts Committee considers that it would
be prudent and entirely commonsense that the company and its subsidiaries
should come within the remit of the Comptroller and Auditor General. This would
give assurance to the Public that there will be an independent oversight of
Jersey Enterprise Board and its activities and would provide additional
assurance to the Council of Ministers.
Amendment (1) will bring changes to the Articles
of Association to require the Comptroller and Auditor General to oversee the
audit and report on the audit to the States.
Amendment (2) will ensure that the Comptroller
and Auditor General has the ability to report on the economy, efficiency and
effectiveness of the way in which the new Company uses its resources. The power
would mirror the current duty of the Comptroller and Auditor General under
Article 46(3)(b) of the Public Finances (Jersey) Law 2005 (see Appendix).
Amendment (3) ensures that there can be no change
to the constitution of the company without prior referral to the States
Assembly. Whilst the Public Accounts Committee has no doubts of the competence
of a Chief Minister or a Minister for Treasury and Resources, this represents a
commonsense check and balance in the operation of the company.
APPENDIX
Duties of Comptroller and Auditor General
46 Comptroller and Auditor General to ensure
compliance with Law
(1) It is the duty of the Comptroller and
Auditor General to provide the States with independent assurance that the
public finances of Jersey are being regulated, controlled and supervised and
accounted for in accordance with this Law and that the provisions of this Law
are otherwise being duly complied with.
(2) That duty shall be taken to include, in
particular, assuring the States –
(a) that money withdrawn from the consolidated
fund, the strategic reserve fund or the currency fund was used for the purpose
for which it was authorized to be withdrawn; and
(b) that all income due to the States has been
collected or otherwise duly accounted for.
(3) It shall also be taken to require the
Comptroller and Auditor General to consider and report to the States on –
(a) the effectiveness of the internal financial
controls of States funded bodies and the internal auditing of those controls;
and
(b) the economy, efficiency and effectiveness
in the way they use their resources of States funded bodies, independently
audited States bodies (other than those that are companies owned or controlled
by the States), and States aided independent bodies; and
(c) the general corporate governance
arrangements of the States and of States funded bodies, independently audited
States bodies and States aided independent bodies,
and, in
each case, to make recommendations to bring about improvement where improvement
is needed.