COMMENT: The Fool - Neither public nor private

Wednesday 08 January 2020

If there's one lesson the public should take from the row between Andium Homes and the government over executive bonuses and pay, it's that taxpayers don't really get a say in the affairs of businesses they effectively own.

That's the view of the secretive business guru known only as The Fool.

He dissected the issue in his latest column for Express..

"If you’re a Jersey taxpayer, you owe it to yourself to acquaint yourself with the little ongoing local difficulty which appears, like the proverbial long-suffering taxpayer himself, to just keep on giving and giving. The Andium Homes story.

In brief, an ex-States department managed to convert itself to a quasi-private company (with assets provided by the good people of Jersey), borrowed a load of money (underwritten by the good people of Jersey), and used the proceeds of that borrowing to develop, by most accounts, some really rather good local housing.  

Pictured: "Andium Homes, as a reminder, is a wholly States-owned, but independent company."

In a great of example of turning a convincing 3-1 home win into disappointing 4-3 away defeat however, certain employees have got into hot water over the nature of, and suitable rewards for, their roles.

Andium Homes, as a reminder, is a wholly States-owned, but independent company. As such, whilst the company operates on a largely independent basis in its day-to-day business, it is ultimately answerable (and indeed is financially underwritten by), the people of Jersey, through their elected representatives, the States of Jersey. What could go wrong there you may well ask?

When the business does well (as, at an operational level, it certainly appears to have done), the people of Jersey receive an annual stipend from the company, which assists with meeting the financial commitments taken on by the island through the issue of debt, which provided much of the company’s capital.

As the sole shareholder of the company, what we ask for in return is that the Board of Directors ensure that the company is well run, and that certain financial constraints are applied, one of which being the reasonable remuneration of certain senior employees.  

Pictured: The row between Andium and Government hit the deadlines after a resignation letter from former Finance Director and Chief Operating Officer of Andium, John Hamon, was leaked to the media.

And this is where cracks appear to have opened up in the foundations.

We initially learnt, through the leak of his resignation letter, of the departure of the Chief Operating Officer of the company.

Aside from the, frankly peculiar, display of self-reverence in referring to himself in the third party as a “conscientious, talented individual that has given so much”, did he really expect to elicit public sympathy by drawing attention to his very generous, and, as it turns out, controversially inflated earnings? It could make a glass eye weep. A truly ‘Ratneresque’ level of PR miscalculation. 

The whole edifice was then shaken further by the release of a report by the Auditor General, revealing a long history of tense relations between the company and the government, which was followed by resignations from certain board members who suddenly saw the way the wind was blowing obviously wished to demonstrate solidarity with their employees.  

Pictured: "The major point of contention appears to be who did, or did not, authorise some chunky pay rises for two senior staff members..."

The major point of contention appears to be who did, or did not, authorise some chunky pay rises for two senior staff members, and whether those increases should stand after being exposed.

Rises of 18% and 26% to £141,000 and £189,000 respectively for the two top bods in 2017 alone look a little bit strange, especially in the context of an inflation rate of around 2%, and more importantly, the rises being imposed upon nurses, teachers, and other non-‘COO’ types within the public sector.   

If one was off the meds, one might view the rises as being justified on the basis that a tiny number of people in South London in similar roles were earning similar sums. If on the other hand one was engaging with reality, they might look like unaccountable ex-civil servants taking advantage.

Pictured: "The revelation of the ongoing spat between the Board and the States ... [has] had a significance way beyond [its] original intent."

A dismayed COO leaking like an old roof (one must assume the letter found its way into the press with the consent of the individual concerned), and the revelation of the ongoing spat between the Board and the States, whether intended or not, have both had a significance way beyond their original intent.

They have shone a light into the world of States-related companies who are neither completely public, nor completely private. (Insert half-way house related puns here). 

Whilst salacious details of what people think they can get away with paying themselves make good headlines, the real revelation has been the manner in which the owners of the businesses (i.e. you and me) are so divorced from the decision-making processes and oversight of these operations.

That is particularly galling when it was the public’s money (or publicly owned assets) which enabled the companies to exist in the first place, and in many cases, continue to provide some or all of the financing.

Pictured: "...the beneficiaries of our unwitting munificence being the very same civil servants who were responsible for the creation of the new artifice which enabled their rapid enrichment."

Oh, and the small matter that the beneficiaries of our unwitting munificence being the very same civil servants who were responsible for the creation of the new artifice which enabled their rapid enrichment. Cheeky. 

So, here’s an interesting question. Given the lack of apparent government oversight of this particular quango, are we (as owners) comfortable that other public-but-private ventures in the island are run on a more fiscally responsible basis?

I sense certain other employees of ours shifting uncomfortably in their seats, wishing that a certain COO had understood that publicly slagging your paymasters, from a position of financial privilege, isn’t really the way to handle a resignation in the private sector."

The views expressed in this piece are those of the author, and not of Bailiwick Express.

This article originally appeared in Connect Magazine, which you can read here.