Jersey's government criticised for not monitoring top salaries in organisations it owns

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Thursday 24 October 2019 at 5:55am

Jersey's government has been criticised for failing to properly oversee Directors' pay in organisations it owns and funds.

Top salaries at companies like JT, Jersey Post, the JFSC and Andium Homes are not governed by any formal States policy or States Department, according to the spending watchdog.

Top salaries at companies like JT, Jersey Post, the JFSC and Andium Homes are not governed by any formal States policy or States Department. Credit: ITV Channel TV

The Comptroller and Auditor General says this lack of clarity is at the heart of the recent row between the government and Andium Homes.

Rows between the government and Andium Homes have led to three high profile resignations from the housing provider. Credit: ITV Channel TV

It follows three high profile resignations from the housing provider.

Yesterday Vice Chair of Andium Homes, Heather Bestwick, resigned after the Chief Minister publicly criticised the housing provider's executives salaries.

And last week Andium Finance Director, John Hamon quit, accusing the government of 'losing its way' saying that leadership was 'non-existent'.

The row is centred on Andium's decision to increase the salaries of the CEO and the Finance Director without explicit approval from the Treasury, as required by their business agreement.

When Andium was first set up in 2014 the CEO's salary was agreed to be £118,706 and the Finance Director £87,202.

The government then approved increases to £150,000 for the CEO and £120,000 for the Finance Director in March 2016.

But subsequent pay rises and bonuses which took the salaries to £211,680 and £157,920 respectively in 2018, were not seen nor approved by the government.

When the States discovered the increases, they initially gave retrospective approval. However a month later they backtracked and ordered the increases to be reversed and bonuses removed.

The Chief Minister has welcomed the Comptroller's report and has agreed to put in a pay policy and to strengthen their governance.

The Chief Minister has welcomed the Comptroller's report and has agreed to put in a pay policy and to strengthen their governance. Credit: ITV Channel TV

There are Memoranda of Understanding in place between the Government and States-owned bodies, which requires them to seek the Government’s approval for significant changes in pay. However, they do not apply to the wider family of entities that we fund, so the introduction of a pay policy across all such bodies will make it simpler for all parties to understand the pay parameters within which they are expected to operate, and I welcome the recommendation. In the case of Andium Homes, which the Comptroller and Auditor General highlighted in her report, it is clear that the company was in breach of its Memorandum of Understanding in awarding substantial pay rises and bonuses for two senior executives without informing the Government or seeking the explicit prior approvals required.

Andium Homes, meanwhile, has also welcomed the watchdog's report saying it highlights the complete absence of any policy and process on Senior Executives salaries and accuses the government of breaching its duties.

The Housing provider goes on to accuse the Treasury of breaching their duties by taking months to approve their accounts, annual report and business plan when they are obliged to respond within ten working days.

Frank Walker, the company's chairman, is due to stand down - but he says that the breakdown of the relationship between Andium and the government has caused wider problems for tenants and the taxpayer.

Andium Chairman Frank Walker says the board has been decimated. Credit: ITV Channel TV

WATCH: Emma Baker's full interview with Andium Homes chairman Frank Walker