JERSEY’S MACHINERY OF GOVERNMENT
Labour MP for Great Grimsby
House of Common, London, UK
Professor of Accounting
University of Essex
A paper submitted to Jersey’s Review Panel on Machinery of Government
on 26 June 2000.
JERSEY’S MACHINERY OF GOVERNMENT
Offshore financial centres (OFCs) have become a major feature of globalisation. They are under increasing international scrutiny because their role in facilitating secrecy, tax avoidance and 'regulation hopping' is undermining the state-citizen relationship in other territorial jurisdictions. They are a magnet for drug-traffickers, money launderers, fraudsters and footloose corporations keen to avoid public accountability (Hampton, 1996; Organisation for Economic Co-operation and Development, 1998; United Nations Office for Drug Control and Crime Prevention, 1998). In the words of Will Hutton and Anthony Giddens,
“Tax havens are a problem. They distort the global economy, allow the rich to avoid taxation and also help authoritarian regimes. So many dire political leaders and oligarchies have bled their countries dry by siphoning off funds abroad. Tax havens, countries with anonymous bank accounts and so forth are deeply implicated in this. A tax haven should be treated a bit like a rogue state; it should be ostracised until it agrees to conform. I don’t think it would be as difficult as many people imagine to close down most of the tax loopholes that exist on an international level. We would have a more effective world framework of corporate responsibility and we should push for this ..... the British have a particular responsibility for tax havens because so many are under our jurisdictions” (Hutton and Giddens, 2000, p. 38)
A former assistant director of the UK based Serious Fraud Office has stated that
“Tax havens are little more than booking centres. I’ve seen transactions where all the decisions are taken in London but booked in the tax havens. In my experience, all you get in return is obstruction of legitimate investigations” (Accountancy, December 1998, p. 21).
In this respect, Jersey has been a tax haven supreme. The OECD lists Jersey as one of the worst offenders in providing harmful tax competition. A culture of secrecy is deeply embedded. As the New York Assistant District Attorney. John Moscow, who started the investigation which eventually led to the closure of BCCI noted, “My experience with both Jersey and Guernsey has been that it has not been possible for US law enforcement to collect evidence and prosecute crime. In one case we tracked money from the Bahamas through Curacao, New York and London, but the paper trail stopped in Jersey ....... it is unseemly that these British dependencies should be acting as havens for transactions that would not even be protected by Swiss bank secrecy laws” (The Observer, 22 September 1996, page 19). For an Island with a population of 86,000, Jersey boasts financial deposits and managed assets of some £400 billion, but its financial regulation lacked even the basics, such as independent regulation of the finance industry, public availability of audited company accounts, customer compliant procedures and an ombudsman (Home Office, 1998). Jersey has also been hiring out its legislative facilities to international capital to enable it to dilute international regulation (Cousins et al, 1998).
The above state of affairs is the direct outcome of the ‘capture’ and failures of political institutions and modes of government. As a member of the Jersey States puts it,
“For over a century Jersey’s ruling elite has had an unchallenged monopoly of power ...... With no clear division between the legislature, judiciary and executive there is an absence of checks and balances” (The Independent, 22 November 1998, p. 23).
Unsurprisingly, even the ‘insiders’ (see note 1) now refer to Jersey as a ‘pariah’ state (Jersey Evening Post, 30 October 1998, p. 2). Against the above background, Jersey States has been under pressure to consider a review of its system of government (Jersey Evening Post, 7 July 1998, p. 3).
A wholesale reform rather than piecemeal tweaking of Jersey’s outdated and discredited system of government is urgently needed. A Royal Commission, as suggested by John Christensen and Roy Le Herissier (Jersey Evening Post, 30 June 1998), with powers to seek public evidence and formulate institutional choices would have been more appropriate. But Jersey’s ruling elite opposed an independent investigation by arguing that
“this would be an open invitation to people like Austin Mitchell and others who have no particular love for Jersey institutions to interfere in our process of government. ..... A Commission would be foolish, but doing nothing would also be foolish ......” (Jersey Evening Post, 7 July 1998, p. 3).
The dilemma facing Jersey is captured by an editorial comment in Jersey Evening Post, which noted that the ruling elite might say that “our political structures are fundamentally sound and imply that any difficulties are caused by the shortcomings of individual Members [of Jersey States], but a more widespread view is that the States desperately needs to be better equipped to deal with the 21st century” (Jersey Evening Post, 30 June 1998).
Jersey’s traditional response has been to present a respectable face to the outside world whilst ensuring that the changes to institutional structures and political culture are absolutely minimal (see below). So on 2nd March 1999, the States of Jersey formed a ‘Review Panel on Machinery of Government’ under the chairmanship of Sir Cecil Clothier (see note 2) . Its terms of reference require it to consider inter alia the role of the Bailiff, the organisational processes of the government, transparency, accountability and democratic responsiveness of the State’s Assembly and Committees of the States (see note 3) . The Panel is required to make recommendations to the Policy and Resources Committee on how the present machinery of government could be improved.
This paper contains our response to the invitation to comment. It is divided into five parts. The first part contextualises the attempts to reform the machinery of government by drawing attention to international pressures upon Jersey, and other offshore financial centres. It also draws attention the hitherto ineffective processes to reform Jersey’s political system. The second part shows that the Review Panel's ‘terms of reference’ are inadequate and will inevitably dilute its effectiveness. In addition, we also express concerns with the modus operandi of the Panel. The third part sketches out some features of Jersey’s system of government. The fourth part puts forward some suggestions for advancing democracy, openness and accountability of the Jersey government. The fifth part summarises our arguments.
JERSEY IN PERSPECTIVE
Jersey, as part of the Channel Islands, is a British Crown dependency. Geographically, it is closer to France, but it is neither part of the UK nor a member of the European Union and is not subjected to any British and/or European Union laws. Under the constitutional arrangements (Kilbrandon Commission, 1973),
“the United Kingdom Government are responsible for defence and international relations of the Islands, and the Crown is ultimately responsible for their good government. It falls to the Home Secretary to advise the Crown on the exercise of those duties and responsibilities. The United Kingdom Parliament has the power to legislate for the Islands, but it would exercise that power without their agreement in relation to domestic matters only in most exceptional circumstances” (House of Commons Debates, Hansard, 3 June 1998, col. 471).
During the last three decades Jersey's economy has gone through considerable change. Traditionally, agriculture and tourism dominated the Jersey economy, but these sectors have increasingly been displaced by the finance industry (see note 4) . Agriculture is supported by direct/indirect government subsidies and makes little contribution to tax revenues. The tourism sector is stagnant (see note 5) and probably amounts to less than 15% of the GDP. The finance industry provides more than 60% of the gross revenues (a 1997 study estimated it to be around 90% of the GDP), but Jersey is no Wall Street. It does not have anything like the Securities Exchange Commission (SEC) or the Financial Services Authority (FSA) to regulate it (see note 6). Though Jersey is a small island, with a population of 86,000, it is the home of some 40,000 registered (and numerous unregistered) companies. However, it does not have any large-scale industry. Many of the businesses are “brass plate” operations formed to avoid taxation in other countries. The Manpower returns for 1999 show that direct employment in financial and legal activities (the latter is predominantly engaged in provision of financial services) is 11,660, including the 5,700 people directly employed by the banking sector.
Jersey has sought to diversify its activities by providing ‘regulation avoidance’, of which its Limited Liability Partnership (LLP) law is the most notorious example. Under this, major businesses (e.g. accountancy firms) are permitted to draft their own legislation and award themselves considerable economic advantages (e.g. protection from negligence lawsuits). Senior politicians, with motives which are not very clear, assured major businesses that their preferred Bills will “be nodded through” (Accountancy, September 1996, p. 29). These assurances were not accompanied by any commensurate obligations to citizens, consumers or stakeholders, whether in Jersey or outside (Cousins et al, 1998).
Jersey also has a history of facilitating secrecy and lack of public accountability (de Smith and Brazier, 1994; The Register, Autumn 1993, pages 8-10; Stuart, 1996; Home Office, 1998; Hampton and Christensen, 1999). In recent years, Jersey has been implicated in the Barlow Clowes affair that resulted in the fleecing of pensioners and savers in the UK (Killick, 1998). Its secrecy also enabled Asil Nadir to transfer huge sums of money to other jurisdictions and thus thwart the work of law enforcement agencies (Killick, 1998). Jersey is implicated in money laundering (Mitchell et al, 1998). Jersey’s regulators did not investigate the matters, or publish any independent reports. Jersey’s Financial Services Commission (FSC), a regulatory body (until recently) effectively headed by its Minister of Finance (who is also a major local businessman), did not reveal the contents of its files.
Jersey’s respectability continues to be questioned by revelations that highlight the ineffectiveness of its regulations and the ‘capture’ of its government by big business. The Bank of Cantrade debacle highlighted the weaknesses of financial regulation and the cosy relationship between the regulators, politicians and civil servants (Accountancy Age, 15 October 1998). According to a leading Jersey Advocate, Philip Sinel, the cosy relationships were a major factor in the Finance & Economics Committee's (FEC) failure to investigate the Cantrade frauds (letter to the Batonnier, 16 July 1998). In 1999, the International Monetary Fund (IMF) launched an investigation after billions of dollars of Russian money turned up at a small obscure Jersey company called Fimaco (see note 7) (Financial Times, 12 February 1999, page 1). Jersey-based company, Benex International, has been linked with the activities of the Russian Mafia (The Times, 24 August 1999). A Jersey based company has been implicated in a multi-million pounds arms deal that led to the massacre of thousands of African civilians. The company in question used an offshore account with Barclays Bank to finance the arms deal with Pascal Lissouba, the former President of Congo-Brazzaville (Jersey Evening Post (see note 8), 30 November 1999). An Essex based company director used Jersey based bank accounts for his Jersey based company, St. Brelade Organisation Limited, to defraud the public (Accountancy Age, 3 March 2000). After a complaint from a senior British banker, Jersey police launched an investigation into irregularities at Cater Allen Bank Jersey (Financial Times, 3 September 1999, p. 9).
Jersey is now highly dependent upon the financial services sector. Yet its system of government has hardly changed. As the Wall Street Journal noted,
“Jersey is an Island that until two decades ago lived off boat-building, cod-fishing, agriculture and tourism. It is run by a group who, although they form a social and political elite, are mostly small business owners and farmers who now find themselves overseeing an industry of global scope involving billions of dollars. ‘By and large’[claims an unnamed senior civil servant] ..... they are totally out of their depth” (Wall Street Journal, 17 February 1996).
Not surprisingly, the UK government imposed a “wide ranging review of the financial legislation and regulatory systems in Jersey .....” (Home Office Press Release, dated 20 January 1998). The review subsequently resulted in a report (the Edwards Report) which highlighted that Jersey lacked even the minimalist regulatory framework (Home Office, 1998). The same review, however, failed to scrutinise the institutions of government.
Jersey has no effective political party system. Its ruling elite has close links with major businesses and the Island effectively functions as a one-party state, in which the interests of big business take precedence over everything else. Jersey’s system of government lacks basic checks and balances. There is little effective scrutiny of legislation. Such a state of affairs, persuaded one of its former senior civil servants to claim that
“the Island had no real democracy, the States could no longer govern effectively, politicians and civil servants lacked an understanding of economic fundamentals, and government incompetence ‘smacks of corruption’ to more ordinary residents” (Jersey Evening Post, 6 April 1999).
Jersey’s response to critical external gaze has been to deny that there is any problem. Debate is stifled by demonising reformers (Jersey Evening Post (see note 9) , 19 June 1996, p. 17; 22 October 1998, p. 8; 31 October 1998, p. 11), by suspending reformers from the States of Jersey (see note 10) (Mitchell and Sikka, 1999a) and by abusing them with labels such as the ‘enemies of the state’ (see note 11) . Jersey government has also sought to manage pressures for change through increased expenditure on political lobbying (Sunday Business, 15 November 1998, p. 1 and 5; Mitchell and Sikka, 1999a). Other tactics have been to pressurise the editors of academic journals and persuade them to reject papers that are critical of Jersey’s politics (Mitchell et al, 1999b). This might appease some sections of the Jersey population, but it fails to deal with any of the problems confronting a small state operating in an international economy.
In the recent past, Jersey’s inquiries have always been inadequate because the nature and scope of the inquiries has always been diluted. As a result, Jersey has failed to modernise its government, its institutions and politics. An example is the investigation by the Kilbrandon Commission (1973). It sought to examine the constitutional relationships between the Channel Islands and the United Kingdom. In a dissenting memorandum, Lord Crowther-Hunt and Professor A.T. Peacock wrote,
“We cannot accept the constitutional recommendations our colleagues make about the Channel Islands and the Isle of Man. This is because although our terms of reference also required us to examine ‘the economic relationships between the United Kingdom and the Channel Islands’, there has in fact been no such examination. As a Commission, we do not know, for example, the extent to which these off-shore islands have developed, and are still further developing, as ‘tax havens’ either for United Kingdom citizens or international companies. Without such information (and we consider an urgent enquiry should be mounted to get it) we do not believe one can make any worthwhile pronouncements on their future constitutional relationships with the United Kingdom. We, therefore, make no such pronouncements”.
Jersey government has continued to shield the tax haven aspects and the economic and constitutional links with the UK from scrutiny. In the face of resistance and private manoeuvring by the Jersey elite, the investigations always deliver less than what they promise. A more recent example of this is the Edwards Report on the state of financial regulation is the Channel Islands and the Isle of Man (Home Office, 1998). Former Treasury civil servant Andrew Edwards was asked to
“assess the contribution made by the current laws and systems to the economic well-being of the Islands themselves and of the United Kingdom”.
His terms of reference were to
“review with the Island authorities their laws, systems and practices for: regulating banking, insurance and financial service business and collaborating with overseas regulators, deterring, investigating and punishing financial crime, including money laundering and fiscal offences, particularly cases with an international dimension” (UK Home Office Press Release dated 20 January 1998).
The Edwards’ investigation (see note 12) was surrounded by secretive processes . It had no public hearings and did not publish any of the written or oral evidence submitted to it. There has been no information about the evidence collected and/or how it was filtered. The report did not focus upon the ‘tax haven’ status on the Island. Under pressure from the Islands’ authorities, Andrew Edwards did not look at the tax system that facilitates tax avoidance for footloose capital, or the social impact of the Channel Islands' role as finance centres, especially as the terms of reference mentioned ‘economic well-being of the Islands themselves and the United Kingdom’. The civil service and courts play a crucial role in the drafting, enactment, implementation and enforcement of legislation. Yet, Edwards did not look at any of these aspects. The tentative nature of the report was described by some commentators as “perilously close to a whitewash” (Morris and Campbell, 1999, page 63). Despite the well-orchestrated public relations hype (Jersey Evening Post, 16 March 2000, p. 1; 21 March 2000, p. 8-9), Jersey has failed to fully implement many of the recommendations contained in the Edwards Report. These include statutory audits for private companies (see note 13) , public filing of information by LLPs, independent complaints procedures for bank depositors, an ombudsman, reform of trusts and disclosure of the ownership of foreign companies based in Jersey.
The Economist subsequently noted,
“One common criticism of the Channel Islands is not addressed in any detail by the report. These are the concerns expressed by lawyers and constitutional experts about the close relationship between the legislature and the judiciary. On Jersey, for instance, the Bailiff is both Jersey’s chief judge, the speaker of its parliament, and in effect the head of the state” (The Economist, 28 November 1998)
The status of Jersey and its economy has changed, but its political landscape has failed to keep pace with it. Often change had to be imposed (see note 14) upon Jersey from the outside, as exemplified by the Edwards Report and the Human Rights legislation.
The above background is central to any understanding of the periodic attempts to reform Jersey. This time, the States of Jersey claims (possibly under the influx of new and younger legislators) to have taken the initiative in forming a Review Panel to reform its machinery of government (see note 15). However, the recent history suggests caution in expecting too much, especially because the Review Panel’s ‘terms of reference’ are highly restrictive and its modus operandi less than open.
TERMS OF REFERENCE
With considerable economic success, rising GDP and lower taxation rates, Jersey’s population by and large seems content, grudgingly or otherwise, with the status-quo. The pressures for change are mainly from the outside (e.g. the imposition of the Edwards review by the UK), but the Panel’s ‘terms of reference’ preclude it from examining
“the constitutional relationship between the Bailiwick and the United Kingdom; and the constitutional relationship between the Bailiwick and the European Union”.
The narrow scope of the ‘terms of reference’ also ignores the practical realities. Jersey is an UK Crown Dependency, rather than an independent nation. For all practical purposes, all Jersey legislation has to be approved by the Privy Council, effectively the UK Home Office. The Lieutenant Governor, appointed by the Crown, is also in a position to veto Jersey legislation. The UK also has the overall responsibility for its ‘good governance’, and international and defence matters, in particular. In a global world, the distinction between ‘internal’ and ‘external’ affairs is increasingly blurred. Jersey’s senior officials routinely call upon the UK to “protect Jersey’s international interests” (Jersey Evening Post, 26 November 1999, pp. 1 and 2). They also wine and dine UK politicians and hire lobbyists (e.g. Shandwick Consultants) to extract concessions from the UK government (Sunday Business, 15 November 1998, p. 5).
Jersey is not part of the European Union (EU), but the UK has negotiated a special status to enable Jersey to enjoy favourable trading terms without the commensurate social, economic and political obligations. Thus the constitutional relationship with the UK is essential to the operations of the Jersey economy and its politics. This relationship also imposes costs upon the UK citizens without any direct benefits or welfare. There are questions about the direct contribution that Jersey makes to the UK. In a Parliamentary reply, the Home Office Minister, Lord Williams of Mostyn said that
“Jersey’s contribution is to pay for the maintenance of a Territorial Army Unit in the Island, the Jersey field Squadron and Royal engineers. The total cost was £1,500,000 (see note 16)” (House of Lords Debates, Hansard, 27 January 1999, col. 153).
The direct cost of the Edwards Report, some £158,000, was borne by the UK taxpayer (House of Lords Debated, Hansard, 27 January 1999, col. 154). The consideration of the ‘constitutional relationship with the United Kingdom’ would have enabled both the UK and the Jersey citizens to express their views about the terms of that relationship.
The contradictions in the Panel's ‘terms of reference’ are further highlighted when it is noted that whilst excluding a review of the constitutional relationship, they seek to review “the role of the Bailiff”. This highly politicised position is filled by the UK government rather than by the people of Jersey. Any change to the role of the Bailiff will necessarily change the historic constitutional relationship with the UK.
The Panel’s ‘terms of reference’ also require it to consider, “whether the machinery of government is presently subject to checks and balances sufficient to safeguard the public good and the rights of individuals ...”. Without considering the role of the judiciary and the civil service, it is difficult to see how an effective evaluation of the machinery of government can be made. One of the weaknesses of the Edwards Report was that it did not look at the role of the judiciary, a crucial aspect of the enactment, enforcement and interpretation of legislation. The same politics remain in ascendancy and the role of the judiciary and the civil service is once again being excluded from consideration.
The Review Panel is also concerned with “the transparency, accountability and democratic responsiveness of the States’ Assembly and Committees of the States”. However, there is no transparency about the appointment to the Panel itself. The Panel itself should have been representative of the people. Yet it is not. Of the nine members of the Panel, eight are male and only one is female. Jersey’s many social constituencies (e.g. young versus old, urban v rural, agriculture v finance centre, middle class v working class, trade union v employers) are not represented on it. There is no information about the politics that restricted the Panel’s terms of reference. To set the right example, the Panel should have insisted upon holding public hearings and invited people to refer to their own experience of the machinery of government. Only through the lived experiences of the people, one can fully begin to understand the effectiveness (or otherwise) and accountability of the machinery of government. Somewhat belatedly, after nearly 12 months of its operations, the Panel has decided to hold one public meeting and even then people are not permitted to refer to government policies to illustrate their arguments about the need for change (Jersey Evening Post, 17 May 2000, p. 2).
All meetings of the Panel should have been in the open. But they are not. Instead, the Panel has mainly met behind closed doors and all the evidence submitted to it will not be publicly available. Instead, the Panel has passed the buck to the Jersey States, arguing that it is up to the States to decide whether the evidence submitted to the Panel should be published. The members of the Panel may be portrayed as ‘independent’ yet like other human beings the views of the Panel members’ are inevitably shaped by their education, class, business and political interests. Such influences simultaneously enable and constrain the Panel members from exploring the rich diversity of views on the possible machinery of government. We believe that people should have opportunities to have face-to-face meetings with the Panel and question the Panel. In the absence of full ‘sunshine’, an inevitable suspicion will be that an elite will sift through the submissions and selectively use the information to advance ideas and reforms (as they did in their meetings with Andrew Edwards) that meet its preconceived objectives. This way Jersey will not find durable solutions to its recurring problems. We believe that there should be full 'sunshine', public hearings and all submissions (written or oral) should be on the public record. Without it people will have no idea about how the evidence given to the Panel has been selected, filtered, weighted or ignored.
On a small island with a strong influence of business on its politics, intertwining relationships between politicians, regulators and businesses, the members of the Panel are vulnerable to 'capture', or undue influence. Therefore, the terms of reference should have required that at the beginning of each meeting, the Panel members should publicly state whether they have discussed any matter under consideration with any outside party.
JERSEY’S SYSTEM OF GOVERNMENT
Despite considerable economic change and international scrutiny, Jersey’s system of government has gone through little change. Most noticeable features are the absence of general elections, overlapping business and governmental interests, concentration of power, the intertwining of the local and national governments and the absence of various checks and balances commonly found in liberal democracies. It could be argued that some of these 'close relationships' and 'captures' are inevitable because Jersey is a small Island. However, it is precisely because Jersey is a small island, it needs to have the utmost transparency, openness and accountability so that any undue influence can be highlighted and be subjected to social scrutiny.
Jersey has a single chamber Parliament, the States of Jersey. There is no second chamber to look dispassionately, independently or sceptically at government policies. The States of Jersey consist of 53 directly or indirectly elected members, connected to territorially defined constituencies, plus representatives of the Crown. There are 29 Deputies, 12 Senators and 12 Constables. The 29 Deputies are elected for a three year period on a constituency basis. The Island is divided into 12 Parishes (constituencies) of unequal geographical and demographic size. This enables some to return any number of Deputies, ranging from 1 to as many as 10. Jersey’s 12 Senators are elected on the Island wide basis for a six year term, and half of these retire every three years. The Constables of each Parish, effectively the heads of civil administration, are not elected on any common electoral cycle.
A fundamental principle of liberal democracies is that all citizens are equal. However, this does not appear to be the case in Jersey where people are able to vote once they have resided on the Island for two years. However, despite paying taxes, acquiring voting rights and holding Jersey passports, individuals face restrictions upon their economic and social conduct. For example, Jersey is content to exploit the economic and social contribution of its migrant labour but denies them important human rights, such as the right to rent or buy housing (as distinct from other forms of property) until a ‘qualifying period’ (ten years if their work is essential (e.g. doctors), twenty-years otherwise) is completed. Jersey’s restrictions amount to a system of ‘apartheid’, and appear to be designed to exclude migrant workers from claiming full economic, social and political citizenship. Even in cases, where migrant workers marry local citizens (qualified residents), they remain subject to the ten/twenty year rule. Thus if a marriage breaks up before the end of the ten/twenty cycle, the migrant worker (who may also have children born in Jersey) is not considered to have achieved residential status and is not permitted to rent/buy housing. Jersey’s restrictions breed fear, silence, exploitation and exclusion. This is in sharp contrast to multi-millionaires (see note 17) settling in Jersey who do not face any qualifying period restrictions, even though their presence has squeezed many Jersey families out of the housing market. Neither are there any restrictions upon businesses, which are able to buy/rent commercial property straight away. In Jersey money rather than human rights, justice, compassion, ethics or decency rules.
A fundamental principle of democracy is that all elected representatives should be treated as equals. Yet that does not appear to be the case in Jersey where the elected representatives either represent the whole Island (e.g. Senators) or a part of it. The confusing electoral arrangement leads to a kind of a class system where people believe that some elected representatives (e.g. Senators) are superior to the rest. Thus Constables are rarely offered the Presidency of any Committee whilst Senators appear to have the first refusal on such posts. No doubt, this discrimination may be rationalised by appealing to the arguments that Senators are elected on an Island wide basis, but this does not explain why some members of the Jersey States are treated as inferior. These social inequalities further reinforce and legitimise the prevailing social inequalities.
The roles and constituencies of various elected representatives overlap. More than ten elected persons can represent the same individual in Jersey States. It is not clear who is finally accountable to the constituents or the general public. Recent elections show that voter apathy is high. In the 1999 elections, some areas had a turnout of just 1% (Jersey Evening Post, 22 November 1999, p. 10) and some Members of the States were returned unopposed (Jersey Evening Post, 3 November 1999).
The UK Crown appoints the Lieutenant Governor, the military commander of the Island. His role is now reduced to that of a liaison between the Sovereign and the Jersey States. He is, nevertheless, entitled to sit in the Jersey States (usually next to the Bailiff, but on a slightly lower chair). Under the constitution he has a right of veto if Crown interests is involved. Jersey States also has other Crown appointees, such as the Bailiff (always a male lawyer), the Deputy Bailiff, the Solicitor General, the Attorney General and the Dean of Jersey. The Bailiff, the Deputy Bailiff and the Dean are permitted to speak on political matters (see note 18) (thus exert influence) but are not formally allowed to vote. Nepotism and conflicts of interest are rife. For example, the Bailiff Sir Philip Bailhache (besides being the Speaker and the President) is also the leading judge on the Island. He hears major legal cases. His brother, William Bailhache, is the Attorney General and prosecutes cases in the courts presided by the Bailiff. In clear violation of the legal principles established by the January 1999 House of Lords’ judgement in re Pinochet, the Bailiff pretends that “there is no risk of bias by his presiding in a prosecution that has been brought by his brother, the Attorney-General” (Jersey Evening Post, 16 March 2000. p. 4). Pity the person seeking justice in Jersey.
Jersey does not have full-time legislators even though its legislative load has increased. Most members of the Jersey States are part-time, with businesses to run. Yet through the Committee system, almost all act as Ministers, making demands upon the legislature, drafting legislation and running the country. There is a clear conflict of interests. As part-time members of the Jersey States they have little time to undertake any research and/or analysis of government policies, or be able to compare them with the policies adopted in other jurisdictions. In common with other Western democracies, they could appoint researchers to advise them, but despite recent increases the financial rewards to Members of the Jersey States are meagre. They are not linked to senior civil servant salary scales. After the recent increase States Members may be entitled to £25,808 and a further expense allowance of £8,602 (Jersey Evening Post, 24 November 1999). This does not enable them to secure the services of secretaries and researchers to support them in their efforts to scrutinise the policies of the executive. They could be advised and briefed by pressure groups and new social movements (e.g. environment, trade unions), but pressure groups are not well organised. This leaves them vulnerable to the partisan information disseminated by the organised financial services, legal and accountancy lobbies. Such processes subvert democratic politics.
Jersey's senior politicians also skew the balance of power very much in favour of organised business rather than the citizens. For example, during the October 1999 elections, the Finance and Economics Committee President, Senator Frank Walker, wrote a letter to the Presidents of various business associations (not sent to trade unions) urging them to use their influence and weight to secure votes for election candidates who will maintain the Island’s economic stability and understand international issues. There was no equivalent letter to trade unions, environmentalists, human rights activists or any other group urging them to mobilise popular support.
A noticeable feature of Jersey is the absence of any clear separation the local and the national government in Jersey. They appear to be merged. Local issues clog up the machinery of the national government. In addition, there is no recognisable form of general election. At no time are the States of Jersey dissolved and all its seats subject to simultaneous election by the electorate. Thus the citizens of Jersey do not have an opportunity to throw the entire government out of office. Jersey does not have anything equivalent to the Representation of the People Act. Thus it is not clear when a government is dissolved, if ever. Even at times of elections, Parliament and the Executive continues to sit and their proceedings become part of electioneering.
In the absence of organised political parties and the political machinery that goes with them, individuals seeking to be elected do so as independent candidates rather than as members of political parties though some candidates seem to form mutual alliances. Unlike the UK, candidates/parties are not entitled to equal free access to radio or television. There does not appear to be any control over the expenses of the election candidates. Candidates are not allowed to have free mail shots for their election manifestos. The election manifestos mostly deal with local issues rather than national. These manifestos seem to be more about ‘personality politics’ (see note 19) than about the deeper issues confronting Jersey. The independent election candidates are no match for those with close connections with big business as they can always find someone to distribute the election leaflets. The absence of political parties makes it difficult for election candidates to secure a mandate for Island-wide change. As a result, Jersey States remains paralysed and is unable to respond to international concerns.
The government is under the control of Committees and their Presidents, who are also in business for themselves. The boundaries between government and business interests are blurred and a ruling oligarchy clearly exist. As most members of the Jersey States are in its Committees, and effectively act as Ministers, there is no organised opposition in the Jersey States. Members of Jersey States can be present on more than one Committee and thus have little incentive to ask searching questions. There is no effective separation of the legislature and the executive branch of government. There is little effective scrutiny of legislation, policies or the government. Members of one Committee seem to be reluctant (though there are some exceptions) to critically scrutinise legislation proposed by another. Dissent is rare and is usually marginalised. Votes of 'no confidence' or motions of censure in any Committee are rare, as is the example of an entire Committee resigning (or forced to resign) over an issue. The Committees exercise most of the power, at least in name. Yet the public has little leverage over them. It cannot attend their meetings, examine their agenda, minutes or policy papers. There is no 'freedom of information' legislation and the various Codes of Practice that do exist are designed to deny any legally enforceable rights for the people. Many people have already lost faith in the government, as demonstrated by very low voter turnout rates at elections.
Pressure group activity on the Island is weak. This does not bring government policies and politics under any sustained scrutiny. Campaigners for change are easily ostracised by the ruling elite. Jersey’s only newspaper, the Jersey Evening Post (JEP), is under the control of a senior member of the government, Senator Frank Walker, with considerable economic and political interests. The local radio and television also finds it easier to follow the official line. Of course, journalists don’t deliberately set out to under report, but they know the limits. Yet pressures from the media should be an essential part of keeping any government on the straight and narrow. In most western liberal democracies, universities have the potential to act as alternative sources of analysis and problematise the claims made by the powerful governmental machines. Yet Jersey does not have a university. In the absence of countervailing power centres, the interests of the ruling elite rules the roost. Its self-interests are presented as news.
Jersey politicians lobby for business and promote business interests. They draft, refine and pass legislation. They have also sat on regulatory bodies, effectively acting as 'gatekeepers' adjudicating on complaints and malpractices. For example, Senator Walker, the President of the Finance Committee, has also been the chairman of the Financial Services Commission (FSC), an authority responsible for regulating banking practices. Politicians sit on the boards of the companies that they are supposed to regulate. For example, Senator Frank Walker was a director of Barclays Bank and simultaneously President of the Finance and Economics Committee (FEC). In the Bank of Cantrade episode, one time President of the Finance & Economics Committee, Senator Pierre Horsfall had been a non-executive director of the Bank. Such overlapping positions are indicative of the deeper cultural and accountability problems in which conflicts of interests have been institutionalised. Anyone rocking-the-boat is easily clobbered by the Jersey Evening Post and ostracised. It took the Edwards Report (Home Office, 1998) to highlight some of the ‘conflicts of interest’ that are so deeply institutionalised in Jersey.
In most liberal democracies, the public has a right to know details of the proceedings in Parliament. In Jersey, this is very difficult. There is no written record of all parliamentary proceedings. The penny-pinching Jersey States requires people to pay £10 for each audiocassette of the parliamentary debates, a definite barrier to wider dissemination of information. Despite having a major internet site, the Jersey States have not made any attempt to provide a free full record of all its proceedings.
Unlike other liberal democracies, there is no separation of powers between the executive, the legislature, or even the judiciary. The Bailiff, appointed by the Crown, acts as the Chief Justice, the Speaker, the Head of the State, the Head of the Executive and Legislature whilst acting as a judge. As a judge he can pronounce on the very laws that have been devised by his department. In his capacity as the Speaker of the States of Jersey, the Bailiff is also perceived to be in a position to, to direct and control debate. During the debates (in 1996) on Jersey’s Limited Liability Partnerships (LLP) law, Senator Stuart Syvret queried the possible conflict of interest of the then President of the Policy and Resources Committee - Senator Reg Jeune - who was a consultant to the law firm that acted on behalf of the accountancy firms (Price Waterhouse and Ernst & Young) who drafted the legislation. Rather than asking Senator Jeune to explain his conduct, the Bailiff expelled Senator Syvret from the Jersey States, for an indefinite period. The Bailiff's role has been problematised by the recent judgement of the European Court of Human Rights in the case of McGonnell v The United Kingdom. It will probably be made untenable if the forthcoming case of Senator Stuart Syvret goes ahead.
PROPOSALS FOR REFORM
Jersey is under pressure, mainly from the outside, to reform its government. Its position in the UK and Europe remains anomalous. Whilst the UK has decided that its future is in the European Union (EU), Jersey wants to remain outside. The world is dividing into trading blocs, but Jersey wants the benefits of the EU without making the necessary contributions e.g. in terms of revenues, ending harmful tax competition, banking secrecy, etc. Jersey wants the UK to fight for its economic interests, but at the same time wants to resist the imposition of the UK requirements (e.g. the Edwards Report). Its wants to facilitate secrecy, tax avoidance and regulation avoidance, yet at the same time give the impressions that it is above these things. It wants economic prosperity but at the same time restrict demands for greater transparency. Jersey is clearly facing an identity crisis. No review of the government can dissolve these contradictions which are deeply rooted in Jersey’s politics and institutions. The answer lies in practical politics that in time can have some influence. Our proposals, we believe, will enable Jersey to make a start.
In the absence of a written constitution, the conflict of interests and the multiple roles of Ministers have multiplied. The States of Jersey and various Committees are too easily 'captured' by big business. Jersey should have a full written constitution that defines the role and limits of the government, legislature, Ministers, Member of the Jersey States and the rights and obligations of citizens. The constitution should be drafted after consultations with the people who in a referendum should also be asked to approve it.
The constitutional arrangements in each society are the outcome of its history, culture and domination by a power elite. However, most liberal democracies are characterised by what may be called the ‘USA Model’ and the ‘Westminster Model’. In the USA model, the entire Parliament (e.g. the Senate and the Congress) is not dissolved. Instead, a proportion of its members are required to be elected at regular intervals. In the USA model, the executive is entirely dissolved and its leader is required to be directly elected by the entire electorate. In the Westminster model, at regular intervals, the House of Commons and the executive is entirely dissolved. Thus both models are characterised by a ‘general election’ in which the public has an opportunity to express its will on the entire government. The public can throw an administration out and replace it with a new one.
In contrast, Jersey does not have a ‘general election’. Neither Parliament nor the executive has ever been dissolved in its entirety. The public has no way of expressing its judgement on the conduct of the entire government. The Jersey government is neither based upon the Westminster nor the USA model. Indeed, it does not fit any model of liberal democracy. Jersey needs to decide which way to go. It can have a President directly elected by the people, say every four/five years, accompanied by a chamber of Parliament (e.g. the States of Jersey) which scrutinises his/her policy proposals. Thus there will be a complete separation between the executive and the legislature. The role of the legislature will need to be adversarial and scrutinise the government formed by the President. The Parliament can consist of political parties and/or independent candidates. Indeed, only political parties will have the necessary resources to develop manifestos and alternative policies. However, no political party or member of the Jersey States shall be financed by big business or any other organised interest. Thus ensuring that they are not entirely ‘captured’ by the private interests. A publicly available register (freely available on the internet) of the Members’ Interests shall provide an additional safeguard. Members of Parliament can form Committees to scrutinise the government and its policies. They shall need to be properly resourced.
The alternative to the USA Model is the Westminster Model. This too gives Jersey a form of ‘general election’. People can throw out the government, should they so wish. However, the danger is that it can also throw up an elected dictatorship, which might use elected members of the Jersey States as voting fodder, rather than as a bulwark for scrutinising the government. However, there is a need for a system of Opposition, and Committees (e.g. Select Committee, as in the UK) that scrutinise policies and develop alternatives. Organised political parties have the capacity to provide resources and the machinery to mobilise competing discourses and policies. In the absence of political parties, the big business’s interest are likely to masquerade as the ‘public interest’. Given Jersey’s history and background, it might be difficult to establish political parties that are free from the influence of big business. However, rigorous rules need to be developed to ensure that political parties are not captured by any organised private interest. Pressure groups should be strengthened by giving them positions on major Committees and Panels. Various committees of the Jersey States should always seek evidence from pressure groups. Researchers and academics should be invited to give evidence to various Committees.
Jersey should have a Cabinet system of government with clearly defined Ministers and government departments There is no logical reason for having all members of the Jersey States as Ministers. Only the reforms that separate the executive from the legislature can create the climate for an effective scrutiny of government Bills and policies. The 1996 LLP legislation (Draft Limited Liability Partnerships (Jersey) Law 199) is an example of the poor scrutiny of legislation. The legislation was poorly drafted and based upon poor principles. Rather than thinking about its long-term social and political outcomes, Jersey's politicians only thought about appeasing major accountancy firms. Jersey's politicians assured partners of Price Waterhouse that it would be “be nodded through” (Accountancy, September 1996, p. 29). It brought international attention and shame upon Jersey. Major firms did not move to Jersey and had no intention to. To avoid similar episodes, Jersey civil servants should draft all legislation after proper consultation. All laws should be preceded by public hearings so that concerned parties have an opportunity to place their concerns on the public record. Jersey is geographically a small enough place to enable people to travel short distances and make their voices heard.
The review panel has a fascinating opportunity to go back to first principles. It could consider whether Jersey needs a Westminster parliamentary democracy that is in fact a façade for an elective dictatorship exercised through the party system. Or does an American style presidential system suit a smaller system? Even more appropriately, it should look at the changes now being introduced in English local government. There councils have the choice between an Elective Mayor to personify the City or an executive cabinet system built around a leading nucleus of major figures.
However, being a committee of part timers working to a restricted brief, rather than taking the time and making the effort involved in any fundamental reshaping of the polity we feel that your preference and recommendations are more likely to be shaped round the status quo. So we have not been radical in our proposals.
Nevertheless, the changes must be substantial - a modernisation aimed at creating an effective executive, answerable to the States and accountable through regular, and general, elections, to the people. Government must be run by full time professional politicians, with a small leading nucleus of them paid enough to make them full time ministers rather than jobbing part timers. All the other elected members should be paid enough to attract better talent, and to offer a career in politics. They should be given the backing to do their job of maintaining an effective critique of government policies in general debates and through an effective committee system which will give all members a role and influence. Jersey's government needs to move out of the amateur league. The State is small but the issues big.
In larger polities much of the necessary accountability, the selection of candidates, both support and critique of the executive, and accountability to the people, is due by political parties based on the dominant division in that society, be it class, economic, religious or regional. Jersey's intimate polity has not developed political parties and us not likely to do so. Opposition for the sake of opposition is a waste of very limited resources. Parties have no available bases. Indeed "Lord save us from party politics" appeared to be a universal cry from the elite though that is self-interested because they are almost a de facto party and their authority would be challenged by parties.
In an intimate society like Jersey politics can be more readily transformed into an effective working democracy by ensuring that the politicians are answerable to the people by greater involvement and openness. If power is clearly located and everyone knows where it lies and if politicians group round for or against an executive with coherent policies and responsibilities, the intimacy of Jersey politics can make for a far more effective democracy than play-way party clashes.
1. This suggests the need for a premier, not as a head of state but the pinnacle of power. The machine should focus on the Premier who should be answerable for it. The premier would perform the same duties as the Prime Minister in larger politics by acting as a leader of an executive team of ministers answerable as such to the States and the People. S/he should be elected by the States from its membership and in general elections would present himself/herself as leader of the team. S/he should be a full time professional politician and paid accordingly. We would consider a salary of £100,000 a year appropriate. Large by Jersey standards and elsewhere, as sadly, all peoples like to be mean with their politicians, but small by the standards of the states and interests s/he will be dealing with.
2. The executive or committee or cabinet preferably consisting of no more than half a dozen should also be elected by the states from its own members. They should be full time Ministers and paid at a full time rate of perhaps £80,000 a year to attract ability and make a political career worthwhile. Each member should be in charge of a major and, as necessary, perhaps a couple of minor departments. Thus the portfolios and power at present distributed around several committees should be focused on individual and accountable ministers, each responsible for a particular area of policy, but all taking wider decisions collectively as a team.
2. In such a situation the States take on a new role, becoming the necessary training ground for power, the point at which policies are discussed, debated and tested in debate, and the check on power. Those who yield power must explain it and justify their policies there, using the States to build up consent and support in general debates in regular question times, and in committees. Each committee should cover the area of one minister's set of portfolios. In this way committees can become a sounding board for policy, a means of raising problems in the portfolio, and a channel through which the people can put their own views, and the minister and his officials be called to account. Legislation too can be better prepared in committee consultation, then passed and amended first by the committee. Each committee should be six or eight strong and, preferably, self selecting so members can pursue their own interests and make their own choice. They should, however, be restricted to voting on only one committee. It will, however, be fair and reasonable to allow all to attend and speak et al.
4. The States themselves would then be the forum for broader discussions and the open forum of democracy. There is no need for a large membership (as in Westminster). Sixty would provide a reasonable reservoir of talent and opposition and ensure that enough bodies to do the duties. Rather than having three types of membership the States would be more effective with only two. Let the Constables go back to their local government job. In the House have 12 Senators to take a wider, whole island view, and 48 Deputies each representing districts as nearly equal as is possible, without breaking the sense of community.
5. Both groups should be elected for three years with the senators more highly paid than the Deputies to compensate them for their wider responsibilities and to designate them as an elite grade to which successful Deputies will eventually graduate and from which the executive will largely, but not exclusively, be chosen. All elected members should come up for election at the same time in a general election which alone can allow electors to make intermittent public judgements on the performance of the executive. Regular elections will require candidates to identify themselves as supporters, or critics of the government line and of the executive, or as independent of everything.
Regular elections will give the processes more coherence and the public more say and influence. It will also increase interest, contents and turnout. This would not, however, be a party system. Candidates would stand as individuals but they will be required, by the nature of things, to take a stance on the executive, its policies and its views on the way the island is being run and all other points at issue. This allows a more coherent choice than a random election of good chaps all elected, some uncontested, at irregular intervals.
6. Ministers would, of course, have the backing, advice and support of departmental officials. For members to be effective they need countervailing advice and support so that the choices before them are clear and their decisions informed. It is essential to avoid any repetition of the efforts to pass complex legislation members don't understand (e.g. LLP legislation). To provide the levels of staffing and advice available to legislators in bigger countries may be considered to be expensive. But without research support members of the State will not be very effective. In addition, to personal research staff, members of the States should have access to a commonly shared research staff based in the States' Library, with access to the internet and such information services as provided in the UK by the Parliamentary On-line Information Service (POLIS). This unit would be able to provide basic background information to members as required.
7. With a clear role differentiation emerging between executives, even though its members sit in the States and the legislature, the post of the Bailiff in the States becomes anomalous. This should be replaced by a Speaker or President, of the States, elected from their own membership.
8. Separation of powers also involves the strict separation of the executive, legislature, and judiciary. Such a separation is not only a matter of right and good government but is essential if overseas investors are to have faith in the legitimacy of the courts and judicial processes of the Island. The role of the judiciary and the Attorney General, failures to prosecute, the restricted number of prosecutions and the feeling that justice can be diluted by political considerations or a desire to protect prominent islanders, give overseas investors no faith in the way the Bank Cantrade scandal was handled. That must not be repeated. Confidence is essential.
9. This implies that the Bailiff no longer sits in Parliament but becomes head of the independent judicial system - and that the Speaker is totally excluded from that. Judges too, should be prohibited from sitting in the States. As should the attorney general. It is argued that talent must be used to the maximum in a small society and also that roles are bound to overlap. Yet there can be no justification for the justice system being influenced by politicians and such anomalies as the brother of the Bailiff also being the Attorney General not only cause difficulties and doubts but is fundamentally unacceptable. Faith in the independence and integrity of the Judges and the courts is a paramount objective.
10. It is essential that the same principles apply to the Independent Regulatory Regime for Financial Services. This has been reformed as a result of the Edwards Report. Thankfully it is no longer seen as a creature of politicians as it clearly was before. Yet it still needs to be better manned, and staffed and lead by a Director of international repute and standing. The only connection between the executive and legislature and the Regulator would be that the head is appointed by the executive, the Authority reports to Parliament and its officers can be examined by its committees. Its fundamental relationships will be with other regulators on the international stage rather than with politicians or the executive within Jersey.
11. The Speaker of the States of Jersey should not be permitted to sit on judgement in the Royal Courts. He should not be the head of judiciary either. The judiciary should be completely separate from the executive, the legislature and the business interests. As the UK has the responsibility for ‘good governance and administration of justice’ on the Island, it should ensure that the judges on the Island are above partisan politics. The UK’s Home Office should advertise the position of judges. From the list of applicants, the Home Office should make appointments. However, all such appointments should need to be ratified, in accordance with a published criteria, by a Committee made up of Members (i.e. members who are not part of the government) of the Jersey States. To ratify the appointment of the judges, the Committee should have open meetings. Ordinary people should be able to air their concerns. A publicly accountable Ministry of Justice should also be established.
12. We can also see no justification for the position of the Lieutenant Governor, a position that harks back to the imperial days when Britain sought to defend itself from France. There is now no military, political or any other reason for such an office. The Lieutenant Governor is not a citizen of Jersey and is appointed by the UK Crown. The elected government of Jersey can appoint its own ambassadors to other countries, including the UK.
13. There should be a written record of all proceedings of the Jersey States. This information should be placed on the Jersey States’ website and should be freely available to all. Government policy papers, consultation documents, Bills and reports should all be placed on the internet and be freely available to the public. The present radio coverage of the proceedings of the States of Jersey should also be extended to television. All parts of the government machine should embrace ‘sunshine’ policies.
14. Jersey's laws are subject to approval by the UK's Privy Council and the Home Office. Yet Jersey has no representation in the UK. The Bailiff (supposed non-political Speaker of the States of Jersey) lobbies the UK government, but there is no backbencher scrutiny of the government policies on Crown Dependencies. To remedy this, the UK’s House of Commons should form a Select Committee to exercise an oversight of the British Crown Dependencies, including Jersey. This Committee should receive evidence and exercise an oversight of the 'good governance' of the Islands.
15. As Jersey considers itself to be a secular society, it is difficult to envisage any political role of the Dean of Jersey. This privileges one set of the religious community in Jersey over the rest and seems to signify in-built discrimination against other communities. On any moral ground, it is difficult to justify a political role for the Dean of Jersey whilst the same recognition is not given to the leaders of other religious denominations. Jersey’s policies may also contravene the European Convention on Human Rights.
16. Jersey clearly is ruled by a tightly knit oligarchy that can subvert the institutions of the state to advance its interests. As a result, the civil service has become highly politicised. A narrow clique of politicians, who share their worldviews, currently appoints senior civil servants (see note 20) . There is no Parliamentary system for protecting civil servants from the factional interests of Jersey politicians. There is no institutional arrangement for scrutinising the appointment, effectiveness, efficiency or performance of the civil service. In this vacuum, Jersey civil service has become the private fiefdom of few. There are no independent arrangements for hearing complaints about the partisanship of the civil service. We recommend that a Committee of the Jersey States (completely independent of the government) should routinely examine all matters relating to the Jersey civil service. This Committee should meet in the open and take evidence from the people. To ensure that all people can speak without any fear of reprisals, Jersey should enact whistleblower, freedom of information, and public interest disclosure legislation to enable public servants to speak without fear. There should be a fuller investigation of the role and nature of the civil service. This should be supplemented by an investigation of the judiciary and Jersey’s relationship with the UK and the EU. Such tasks could be handled by an almost permanent Royal Commission on the future of the Channel Islands.
17. For any democracy to function, a certain kind of scepticism is needed. Media is a major part of this but Jersey’s only daily newspaper, the Jersey Evening Post (JEP), is closely tied with the local political oligarchy and faithfully follows the party line. Ideally, the JEP’s monopoly (vertically and horizontally) should be broken up into its constituent parts. It should not be owned, run or managed by politicians.
18. To call the government to account people need clearly defined rights that can be enforced in the courts. Instead of this, the Jersey government has developed a series of Codes of Practice, e.g. on gender discrimination, sexual discrimination in the work place and so on. These empty gestures seek to stifle popular demands for change and do not give people the rights that are enforceable in the courts. Another example of the cynical manoeuvres of the ruling elite is to reinvent itself by producing Codes and corporate governance statements (States Audit Commission, 1999). Jersey’s Codes and corporate governance statements are modelled on the Cadbury (Committee on the Financial aspects of Corporate Governance, 1992), Greenbury (Study Group on Directors’ Remuneration, 1995), Hampel (Committee on Corporate Governance, 1998) and other UK reports that primarily reflect the politics of the UK business sector. These Committees were formed and financed by big business. They met in secret and were not representative of wider social interests. They did not offer any rights to consumers, employees, or other stakeholders and opposed any extension of democracy to corporate stakeholders. These committees advanced discredited ideas, such as audit committees consisting of the friends of company directors (see note 21) (Mitchell and Sikka, 1996). The Jersey government has enthusiastically adopted such ideas (States Audit Commission, 1999). Seemingly, the Jersey States have simply jumped on a bandwagon to mobilise the rhetoric of openness, democracy and accountability without advancing the transparency, or accountability of political processes and institutions.
19. The Codes of Practice only make sense in the context of defined and enforceable rights. Freedom of information and analytical scrutiny of government policies are essential features of democratic life. In a small island society, it is vital to ensure that a close knit circle of people do not conceal matters, or gloss over ‘inconvenient facts’. The Ministers should not be in a position to conceal information. Jersey should have ‘freedom of information’ law, preferably based upon the USA model. Ministers should not have any control over the information that should be published. Such decisions should be made by a Committee independent of the Ministers. For example, the President of the Economics and Finance Committee should not have any veto on the publication of a critical report, say relating to Bank Cantrade or Fimaco. Instead, an Independent Committee made up of the Members of the States who are not part of the government should make the decision. The Committee should give reasons for withholding any information. It decisions should be the subject of judicial reviews. Thus presumption should be in favour of publishing information rather than concealing it.
20. To encourage a culture of scepticism and alternative analysis, Jersey needs to establish a university, perhaps one for the Channel Islands. However, there is a danger that in time this too will be ‘captured’ by the local oligarchy who might appoint their own friends to senior positions to control the research and teaching agenda. Jersey States will need to develop suitable safeguards against this. Independently minded philanthropists might also consider setting up an independent ‘think tank’ to collect, analyse and disseminate alternative forms of information.
21. The role of the Audit Commission should be broadened to review the effectiveness of all government machinery. The head of the Audit Commission should not be a political appointee. His/her appointment should be ratified by a Committee of the ‘backbench’ Members of Jersey States and s/he should also be regularly called to evidence to an independent committee (i.e. independent of the government) of the Jersey states.
22. Finally, we recommend that there should be a permanent standing Commission on the Machinery of Government. In the absence of such a Commission, it is likely that Jersey’s ruling elite will probably only make some cosmetic gestures towards reforming the government rather than the fundamental changes that are needed. The Commission shall consist of ordinary people and should take written and oral evidence from the public. All of its meetings shall be in the ‘open’. It shall issue an annual report and make recommendations for changes to the machinery of the government. It shall also be responsible for providing feedback stating whether its recommendations have been implemented. The government should be required to issue a written and oral response to all recommendations made by the Commission. To ensure that the Commission’s independence is not subverted in any way whatsoever the Ministers shall be required to give meticulous details of any meetings (e.g. full minutes of the meetings should be published) held with any member of the Commission. At the commencement of each public meeting, each member of the Commission shall state whether s/he has discussed any of the matters under scrutiny with any government official. The Commission should also have powers to call referendums on the reforms that have not been implemented by the government.
We recognise that these may be seen as major changes. Yet all are desirable, in our view, if Jersey's antique working of government is to be modernised, made more accountable, more genuinely democratic and more effective. In some regards Jersey is over-governed but such comprehensive changes at the centre will simplify everything, provide clear lines of responsibility and accountability and give to the people of Jersey an influence and an assurance of being heard which they presently do not feel.
The Jersey States has responded to external pressures for change by setting up a Panel to review the machinery of government. The role and position of Jersey in Europe has changed, but its political institutions have not kept pace with the change. Jersey needs urgent reform as its political system lacks intermediate institutions, electoral accountability, independent judiciary, openness and public accountability. It confers substantial power on the elite but does not make them accountable to the people. Yet this historic, or antique system, is home to an offshore financial centre operating on a world-wide scale, handling billions of pounds and making only a minimal contribution to Jersey’s people. It forces up their costs (e.g. housing), but does not spread the benefits beyond a tightly knit group of financially motivated individuals.
A central issue facing Jersey is whether this antiquated domestic regime is capable of combining regulation of this powerful visitor with democratic practices. Can its judicial, legal and political system secure the confidence of the people and the outsiders? As the Panel ponders over some crucial questions, it needs to be sensitive to the views of the people of Jersey and the world outside, not just those of the elite treating Jersey as a private fiefdom. A full and comprehensive analysis of all aspects of Jersey’s system of government is needed, but the Panel’s restrictive terms of reference are unlikely to enable it to prepare a comprehensive report. Concern with the judiciary, the civil service, the law making processes, the relationship with the UK and the EU and the social impact of Jersey’s tax haven status on its own citizens (e.g. the impact on housing) is excluded from consideration. All of this will dilute the Panel’s investigation.
Jersey’s recent history shows that the impulse of the ruling elite is to do little to dilute its power. Pressures for institutional change, as evidenced by the Edwards Report and the Human Rights legislation, had to come from outside the Island. The changes introduced in response to the pressures have enabled Jersey to present a respectable face to the outside world. Yet the ruling elite remains more committed to preserving its powers rather than embracing democracy, accountability and openness. The deeply ingrained impulses for self-preservation and secrecy are also likely to limit the scope of the Clothier Committee and its recommendations. As a result the reforms are likely to be minimal and Jersey will be ill equipped to face the winds of change that are sweeping through the world.
The reforms sketched out in this paper seek to introduce a separation
in the powers of the executive, the judiciary and the legislature. They
enable Jersey to embrace practices that are commonly adopted by other liberal
democracies. They seek to end the culture of secrecy, nepotism and cronyism
that has become so institutionalised in Jersey. The adoption of these modest
proposals will not necessarily solve the deep-seated shortcomings of the
machinery of Jersey government, but they can start the process of reform.
1.Views expressed by John Christensen, former assistant economic adviser to the government of Jersey (Jersey Evening Post, 30 October 1998, p. 2).
2.Other members of the Panel are Sir Kenneth Bloomfield, Sir Maurice Shock, Professor Michael Clarke, Mrs. Anne Perchard, Mr. John Henwood MBE, Advocate John Kelleher, Advocate David Le Quesne and Mr. Colin Powell OBE.
3. The full terms of reference were "to consider whether the present machinery of government in Jersey is appropriate to the task of determining, co-ordinating, effecting and monitoring all States’ policies and the delivery of all public services; including - the composition, operation and effectiveness of the States’ Assembly; the composition, operation and effectiveness of Committees of the States; the role and respective responsibilities of the States, the Committee and the Departments in achieving an efficient and effective strategic and business planning and resource allocation process; the role of the Bailiff; the transparency, accountability and democratic responsiveness of the State’s Assembly and Committees of the States; and whether the machinery of government is presently subject to checks and balances sufficient to safeguard the public good and the rights of individuals....".
4."Finance has eaten away at this Island [Jersey] like the first little black and white computer game, Pacman, to the detriment of other Island staple industries”, according to a leading Jersey Advocate (Jersey Evening Post, 31 October 1998, p. 11).
5. Recently, the Jersey European Airways has decided to abandon any visible link in its name to Jersey. British Airways has cancelled flights from Jersey to Heathrow.
6. In Jersey, the financial services sector is regulated by the newly constituted financial Services commissions (FSC), which is full of political appointees.
7. Fimaco was established by a law firm, Ogier & Le Cornu. Michael Birt, one of the partners in the firm, was one of the directors of Fimaco. His role was nominal. But the same Michael Birt subsequently became the Island’s Attorney-General and is currently is Deputy-Bailiff. Mr. Birt has denied any knowledge of the affairs of Fimaco. This highlights the problems of Jersey’s regulatory regime. Individuals can become nominee directors and collect fees, but they are not obliged to have any familiarity with the affairs of the companies that they legitimise.
8. The Story originally appeared in The Observer.
9. For example, in an editorial (6 October 1998), the JEP castigated critics of the Jersey government for using the internet to advance their arguments. Yet a few days later, the launch of the JEP web site was accompanied by fanfare without any hint whatsoever about the ideological construction of the news appearing in the JEP and/or its web site.
10. As in the case of Senator Stuart Syvret, during the 1996 parliamentary
passage of the Limited Liability Partnership legislation.
11. A phrase repeated during the Parliamentary proceedings on 19th May 1998 when Jersey sought to pass the insolvency provisions relating to LLPs. 95 pages of legislation were passed in less than 30 minutes.
12. Early drafts of the Edwards Report were made available to
Jersey’s ruling elite. Reformers were prevented from seeing it. An early
draft of the Report was also leaked (http://visar.csustan.edu/aaba/aaba.htm)
much to the protestations of Jersey’s ruling elite (Jersey Evening Post,
5 October 1998, p. 1 and 2; 6 October 1998, p. 8; 7 October 1998, p. 3).
http://www.jerseyeveningpost.com accessed on 23 November 1999.
13. This often leads to calls for Jersey to declare its independence from the UK (for example see the Jersey Evening Post, 22 March 1999, pp. 8-9). Whether an island of 86,000 can survive in the global economy without the protection of a hegemon is open to debate.
15. By a coincidence an identical committee has also been formed
for Guernsey. Is it a coincidence, or is it pressure upon the Islands by
external authorities (e.g. the UK government)?
16. Jersey treated this information as a public relations disaster. Its leading politicians did not argue for more openness about the constitutional relationship but asked for more effort on public relations. Jersey Evening Post website (http://www.jerseyeveningpost.com) accessed on 8 March 1999.
17. Examples include golfer Ian Woosnam, racing drivers Derek
Warwick and Nigel Mansell, Jack Walker, owner of Blackburn Rovers and Jack
Higgins, author of The Eagle has landed.
18. For example, during the Jersey States debate (May 1998) on the insolvency provisions of the LLP law, the Bailiff complained that he did not receive copies of a commentary circulated by Prem Sikka.
19. For example, one Constable (elected unopposed) claimed that he “enjoyed low-water fishing and was well known in the farming community. He was known in the Island for his award winning dahlias” (Jersey Evening Post, 12 October 1999, p. 4).
20. A practice confirmed by the recent appointment of the chief executive to the Policy & Resources Committee. To the best of our knowledge, the appointment was not made by an independent appointment board.
21. Companies such as BCCI, Maxwell and Polly Peck had audit committees
consisting of the friends of directors, rather than the independently elected
representatives of stakeholders. Such committees lack the moral courage
to play a public spirited role and inevitably failed.
Committee on Corporate Governance, (1998). Committee on Corporate Governance: Final Report, London, Gee, (the Hampel Report).
Committee on the Financial aspects of Corporate Governance, (1992). The Financial Aspects of Corporate Governance, London, Gee, (the Cadbury Report).
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