SECTION 1 ~ INTRODUCTION
1.
This is the report of an investigation of circumstances
surrounding the 2006 Battle of Flowers and of governance
arrangements within the Jersey Battle of Flowers Association
(‘the Association’). The terms of reference for this
investigation are set out in Appendix 1.
2.
For many people, the 2006 Battle of Flowers
was a success. Many have told me that the floats were
remarkable. Others have told me that the carnival atmosphere
was as good if not better than Battle has achieved before.
Unfortunately, the Battle also gave rise to public
concern.
3.
Firstly, after several years when no celebrities
were invited to attend Battle, it was decided for the
2006 Battle that a celebrity should be invited in the
hope that this would attract a larger audience. In the
event, the invited celebrities were regarded by many
commentators as inappropriate to the true character
of the parade. Secondly, an attempt was made to sell
corporate hospitality tickets and thus to increase the
Battle’s income. In the event, this attempt led to embarrassment
for the Association as many tickets were not sold, the
stand and marquee were half-empty, and it is likely
that a serious loss has been suffered. Concern over
these two matters has led to concern over the way in
which Battle is managed.
4.
This is a serious matter for a number of reasons.
For many people throughout the world, the name of the
Island is inextricably linked with Battle. In part,
this is a result of the way in which the Island has
marketed itself as a tourist destination. But it is
also a result of the close link between the Island’s
community and Battle. The floats which are the focus
of Battle are the product of many hours of voluntary
community activity. They are therefore not simply splendid
spectacles but also symbols of the importance of community
action for the Island. Questions about the competence
of the Association to manage Battle successfully and
to assure its future are bound to be taken seriously.
5.
My investigation began with a close examination
of all of the documents relevant to this year’s Battle
and an examination of records of the management of Battle
in recent years. I have also undertaken a series of
interviews with those who have been involved in the
2006 Battle in some capacity or other. The names of
the interviewees with whom I have spoken are listed
in Appendix 2. I am grateful to all of the people who
have assisted me in this investigation: particularly
those involved as float builders who have helped me
to understand something of the importance of Battle
to the Island’s community.
6.
This report sets out the outcome of my investigation
in the following sections:
(1) a chronology of the events within the Association leading
to this year’s Battle (section 3 of the report). The
purpose of preparing this material was to provide a
basis for an analysis of the factors which led to disappointment
and embarrassment.
(2) an analysis of the factors which contributed to failure (section
4 of the report).
(3) an examination of the strengths and weaknesses of corporate
practices within the Association (section 5 of the report).
(4) an examination of the strengths and weaknesses of the internal
financial controls within the Association (section 6
of the report).
(5) an examination of certain aspects of the relationship between
the Association and the Economic Development Department
(‘the Department’) (section 7 of the report).
7.
But first, I will set out in section 2 a summary
of my findings and recommendations.
SECTION
2 ~ SUMMARY OF FINDINGS AND RECOMMENDATIONS
Findings
8.
As I have already indicated, many people have
told me that the 2006 Battle was a success in terms
of the quality of the floats and the atmosphere that
was created. These achievements are the result of the
committed work of the volunteers who build the floats
and of the members of the Association’s Council who
plan and manage the parade itself.
9.
However, from the chronology in section 3 of
this report it is clear that in some respects the outcome
of the Association’s work in preparing for the 2006
Battle was indeed a disappointment:
(1) in the eyes of some members of Council, the initiative
to improve the marketing of the Battle did not achieve
the desired results;
(2) the choice of a celebrity to attend the parade was made notwithstanding
the misgivings of some members of Council and has led
to criticism and complaint,
(3) the attempt to make corporate hospitality facilities available
led to embarrassment for the Council and a material
loss for the Association rather than the surplus that
was anticipated; and
(4) the Association may have suffered a material loss partly through
the failure of corporate hospitality income to materialise
and partly through carelessly incurred liabilities.
This loss will have been incurred notwithstanding the
increased grant made available by the Department.
10. In my view, these disappointments can be attributed
to a number of factors:
(1) Factor 1: For some tasks, the Association relied inappropriately
upon people who did not have the necessary skills and
experience.
(2) Factor 2: The Council and its Officers continued to
rely upon individuals even when there was evidence that
their reliance may have been misplaced.
(3) Factor 3: Weaknesses in the Association’s corporate
governance practices and its internal financial controls
magnified the effects of these misjudgements.
(4) Factor 4: These weaknesses were in turn exacerbated
by personal animosity between some members of the Council.
(5) Factor 5: The Minister for Economic Development (‘the
Minister’) failed to ensure that the terms on which
he offered further grants had been discussed with the
Department’s officials and were then properly recorded,
defined and, most importantly, applied. In addition,
the Department did not make good this failure to record
and define the terms of the Minister’s offers. This
contributed to the Council’s understanding that by accepting
the grants it was obliged to take certain initiatives.
Recommendations
11. On the basis of my investigation, it seems
possible a number of changes to the structure and management
of the Association would limit the risk of a recurrence
of this year’s problems and thus of further detraction
from the achievements of the many volunteers who contribute
to the event. In this spirit, I make the following recommendations:
(1) Recommendation 1: As soon as possible, the business
of organising and managing the parade should be transferred
to The Jersey Battle of Flowers Limited, the company
owned by the Association.
(2) Recommendation 2: The board of the limited company
should be small and consist of people with the skills
necessary to manage the parade’s business affairs.
(3) Recommendation 3: The Chairman of the limited company
should be responsible for ensuring that the board’s
membership includes all of the key skills necessary
for effective management.
(4) Recommendation 4: The Chairman of the Association should
be responsible for ensuring that the key offices of
the Association are filled and that necessary skills
are represented on the Council.
(5) Recommendation 5: Wherever possible, the Battle of
Flowers organisation (whether in the form of the Association
or of the limited company) should use sub-contracted
services.
(6) Recommendation 6: In principle, the States should not
make further grants available to the Association until
the Association has implemented reforms intended to
achieve the recommendations set out in this report.
(7) Recommendation 7: The normal arrangements concerning
offering and making grants should apply to Ministers
as well as departmental officials.
SECTION
3 ~ 2006 BATTLE OF FLOWERS
Introduction
12. In the first section of this report, I have
listed the concerns which have arisen concerning the
management of the 2006 Battle. To analyse the circumstances
which gave rise to these concerns, I started by trying
to establish what took place within the Association.
In this section of the report, I will set out a chronology
of the Association’s preparation of the 2006 Battle.
13. The chronology set out below is based upon
my interviews with those people who were most closely
involved and an examination of the relevant documents.
It concentrates on exchanges that are relevant to the
issues with which this report is concerned and thus,
for example, does not mention all Council meetings or
all of the matters discussed at a meeting. In a number
of cases, there are conflicts between people’s memories
and documents. I have indicated the existence and nature
of any conflicts.
Chronology
9
November 2005: Annual General Meeting
14. At the Association’s Annual General Meeting,
Mr Gavin Roberts was elected Treasurer. Mr Bob Pallot remained in office as Chairman
as did Mr John Farley as President. Mr Mark Leonard,
Mrs F Roberts and Mrs M Fitzgerald were elected to serve
as members of Council. In addition, the Council for
the following year included: Dr Steve Cooke, Mr Martyn
Farley (co-opted), and Mrs Donna Le Marrec (co-opted).
5
January 2006: Council meeting
15. At this meeting, the Council agreed that the
Treasurer should be added to the bank mandate as a cheque
signatory.
19
January 2006: Council meeting
16. Following the practice of previous years, the
Treasurer presented to the Council a budget for the
2006 Battle. The budget showed a deficit of £21,150
(as the balance of estimated expenditure amounting to
£361,150 less estimated income of £340,000) which continued
the trend of declining surpluses. It was agreed that an approach should be
made to the Economic Development Department (‘the Department’)
for further financial assistance.
2
February 2006(afternoon): Meeting with Senator Ozouf
17. This meeting was attended by Mr Pallot, Mr
Avery, Mr M Farley and Mrs Fitzgerald on behalf of the
Association. Senator Ozouf, Economic Development Minister,
Mr de Carteret, the Department’s Director of Tourism
and Marketing, and Mrs Le Marrec, the Department’s Business
Development Manager, attended on behalf of the Department.
A number of other parties were also represented (eg
Jersey Arts Centre). After the Association’s financial
position has been explained, Senator Ozouf made it clear
that additional funds might be made available and invited
the Association to put forward its proposals.
2
February 2006 (evening): Council meeting
18. The Council discussed a number of ideas for
improvement of the 2006 Battle including the acquisition
of new arches at each end of the Battle arena, inclusion
of more carnival features in the parade and the possibility
of a move towards a ‘free’ parade.
16
February 2006 (afternoon at 1600 hours): Meeting with
Senator Ozouf
19. This meeting was attended by substantially
the same group of people as had attended the meeting
on 2 February 2006. Senator Ozouf asked the Association’s
representatives whether attendance at Battle could be
increased if more money was available to the Association.
Mr Pallot and Mrs Fitzgerald said that this should be
possible. They suggested that a sum of £50,000 would
be valuable to which Senator Ozouf responded by tabling
an offer of a further grant of £50,000 in addition to
the ‘normal’ grant of £95,000. Senator Ozouf also suggested that a further
amount (up to £45,000 to match commercial sponsorship
on a pound for pound basis) might be made available
although he asked that this offer should not be made
public. He also suggested that the Association should
consider establishing a committee to manage the expenditure
of the additional funds and that it should consider
including external members in this committee.
20. At the end of this meeting, the Association
was invited to put forward its proposals for the use
to which these additional funds would be put.
16
February 2006 (evening): Council meeting
21. Mr Pallot and Mr Avery reported the substance
of their meeting with Senator Ozouf and the Council
then discussed how the further funds might be applied.
It was estimated that the additional grant of £50,000
could be applied to:
(1) Improvements to the carnival aspects of the parade:
£25,000.
(2) New arena arches and decorations: £10,000.
(3) Improvements to the pyrotechnic display: £5,000.
(4) Additional marketing assistance: £10,000.
22. As for the further sum of £45,000, the following
possible uses were canvassed: the creation of a new website; further enhancements to the arena; the re-introduction
of a town parade; the re-introduction of Miss Battle’s
travel to twinned events; increases in the guaranteed
payments to exhibitors; and undertaking a feasibility
study for a free parade.
23. It was agreed that these thoughts would be
put to Senator Ozouf and that a further meeting would
be sought for 24 February 2006.
24
February 2006: Letter to the Association from Mr de
Carteret
24. Following a letter from the Association setting
out proposals for use of the proposed additional funds,
The Economic Development Department cancelled the planned
meeting apparently because of disappointment at the
quality of the Association’s response. A letter was
sent to the Association regretting that the positive
tone of the two recent meetings did not appear to be
reflected in the Association’s presentation and clarifying
the Department’s expectations and suggesting that the
Department would welcome proposals for development of
the carnival aspects of Battle and improvement of the
marketing of Battle. The letter also suggested that
it might be helpful to establish a small group to take
further these issues.
2
March 2006: Council meeting
25. The minutes record that Mr John Farley, the
Association’s President, asked what was the state of
conversations with the Department. It was reported that
there had been no movement.
23
March 2006: Council meeting
26. By this meeting, agreement appears to have
been reached with the Department. It is agreed by all
of the parties that the further funds were for certain
purposes: the arrangement of marketing assistance for
the Association, improvement of the carnival aspects
of the 2006 Battle and the attendance of a celebrity
at the Battle (to be an attraction to the public to
attend). It is also apparent that, as proposed in
Mr de Carteret’s letter, a small group had been formed
to deal with these matters.
27. The minutes record that the Council discussed
the steps that had been taken to deal with these three
matters:
(1) Marketing/public relations assistance: It was reported that
bids had been invited from four companies with a view
to the appointment of consultants to the Association.
(2)Corporate sponsorship: Mr Martyn Farley, a co-opted member
of Council, reported that there had been contact with
at least one potential corporate sponsor for Battle.
Mr Farley suggested that it would be helpful if the
Department could announce its decision to provide additional
financial support to Battle as this would encourage
commercial interest in Battle.
(3) Celebrities: Council discussed the names of celebrities at
some length. It was reported that Mr Avery had spoken
to an island impresario who had suggested that Bradley
Walsh might be available at a fee of the order of £25,000
per day. Mr Roberts said that he had spoken to his
contacts in London who had suggested names that would
be as attractive as those suggested by Mr Avery and
possibly less expensive as it was proposed to invite
them in return for an ‘expenses paid holiday’ in the
Island.
4
May 2006: Council meeting
28. The following reports were made at this meeting
of Council:
(1) Marketing consultants: Orchid Communications had been appointed
to provide marketing consultancy support to the Association. Contracts were being agreed. It was also
agreed that all members of Council should have access
to Orchid.
(2) Corporate sponsors: Negotiations with possible corporate sponsors
were continuing.
(3) Corporate hospitality: Estimates were awaited for a 300 seat
covered grandstand for corporate hospitality purposes.
(4) Celebrities: Mr Roberts reported that discussions were continuing
and mentioned one more possible name.
18
May 2006: Council meeting
29. The following reports were made to this meeting
of Council:
(1) Celebrities: No celebrity had been booked. The names of a
number of sportsmen were discussed in addition to those
mentioned at previous meetings.
(2) Corporate sponsors: Three possible sponsors were discussed
with a view to raising the amount of £45,000 needed
to match the funds offered by the Department.
(3) Corporate hospitality: A quotation had been received from
the Association’s normal supplier for a stand which
would not be covered since the request had been made
too late. It was proposed that there should be three
‘grades’ of corporate hospitality offered: ‘Gold’, ‘Silver’
and ‘Bronze’. The names of possible caterers were canvassed.
It was reported that 85 tickets had been sold.
30
May 2006: Council meeting
30. At this meeting of Council the following reports
were made:
(1) Celebrities: No appointment had been made. More names of
possible celebrities were canvassed with Council.
(2) Mr Martyn Farley had met a prospective corporate sponsor and
was putting together a presentation.
(3) Corporate hospitality: Meetings had been held with the two
possible caterers and a choice had been made between
them. Mr Roberts reported that it was proposed to increase
the seating to 450 (from 300) as there was confidence
that all of the tickets could be sold.
15
June 2006: Council meeting
31. At this meeting of Council the following reports
were received:
(1) Corporate hospitality: The larger stand for corporate hospitality
purposes had been arranged. Mr Martyn Farley had spoken
to representatives of the Chamber of Commerce about
further corporate support for the corporate hospitality
arrangements.
(2) Corporate sponsors: Mr Martyn Farley reported that presentations
had been made to two possible sponsors.
(3) Carnival: A number of local acts had been hired to improve
the carnival atmosphere of the parade.
29
June 2006: Council meeting
32. The following reports were made:
(1) Corporate sponsors: One of the possible sponsors to which
presentations had been made had decided not to become
involved but was thought to be interested in supporting
the 2007 Battle. There had been no reaction from the
other possible sponsor.
(2) Celebrities: Names of celebrities who might be available to
be present at Battle were discussed.
33. It was reported that the Association would
send invoices to the Department for the further amounts
that had been agreed.
6
July 2006: Department’s purchase orders
34. The Department created two purchase orders
for the additional payments to the Association. They
were endorsed in manuscript by Mr de Carteret as follows:
“Order 31255-OP: £50,000: Agreed funding for
Carnival (30,000) & outsourced on-island marketing
support (Orchid £12k) + Battle Bee initiative &
‘Goody bag’ (£8k).
Order 31256-OP: £45,000: Additional increase
agreed by Senator Ozouf for a Celebrity + new arches
to arena.”
6
July 2006: Council meeting
35. This meeting received a number of reports:
(1) Celebrities: The minutes record that another conversation
took place concerning various celebrities who might
be invited. These included the names of various sportsmen
including that of Mr Ian Wright. No decision was made.
(2) Arena: Mrs Le Marrec reported on arrangements for painting
and improving the arena arches.
(3) Corporate hospitality: Mr Roberts reported that he believed
that 175 corporate hospitality tickets had been sold
and that some companies would be distributing gifts
at the lunch. He expected that a substantial number
of additional tickets would be sold by the end of the
following week (i.e. by 15 July).
(4) Public relations: Mr Pallot had met Senator Ozouf to report
on the current situation and the unhappiness within
the Council at the service being provided to the Association.
Senator Ozouf had told Mr Pallot that he would judge
the success of the Battle of Flowers parade by the numbers
who turn out to watch the parade. Mr Pallot had subsequently
met Orchid Communications to ask them to redirect their
efforts towards encouraging ticket sales.
(7) Exhibits Committee: There was no report from Mrs Roberts and
it was agreed that the Executive Officer would meet
Kathy Gill, the secretary of the sub-committee, to ensure
that appropriate progress was being made.
(7) Programmes: The results of tendering for the production of
programmes for the parade were reported.
Thursday,
13 July 2006: Council meeting
36. The following reports were made:
(1) Celebrities: Mr Roberts reported that he had made an offer
for Mr Wright to attend the parade at a fee of approximately
£45,000. It was agreed that this proposal together
with other quotes would be passed to Senator Ozouf for
his comment and advice. No decision on accepting the
Mr Wright proposal was made: the decision was deferred
until the next meeting of the Council to be held on
20 July, 2006. It was also mentioned that another celebrity
was also being canvassed at a possible cost of £30,000.
(2) Exhibits Committee: There was no report from Mrs Roberts.
13
– 20 July 2006
37. Following the Council meeting on 13 July, Mr
Roberts continued his e-mail exchanges with Upfront.
On 18 July 2006, Upfront sent a draft contract to Mr
Roberts as a confirmation of the oral arrangement that
had been agreed. This draft had already been reviewed
by Mr Wright’s agent who had also confirmed the proposed
air flight arrangements for Mr Wright’s visit. Mr Roberts
made some amendments to the draft and on 20 July 2006
returned it to Upfront. These amendments included details
of the Battle-related events that it was expected that
Mr Wright would attend. On the same day, Upfront replied
with detailed questions concerning arrangements for
Mr Wright’s attendance (eg who might accompany Mr Wright,
what he would be expected to say in speeches at events
and so on).
Thursday,
20 July 2006: Council meeting
38. Mr Roberts did not attend this meeting of Council.
The following matters were discussed among others:
(1) Celebrities: The Council decided that it would not accept
the proposal that Mr Ian Wright should attend the parade.
(2) Corporate hospitality: It was reported that tickets amounting
to approximately £50,000 in value had been sold.
(3) Corporate sponsor: It was reported that a sponsor had indicated
interest in the 2007 Battle.
(4) Exhibits committee: It was reported that Mrs Roberts would
stand back from the Chairmanship of this Committee which
would be run by Kathy Gill with the assistance of Lynne
Hind and Lyn Latham.
(5) Carnival: Mrs Le Marrec reported on the arrangements that
had been made. It had been decided that the proposal
to insert a leaflet in the Jersey Evening Post would
not be followed up. Arrangements for handing out flowers
and tags to tourists arriving at the Airport had been
made. The design for new banners at the Harbour and
the Airport had also been approved.
Monday,
24 July 2006
39. Mr Roberts sent an e-mail to Upfront answering
the questions that had been raised in the 20 July e-mail
concerning arrangements for Mr Wright’s visit to Battle.
In particular, Mr Roberts said that it was acceptable
for Mr Wright’s party (of four people) to sit at the
same table for lunch and dinner, and that Mr Wright’s
agent could accompany him in the open top car in the
parade. He also made suggestions for the content of
Mr Wright’s speeches.
Tuesday,
25 July 2006
40. Mr Roberts sent an e-mail to Upfront which reads as follows:
“With reference to my last e-mail, could you
please give me a call to discuss as the Council [were]
not keen on spending £45k on a star.”
Thursday,
27 July 2006:
41. At this meeting of Council the following issues
were discussed:-
(1) Celebrities: A number of new names for celebrity invitations
were discussed including Chico and Nikki, Ms Jodie Marsh
and Grace Adams Short. It was reported that any three of the names
mentioned could be hired at an approximate cost of £26,000.
(i.e. £22,000 fee plus expenses). It was agreed by
Council that Chico and Nikki “would give to Battle what
was needed” (ie they would attract a larger audience)
and Mr Roberts was asked and authorised to make the
appropriate arrangements.
The Minutes record that Mr Martyn Farley
enquired as to the relationship between the final tranche
of additional funds made available by the Department
and the appointment of a celebrity.
(2) Corporate hospitality: Mr Roberts reported that all invitations
for hospitality tickets had been sent out and that if
all of the tickets were taken up, then the space in
the marquee would have been over-sold.
Friday
28 July 2006
42. Mr Roberts contacted Eminence to check the
availability of Chico and Nikki to discover that they
would not be available. The celebrities who might be
available were Grace Adams Short and William Murray.
As Mr Roberts understood that he had been authorised
by Council to settle the celebrity issue, he was minded
to go ahead with this proposal but Eminence wanted a
deposit of £15,000 to confirm the arrangement.
Monday
31 July 2006
43. Mr Roberts spoke to Mr Avery to arrange for
the necessary deposit to be paid. However, Mr Avery
was not prepared to draw a cheque without first having
seen the contract.
Tuesday
1 August 2006
44. A meeting was held at Meadow Bank attended
by Mr Pallot, the Executive Officer, the Treasurer and
Mr Mark Leonard. Mr Roberts reported that payment of
a deposit of £15,000 was necessary to secure the booking
of two celebrities. As no contract was available, the
Executive Officer was not happy to release any money
at this stage.
Wednesday
2 August 2006
45. Mr Tracey of Upfront (who had been involved
in the discussions concerning Mr Wright) telephoned
the Association’s office and spoke to Mr Avery. Later
that day he sent an e-mail to Mr Avery in which he claimed
payment from the Association of a fee in respect of
the abortive negotiations concerning Mr Wright. With
his e-mail to Mr Avery, he enclosed:
(1) a letter to Mr Pallot which described the various exchanges
that had taken place between Upfront and Mr Roberts
which, as far as I am aware, had previously been unknown
to Mr Avery and Mr Pallot. In this letter, Mr Tracey
complained that he had not been able to contact Mr Roberts
by telephone.
(2) a copy of the e-mail dated 11 July 2006 in which Mr Roberts
made the offer in respect of Mr Wright’s proposed attendance
at Battle;
(3) a copy of the agreed contract ;
(4) an invoice from Upfront for its fee of £6,000.
46. Separately, Mr Roberts sent an e-mail to the
Association’s office enclosing a draft contract for
the appointment of celebrities. He also advised again
that a deposit of £15,000 had to be paid immediately
to secure success. The celebrities named in the contract
were Grace Adams Short and Andy Abraham. The Executive
Officer refused to sign the contract (or to pay the
necessary deposit) as the names mentioned in the contract
were not those agreed by the Council.
47. Later that day Mr Roberts returned to the Association’s
office with another contract which included the names
of Grace Adams Short and William Murray. Mr Roberts
recalls that the Executive Officer refused to pay the
deposit unless instructed to do so by the Chairman.
The Executive Officer telephoned Mr Pallot to obtain
his authority to proceed; and wrote a cheque which he
asked the Treasurer to counter-sign before it was sent
to the agency.
Thursday,
3 August 2006
48. Mr Roberts received a telephone call from Eminence
to say that payment was still awaited and that unless
payment was made by the close of business on that day,
then the Association’s first option on the chosen celebrities
would be cancelled.
49. Mr Roberts then went to NatWest Bank, the Association’s
bankers, to facilitate the necessary payment. The Bank
was helpful and prepared to make the necessary payment
by way of CHAPS provided that authority was given by the approved
signatories. However, the Bank could not accept the
Treasurer’s signature as his name had not been added
properly to the bank mandate.
Thursday,
3 August 2006: Council meeting
50. The following reports were made to this meeting:
(1) Matters arising: Mrs Le Marrec reported that the third tranche
of money paid by the Department was intended to meet
the cost of hiring a celebrity but was also intended
to assist with the other developments that had been
agreed between the Association and the Department.
(2) Treasurer: The Treasurer submitted a letter of complaint concerning
the failure to make appropriate arrangements for him
to sign cheques drawn on the Association’s bank account.
The complaint centred on the difficulty surrounding
the addition of his name to the bank mandate that had
come to light on 2 August 2006.
(3) Celebrities: Mr Roberts reported that Mr William Murray was
no longer available but that Andy Abraham was available.
The Council agreed that Grace Adams Short and Andy Abraham
should be invited to attend.
Friday,
4 August 2006:
51. On the morning of 4 August 2006, at 0937 hours,
Mr Roberts sent an e-mail to Mr Pallot and to the Association’s
office confirming that he had spoken to the agents and
that Grace Adams Short, Andy Abraham and Jodie Marsh
were available. He also confirmed that William Murray
was not available. He reported that the cheque that
had been sent had not arrived and gave the bank details
that were necessary for a CHAPS payment to be made in
accordance with the Council’s decision on the previous
evening.
52. Overnight Mr Pallot had become uneasy about
the Council’s decision concerning the celebrity contract.
Mr Pallot telephoned the Executive Officer to discuss
the matter and to ask if the Chairman of the Council
“could pull the plug” on the decision that had been
made on the previous evening.
53. Mr Pallot decided that he must first speak
to Mr Roberts to say that he was not happy to go ahead. In a telephone conversation Mr Roberts said
to Mr Pallot that it might be possible to cancel but
suggested that legal advice should first be taken.
Mr Pallot then apologised to Mr Roberts because he felt
guilty that this was the unsatisfactory conclusion to
all of the work that Mr Roberts had invested in the
event.
54. Mr Roberts then spoke to Eminence and suggested
that they should speak to Mr Pallot. Later, Mr Roberts
met Mr Leonard, explained what had happened and said
that he intended to resign.
55. Mr Pallot received a telephone call from Eminence
during which Mr Pallot was informed that one of the
celebrities under consideration was Ms Jodie Marsh.
Mr Pallot recalls that this was the first occasion on
which he had appreciated that she was expected to attend
Battle.
56. The Executive Officer (at the same time or
subsequently) sought advice from the Association’s lawyers
who said that it would be difficult to get out of the
oral arrangements that Mr Roberts had made whose existence
was confirmed in the first line of the proposed contract.
57. Meanwhile, a journalist contacted Mr Pallot
to enquire into the circumstances surrounding the celebrity
issue and mentioned that Mr Roberts had resigned as
Treasurer of the Association. That evening, Mr Pallot
spoke to Mr Roberts and asked him not to resign in view
of the fact that the day of the parade was so close
and he had so many responsibilities (eg for arranging
the corporate hospitality facilities).
58. Also on that evening, Mr Roberts watched the
‘Big Brother’ programme and became aware of speculation
that Grace Adams Short might re-enter the Big Brother
house and thus, whatever the Council decided, she would
not be available to attend Battle.
Saturday,
5 August 2006
59. An article appeared in the Jersey Evening Post
which referred to the complaint which Mr Roberts had
made at the 3 August Council meeting and the amounts
of money which were involved in the negotiations over
appointment of a celebrity.
Monday,
7 August 2006
60. Mr Roberts recalls that he called Eminence
and confirmed that Grace Adams Short was to re-enter
the Big Brother house. At this point, it was clear that the only
celebrities available to attend the parade were Ms Jodie
Marsh and Andy Abraham.
61. During the day, Mr Avery and Mr Pallot again
talked to Council members and a number met at the Association’s
offices during that evening. Those present agreed that
Ms Jodie Marsh was not an ideal choice but that cancellation
at that stage would attract adverse publicity. They
were also concerned that the Association would be liable
for the full amount due under the proposed contract
and so would have to make a payment whether a celebrity
attended or not. Consequently, the people present agreed
that the proposed contract should proceed.
62. Following this meeting, Mrs Roberts resigned.
Tuesday,
8 August 2006
63. Mr Avery went to the Association’s bank to
arrange for the necessary payment under the contract.
He was told that he needed a second signature on the
payment authority. As Mr Pallot was not readily available,
Mr Avery arranged for the payment of £15,000 to be made
from his private bank account.
64. As I have reported above, at successive Council
meetings, Mr Roberts had reported that sales of corporate
hospitality tickets had been satisfactory. Later this
day, Mr Roberts reported that there had been a few cancellations
because of the public reaction to the celebrity chosen
to attend the Battle.
Wednesday,
9 August 2006
65. Mr Avery and Mr Pallot have told me that on
this day, Mr Roberts again confirmed that he expected
that more than 350 people would be present in the corporate
hospitality stand.
Thursday,
10 August 2006: Battle of Flowers
66. Mr Avery and Mr Pallot recall that about one
hour before the parade commenced, Mr Roberts said that
only 200 people would be present in the corporate hospitality
stand including the invited guests of the Association. At this point, there was little that could
be done. Tables were re-arranged in the marquee but,
when the parade took place, the stand was half-empty.
67. In the event, Ms Jodie Marsh and Andy Abraham
attended the parade as agreed on 7 August, but the audience’s
reaction was not consistently positive.
SECTION
4 ~ OUTCOMES AND FINDINGS
Introduction
68. From the chronology in section 3 of this report
it is clear that in some respects the outcome of the
Association’s work in preparing for the 2006 Battle
was a disappointment:
(1) in the eyes of some members of Council, the initiative
to improve the marketing of the Battle did not achieve
the desired results;
(2) the choice of a celebrity to attend the parade was made notwithstanding
the misgivings of some members of Council and has led
to criticism and complaint,
(3 the attempt to make corporate hospitality facilities available
led to embarrassment for the Council and a material
loss for the Association rather than the surplus that
was anticipated; and
(4) the Association may have suffered a material loss partly through
the failure of corporate hospitality income to materialise
and partly through carelessly incurred liabilities. This loss will have been incurred notwithstanding
the increased grant made available by the Department.
69. However, whilst recognising that some disappointments
have occurred, it is worthwhile to recognise that some
things went well:
(1) many have commented that the parade was an impressive
spectacle and that the atmosphere was excellent;
(2) the carnival improvements arranged with the assistance of
Jersey Arts Centre and funded by the Department’s grant
appear to have been a widely appreciated success;
(3) the re-decoration of the arena arches and the arena banners
appear to have been appreciated; and
(4) although the final results are not yet available, the sampling
of the audience’s reactions appears to suggest that
the parade was well-received.
70. Against this background, I will now turn to
my analysis of factors which led to disappointment.
Factor
1: For some tasks, the Association relied inappropriately
upon people who did not have the necessary skills and
experience
71. I believe that this is evident in three areas:
(1) the appointment of marketing consultants;
(2) the invitation of a celebrity; and
(3) the organisation of corporate hospitality facilities.
Marketing
consultants
72. It is evident from the Association’s management
of the search for marketing consultants that the Council
did not have a clear view of the marketing services
which it needed or of the difference between marketing
and public relations advice. Nor did the Association
demonstrate that it knew how best to manage consultants
once they had been appointed.
Celebrity
73. In a number of respects, Mr Roberts’ handling
of the celebrity initiative was unsatisfactory.
74. For example, before the Council meeting on
13 July 2006 at which consideration was given to the
proposal to invite Mr Wright to attend Battle, Mr Roberts
had issued an invitation and proposal to Mr Wright’s
agent. Although Council then deferred its decision for
a week, Mister Roberts failed to alert the agent to
the delay. Mr Roberts even failed to react when the
invitation and offer were accepted on 18 July 2006,
two days before the meeting to which Council had deferred
its decision. Mr Roberts was not at the Council meeting
at which the proposal to invite Mr Wright was turned
down but he failed to take the elementary precaution
of checking the outcome: he continued to discuss detailed
arrangements with Mr Wright’s agent. Only when he received
the minutes of the meeting on 25 July 2006, did he warn
the agent that there was a problem. He then appears
to have ignored telephone calls from Mr Wright’s agent
and began discussion of alternative celebrities with
other agencies (who shared this news with Mr Wright’s
agent thus compounding the growing difficulty of the
relationship between Upfront and Mr Roberts).
75. In these circumstances, it may not be surprising
that Mr Wright’s agent has claimed a fee from the Association.
76. This problem arose because of Mr Roberts’ poor
business practice. Mr Roberts’ answer to this, as I
have shown in section 3, is that he thought it was inconceivable
that Council would turn down his proposal. That was
an error of judgement.
77. It is difficult to avoid the conclusion that
Council’s reliance upon Mr Roberts in this area of responsibility
was misplaced.
Corporate
hospitality
78. As far as I can discover, all of the responsibility
for organisation of corporate hospitality facilities
was left with Mr Roberts once he had taken responsibility
for it. This included responsibility for the sale of
tickets and for the administrative work that accompanied
the sale of tickets. It even extended to the organisation
of the marquee and planning seating in the marquee.
79. In the event, it became clear that by his reports
to Council meetings, Mr Roberts had encouraged expectations
of sale of corporate hospitality tickets and of his
capability to organise an event on the scale which he
had led people to expect which were simply not realised.
Factor
2: The Council and its Officers continued to rely upon
individuals even when there was evidence that their
reliance may have been misplaced.
80. As I have explained above, Mr Roberts was allowed
to take responsibility for the whole of the organisation
of the corporate hospitality facilities including such
detailed matters as the administration of ticket sales
and marquee seating plans. I am clear that Mr Roberts
would readily have said that he would undertake this
work. However, the volume of work that would have been
involved would have been substantial in view of the
number of people whom Mr Roberts had led the Council
to believe had bought tickets. On its own, this should
have led the Council to question whether it was wise
to allow a single person to take on this burden. In
view of the risk to the Association’s reputation and
its finances if there had been a major failure, it would
have been wise to insist that the administration of
ticket sales and the marquee should have been a task
for the Association’s office staff.
81. I realise that Mr Roberts may have resisted
this; but in my view the Council and its Officers have
an obligation to ensure that preparation for Battle
is properly managed and that the good name of Battle
is not endangered by volunteers who over-extend themselves.
Factor
3: Weaknesses in the Association’s corporate governance
practices and its internal financial controls magnified
the effects of these misjudgements.
82. The willingness to rely upon individuals to
an unreasonable extent and the unwillingness to intervene
when it appears that reliance may be unwise, were in
my view compounded by weaknesses in the corporate governance
practices within the Council.
83. In sections 5 and 6 of this report I will set
out the results of my detailed analysis of the strengths
and weaknesses of the Association’s corporate governance
practices and internal financial controls. In my view,
the preparation for the 2006 Battle was made more difficult
by the effect a number of key weaknesses:
(1) a failure by the Officers to ensure that key posts are filled
effectively. Most importantly, the failure to appoint
a Treasurer for the three years before 2005/2006 coupled
with an acceptance that the Executive Officer should
also discharge the responsibilities of a Treasurer was
unfortunate.
(2) a failure by the Council and the Officers to ensure that the
Executive Officer was held properly accountable for
his actions. The fact that for some years the Executive
Officer also discharged the functions of a Treasurer
was a serious weakness in arrangements for the Council’s
supervision of the office’s activities. It also created
the possibility that the eventual appointment of a Treasurer
might be contentious.
(4) an acceptance that all spending decisions are subject to the
veto of the Executive Officer (he signs all cheques:
even those drawn in favour of himself, although a counter
signature is required for certain payments) whilst not
all spending decisions appear to be the subject of review
by Council.
(5) the use of sub-committees (which in some cases consisted of
a single person) to undertake particular functions with
a considerable degree of freedom and autonomy. No minutes
are kept of sub-committee meetings although reports
are expected at each Council meeting.
Factor
4: These weaknesses were in turn exacerbated by personal
animosity between some members of the Council.
84. In the chronology in section 3 I have indicated
instances in which the orderly conduct of the Association’s
business was hampered by unsatisfactory relationships.
I will not repeat them here.
85. Inevitably, current personal relationships
are affected by memories of past exchanges. I am aware
that some members of Council recalled that Mr Roberts
had been a member of council on a previous occasion.
They also remembered the unsatisfactory circumstances
which led him to feel obliged to resign. These memories
undoubtedly affected Mr Roberts’ relationship with some
other members of the Council.
Factor
5: A failure by the Minister to ensure that the terms
on which he offered further grants had been discussed
with the Department’s officials and that they were then
properly recorded, defined and applied. In addition,
the Department did not make good this failure to record
and define the terms of the Minister’s offers. This
contributed to the Council’s understanding that by accepting
the grants it was obliged to take certain initiatives.
86. As I have indicated in section 3, the terms
on which the additional amounts of £50,000 and £45,000
were offered by the Minister were not defined in writing
(other than in the somewhat unsatisfactory form of Mr
de Carteret’s letter dated 25 February 2006 which did
not deal with the invitation to a celebrity which was
linked to the offer of £45,000). The Council and its
Officers understood that in return for funds being made
available, they were being asked to take a number of
steps which they would not have taken on their own.
In particular, they understood that in return for the
advance of the final amount of £45,000 they were expected
to invite a celebrity to attend the parade.
87. Senator Ozouf has told me that it was not his
intention that inviting a celebrity should be a condition
of accepting this sum although it was certainly envisaged
that an attempt would be made to find a suitable person.
88. Unfortunately, the lack of clarity left room
for the Council to misunderstand what was intended.
This contributed to the Council’s persistence in seeking
a celebrity at a very late stage when the effect of
a celebrity’s attendance upon the potential audience
could not have been other than negligible.
89. I also note that the payments were made in
spite of the fact that the Association had not complied
with the undertakings it had given to implement proper
corporate governance arrangements and to raise money
by way of corporate sponsorship.
Mr
Roberts’ complaints
90. In discussing these issues with me, Mr Roberts
made a number of criticisms of the Council’s conduct
which I presume were intended in part as answers to
the criticisms which others had made of him. They concerned:
(1) Mr Roberts’ status as a cheque signatory;
(2) Mr Roberts’ access to the financial records of the Association;
(3) Mr Roberts’ proposals for the improvement of the association’s
financial controls;
(4) corporate hospitality tickets; and
(5) communication of the outcome of the Council meeting on 20
July 2006 (ie the decision concerning Mr Wright).
91. I have considered all of these matters.
Cheque
signatory
92. Mr Roberts’ complaint is that he was not added
to the Association’s bank mandate to become a cheque
signatory as was proper.
93. I agree with Mr Roberts that he should have
been recognised as a cheque signatory in accordance
with the Association’s constitution. I also agree that
his name was not added and that this was unsatisfactory.
I note that the omission to correct the bank mandate
does not appear to have caused practical difficulties
until mid-August. I also note that the failure to amend
the bank mandate meant that the deposit to confirm the
celebrities’ contract was eventually paid from Mr Avery’s
personal bank account because a necessary second signatory
could not be found.
Access
to the Association’s financial records
94. Mr Roberts has told me that Mr Avery did not
allow him to have access to the Association’s financial
records which were maintained on a computer using a
Sage accounting software package. This is not to say
that Mr Avery provided Mr Roberts with no financial
information at all. Mr Roberts has told me that on the
day of each Council meeting, Mr Avery would send him
a copy of a print out of accounts balances in the Association’s
ledger so that Mr Roberts could prepare a report and
financial summary for the Council meeting. Mr Roberts
has told me that this inconvenienced him as he had little
time in which to prepare his report and no chance of
asking questions of Mr Avery when he needed explanations
of the balances.
95. Mr Avery tells me that he provided accounting
information to Mr Roberts in the manner chosen by Mr
Roberts and that Mr Roberts did not express any dissatisfaction.
I have searched the Council’s minutes and can find no
suggestion that Mr Roberts reported any dissatisfaction
about this matter to any meeting of the Council.
96. At least one other member of Council has told
me that Mr Roberts’ financial reports were not entirely
helpful and discussed the issue with him. In that conversation,
Mr Roberts made no reference to any problems he may
have experienced in obtaining accounting information
from Mr Avery.
97. If Mr Roberts considered that he was being
hampered in his proper duties as Treasurer by a failure
on Mr Avery’s part to make available necessary information
or to provide necessary access to records, Mr Roberts
should have raised this matter firstly with his fellow
Officers (ie Mr Pallot and Mr John Farley) and secondly
with Council.
Improvements
to the Association’s financial controls
98. Mr Roberts has told me that when he became
Treasurer, he visited the Association’s auditors and
its bankers. As a result of his conversations with them,
Mr Roberts told me that he made various suggestions
to Mr Pallot and Mr Avery for improvements in the Association’s
financial controls (eg a change in the value of cheques
for which a single signatory would be required) which
they dismissed.
99. I have asked Mr Pallot and Mr Avery for their
recollection of this conversation. They both separately
denied that such a conversation took place.
100.
I
have asked the Association’s auditors for their recollection
of Mr Roberts’ visit. They recall that the conversation
did not cover control issues. I have made a similar
enquiry of the Association’s bankers who recall that
the conversation in question was general and introductory
in nature.
101.
As
will become apparent later in this report, I believe
that the Association’s internal financial controls are
weak in a number of respects.
Corporate
hospitality tickets
102.
Mr
Roberts has told me that he was hampered in his efforts
to sell corporate hospitality tickets and to collect
money for them by the fact that Mr Avery did not print
the tickets and make them available to him until 24
July 2006. Mr Avery tells me that the tickets were
in fact printed some weeks before that but were not
collected by Mr Roberts.
103.
At
its meeting on 20 July 2006, Council was told that tickets
worth £50,000 had been sold (ie substantially most of
the tickets available for sale). This suggests that
Mr Roberts attempts to sell tickets had not been hampered.
104.
I
agree that if it were the case that Mr Roberts had sold
as many tickets as were reported and had no actual tickets
then attempts to collect the cash due would have been
hampered. But in that case, one would have expected
Mr Roberts to report to Council that his activities
had been hampered by the fact that tickets were not
available. There is no record of such a report.
Outcome
of Council meeting on 20 July 2006
105.
Mr
Roberts has complained to me that the Chairman did not
tell him directly of the result of the meeting’s discussion
of the proposal to invite Mr Wright to attend the parade
and that in consequence he did not know of the outcome
until he received the draft minutes on 25 July 2006.
106.
Irrespective
of the Chairman’s actions, Mr Roberts knew that the
proposal was to be discussed at the meeting. He needed
to know the outcome of the Council’s debate. If for
whatever reason Mr Roberts was not told the outcome,
it was incumbent on him to ask for the information he
needed before taking further action. His apparent failure
to do this was a misjudgement.
SECTION 5 ~ GOVERNANCE OF THE ASSOCIATION
Introduction
107.
The
Battle of Flowers parade is produced and managed by
the Jersey Battle of Flowers Association whose principal
purpose is:
“To promote the Island of Jersey by holding
an annual event to be known as the Jersey Battle of
Flowers.”
108.
Doubtless
this object reflects the intentions of the collaboration
between interested volunteers and the Tourism Committee
of the States Assembly which led to the re-commencement
of the parade in 1952.
109.
Annual
membership of the Association is open to anyone upon
payment of the appropriate subscription. Members of
the Association have the right to:
(1) attend and vote at special and general meetings of
the Association;
(2) to attend meetings and events organised under the auspices
of the Association on payment of appropriate admission
fees;
(3) elect the Executive Council of the Association; and
(4) be eligible for election to the Executive Council.
110.
Management
of the Association is vested in an Executive Council
(‘the Council’) which consists of the three principal
officers (Chairman, Vice-Chairman and Treasurer), six
elected Council members and the Executive Officer. Members
of the Executive Council hold office for a period of
three years from appointment, two members being elected
in each year. Similarly, the principal officers hold
office for three years and in each year one of the officers
is elected in rotation. In the case of vacancies, the
Council may appoint substitutes for the principal officers.
111.
The
Association also elects a President who serves for three
years and attends meetings of the Council although he
has no vote.
112.
Management
of the business and affairs of the Association is the
responsibility of the Council which is given power
to:
(1) expend the funds of the Association and incur liabilities
subject to the Association’s financial rules;
(2) make necessary regulations for the conduct of the Association’s
business;
(3) delegate powers by appointing Committees and Sub-Committees;
and
(4) appoint an Executive Officer and agree terms and conditions
of employment.
113.
In
practice, a great deal of the Association’s business
is handled by a number of permanent sub-committees which
deal with public relations, commercial affairs, exhibits,
carnival week and arena arrangements. Terms of Reference
exist for each of these standing committees which are
required to report their progress and financial estimates
at meetings of the Council. Chairmen of all the standing
committees are to be members of the Council and select
the members of their Committees subject to the agreement
of the Council. All standing committees have the power
to conduct the Association’s business within the Terms
of Reference which they have been given.
Practice
114.
In
a number of respects, the Council has adopted practices
which vary somewhat from the provisions of the constitution.
115.
Firstly,
the Association’s Chairman normally allocates sub-committee
responsibilities to each Council member and it is accepted
that the nominated Council member may decide that a
Committee is not required. For example, during 2005
to 2006, the Association’s Chairman, Mr Pallot, decided
to take responsibility for public relations himself
and also decided that a sub-committee would not be required.
Consequently, Mr Pallot discharged the responsibilities
of the sub-committee himself. This was also the case
with commercial affairs.
116.
Secondly,
it has not been possible to fill all of the principal
offices of the Association. In 2005-2006, the Association
did not elect a Vice Chairman. For the three years
before that, the Association did not elect a separate
Treasurer. Although the constitution gives power to
the Council to fill vacancies until the next Annual
General Meeting, in neither of these cases did it do
so. As a result, the Council has functioned without
a Vice-Chairman during 2005-2006. Before that, the Executive
Officer also discharged the functions of a Treasurer
to the extent that he was able to do so.
Company
117.
Apart
from the Association, in 1983 a limited company (The
Jersey Battle of Flowers Limited) was formed to hold the Association’s interests
in property (i.e. the shed and offices at Meadow Bank).
The company does not undertake any activities other
than the holding of the Association’s principal fixed
assets. Other assets relating to the Battle of Flowers
(eg the crest and logo) are held by the Association.
Suitability
of structures
118.
Under
the current arrangements, the business of producing,
organising and presenting a major public event, the
Battle of Flowers parade, is the responsibility of an
unincorporated association. In some ways this may be
attractive. Many of the Association’s members are associated
with float building and thus are interested in the parade
and have a commitment to its character and history.
However, in other ways, this structure is unattractive.
119.
Firstly,
managing a public event of the scale of the Battle of
Flowers is inherently risky. If by misfortune a serious
disaster were to occur whose financial consequences
exceeded the level of the Association’s public liability
insurance, the resulting insolvency of the Association
would result in personal liabilities for each of the
Association’s members. Whilst a disaster of this sort
has not so far happened it is obviously not sensible
to assume that it will never happen.
120.
Secondly,
an unincorporated association (such as the Association)
does not have a distinct legal identity and so cannot
enter into contracts in its own name. This is a part
of the reason for the creation of a company to hold
the Association’s interest in property.
121.
It
would be wiser for the Association’s trading and business
affairs to be managed in the context of a limited company.
This would enable the financial risks attaching to the
promotion of the Battle of Flowers parade to be managed
within company law and would provide some measure of
protection to members of the Association. A company
would also be able to contract in its own name.
122.
This
would be relatively easy to achieve since the Association
already owns a limited company which could be used for
this purpose.
Governance
arrangements within the Council
123.
Quite
apart from the appropriateness the structure within
which the Association’s business is conducted, the investigation
of events surrounding the 2006 Battle of Flowers suggests
that the way in which business has been handled within
the existing structure has not been ideal.
124.
To
analyse the nature and cause of the shortcomings, I
decided to compare the governance practices of the Association
with a benchmark. Choice of a suitable benchmark is
not straightforward. Many codes of corporate governance
are intended for larger companies and would not be appropriate
for largely voluntary associations. In the circumstances,
I have used as a benchmark a code of practice published
by (among others) the Association of Chief Executives
of Voluntary Organisations and the National Council
of Voluntary Organisations.
125.
My
detailed comparison of the Association’s practices with
this benchmark is set out in Appendix 3 to this report.
Assessment
of the Association’s governance arrangements
126.
From
the detailed analysis set out in Appendix 3, two main
weaknesses are apparent.
127.
Firstly,
the Council relies on a number of sub-committees which
may consist only of a single person, do not keep minutes
of their meetings and have authority to commit the Association.
I realise that the chairmen of the sub-committees are
supposed to keep the Council informed of their actions
and that they are intended to make sure that the Association’s
office has copies of significant documents, but this
does not always happen.
128.
Secondly,
by allowing key positions to remain, the range of skills
available within the Council was inappropriate to manage
all aspects of the Association’s business. In particular,
the failure of the Association to elect a Treasurer
in the years before 2005 to 2006 led to an unacceptable
concentration of financial responsibility in the hands
of the Executive Officer with consequences which I will
set out in the next section of this report dealing with
internal controls.
129.
As
importantly, it is clear that the Council did not have
the skills necessary to deal with the commercial aspects
of organising the Battle of Flowers. This is evident,
for example, from the mistakes which were made in considering
the appointment of celebrities to attend the 2006 Battle
of Flowers parade but also in other areas of the organisation.
130.
In
previous years, this difficulty had been managed through
the assumption by the Executive Officer of a range of
responsibility which was not fully supervised and managed
by the Council. Whilst this may have been effective
in practice, it was unacceptable in principle. In particular,
the absence of proper challenge and supervision of the
Executive Officer within the Council was and is unsatisfactory.
The result is that the Council does not discharge its
responsibilities to the members of the Association and
that the Executive Officer is vulnerable to criticism.
131.
This
is not to say that all aspects of the Council’s management
of the Battle of Flowers are unsatisfactory. I have
spoken to a number of exhibitors who are broadly happy
with the nature of the relationship between exhibitors
and the Association. Moreover there is broad appreciation
of the quality of the floats which take part in the
Battle of Flowers parade. This part of the Association’s
responsibility appears to be well managed.
Future
development:
132.
It
would be unwise for the current arrangements to be allowed
to remain unchanged. The unsuitability of the current
structure leaves members exposed to the unexpected consequences
of risk. Current management arrangements within the
Council appear unsustainable. Finally, there must be
considerable doubt whether the weaknesses in the current
arrangements assist the Association in achieving its
principal object which is:
“To promote the Island of Jersey . . .”
133.
Whilst
most of the people whom I have interviewed would accept
these observations in principle, they have all expressed
the concern that any changes in the existing arrangements
should not amount to the Association “being taken over”.
Such reactions are understandable. The voluntary nature
of the float builders’ work is important in itself but
to many people also seems symbolic of Jersey’s community.
Undermining the voluntary character of the parade would
for these people tend to vitiate the parade’s worth
as a symbol of the values of the Island’s community.
134.
I
have borne these concerns in mind in considering the
following recommendations.
Recommendation
1: As soon as possible, the business of organising and
managing the parade should be transferred to The Jersey
Battle of Flowers Limited, the company owned by the
Association.
135.
The
purpose of this transfer would be to manage the business
aspects of the parade within a corporate structure so
that the responsibility of the Association’s members
for any liabilities could be managed and limited. This
transfer would also lead to the normal rules of governance
within companies being applied to the parade’s business.
136.
As
the Association would remain the owner of the limited
company, I envisage that the Association would be able
to hold the board of the company to account for its
management of the parade partly by requiring the provision
of reports at Annual General Meetings and by questioning
of Board members at those meetings. In this way, the
volunteers’ proper interests would be institutionalised
and sustained.
137.
I
also envisage that, if it were thought appropriate,
the management of the preparation of floats could remain
with the Association rather than being transferred to
the company. This might be helpful in safeguarding the
voluntary nature of these projects. After all, there
is little criticism of the way this has been managed
by the Association.
Recommendation
2: The board of the limited company should be small
and consist of people with the skills necessary to manage
the parade’s business affairs.
138.
The
following principles should be followed in appointing
the members of the board of the limited company:
(1) the board should be relatively small.
(2) the board should include members with the key skills necessary
for effective management: including financial management
experience, and events management experience.
(3) the board should include a Chief Executive.
(4) the chairman of the board should have responsibility for ensuring
that key skills are adequately represented on the board.
(5) if possible, the board should include representation for key
stakeholders (eg the major providers of funds such as
the Economic Development Department and major corporate
sponsors). If restricting the size of the board does
not permit inclusion of such representation other means
of representing key stakeholders should be found.
Recommendation
3: The chairman of the limited company should be responsible
for ensuring that the board’s membership includes all
of the key skills necessary for effective management.
139.
Ensuring
that key skills are available is not a matter that can
be left to chance. If financial skills are missing,
then they should be found and it should be the responsibility
of the chairman to find them.
SECTION
6 ~ INTERNAL FINANCIAL CONTROLS
Introduction
140.
From
the chronology of the events leading to the 2006 Battle
of Flowers, it is clear that the Association’s internal
controls have proved inadequate to the task of protecting
the Association’s financial assets.
141.
Accordingly
it seemed appropriate to examine the nature of the Association’s
internal financial controls in some detail and to do
this, I decided to compare the Association’s arrangements
with an external benchmark. As was the case with my
assessment of the Association’s governance arrangements,
selection of an appropriate benchmark with which to
compare the Association’s arrangement was not straightforward.
It would not, for example, be appropriate to compare
the Association with a substantial commercial enterprise.
As benchmark, I therefore chose the guidance of the
Charity Commission in England and Wales on internal
financial controls for charities. This guidance is expressed in terms appropriate
for small charities which are not companies and thus
for entities similar to the Association.
142.
My
detailed comparison of the Association’s arrangements
with the provisions of this guidance are set out in
Appendix 4 to this report.
Weakness
in internal financial controls:
143.
From
the detailed analysis set out in Appendix 4, three main
weaknesses are apparent.
144.
Firstly,
a great deal of responsibility has been focused upon
the Association’s Executive Officer. As I have explained
in Section 4 of this report, this has been partly a
reaction to the varying range of skills represented
on the Association’s Council.
145.
Secondly,
the combination of the degree of responsibility passed
to the Executive Officer with the failure to appoint
an effective Treasurer has meant that the Council has
not been able to exercise appropriate supervision over
the Executive Officer and in particular his control
of the Association’s finances. I would stress that
I have not found evidence that the Executive Officer
has abused the considerable degree of trust which has
in effect been placed in him. Nonetheless, the Executive
Officer has found himself vulnerable to criticisms about
the way in which his responsibilities have been discharged
because for some years there has been no effective Treasurer
who could provide reassurance.
146.
Thirdly,
the combination of the degree of responsibility passed
to the Executive Officer and the failure to appoint
an effective Treasurer has been exacerbated by the range
of practical tasks undertaken by the Association’s office.
All of the cash takings in the week of Battle are counted
by the Association’s staff in the Association’s offices.
Significant amounts of cash are received from concessionaires
(e.g. the fun fair) and counted by the Association’s staff in
the Association’s offices. All of the Association’s
ticket sales (apart from corporate hospitality sales
in 2006) are managed directly by the Association’s staff
in the Association’s offices.
147.
The
result is that considerable amounts of cash pass through
the hands of the Association’s staff. It was explained
to me that this arrangement was chosen because of a
desire to avoid the costs that would be incurred by
sub-contracting this work to the commercial companies
that would be prepared to undertake it. In my view,
this has been unwise because it has opened the Association
(and its staff) to accusations of mis-management.
148.
I
note that the Association’s auditors have not reported
to either the Council or the members that they have
found such evidence and I therefore infer that in all
material cases, the auditors have been able to confirm
that the Association’s accounts have correctly reported
its income.
Recommendation
4: The Chairman of the Association should be responsible
for ensuring that the key offices of the Association
are filled and that necessary skills are represented
on the Council.
149.
It
is a prime responsibility of an organisation’s chairman
to ensure that its council or board contains within
it the financial skills which are necessary for effective
management. The Chairman and the Council together should
be responsible for ensuring that at each Annual General
Meeting a person with the appropriate skills is nominated
to serve as Treasurer. It is not satisfactory for this
to be left to the chance.
150.
If
my recommendations concerning the structure of the Association
and the increasing role of the limited company are accepted,
then the chairman of the limited company should take
responsibility for ensuring that one director at least
has appropriate financial skills.
151.
Had
this been done in the past and had the appointed Treasurer
undertaken the checks envisaged by the Charity Commission
guidance, a major part of the difficulty which has now
arisen would have been avoided.
Recommendation
5: Wherever possible, the Battle of Flowers organisation
(whether in the form of the Association or the limited
company) should use sub-contracted services.
152.
The
Association has tended to assume that it must not only
manage but also undertake itself most of the processes
necessary for the promotion of the annual parade. This
increases the range of skills that the Council needs
and the risk that they cannot be found. It can also
increase the burden on the Association’s staff.
153.
An
example of this is provided by the way in which the
Association deals with cash takings from Battle. Cash
is collected by Securicor and held until the Executive
Officer calls for it. The cash is then counted by the
Association’s staff before being deposited in a bank.
A wiser course may be to use the cash counting services
offered by a bank.
154.
A
larger example is provided by arrangements for the sale
of tickets. At present, the Association’s office deals
with the sale of tickets (save in 2006 for the sale
of corporate hospitality tickets). This requires the
Association to have systems to take bookings by internet,
phone, and e-mail. It would be possible for the Association
to use a commercial ticketing agency and thus avoid
its current administrative burden.
SECTION
7 ~ RELATIONSHIP BETWEEN THE ASSOCIATION AND THE STATES
Introduction
155.
For
many years, the States has provided grant assistance
to the Association to assist in the Association’s principal
objective of promoting the Island of Jersey. These
grants have taken the form of a lump sum paid to the
Association which in some years has been augmented by
a further sum to underwrite the overall loss incurred
by the Association. In addition, the States made a
loan available to the Association to fund the acquisition
of its premises in St Peter and, more recently, a further
grant to assist with the purchase of crowd barriers
and portable toilets.
Agreement
with the States
156.
The
relationship between the Association and the States
has been governed in each year by an agreement which
latterly has been called a partnership agreement. The
principal provisions of this agreement, apart from
the amount of the grant (for some years £95,000), are
as follows:
(1) The Association will ensure that robust corporate governance
principles have been agreed and are in place.
(2) The Association will produce annual audited accounts and an
annual business plan.
(3) The grant and all related expenditure incurred by the Association
must be clearly identified in the Association’s accounts.
(4) ‘Jersey Tourism’ must be recognised as a sponsor in all press
releases, media broadcasts and public addresses.
(5) The Association will produce an annual progress report and
financial forecast.
(6) The Association will participate in the Department’s performance
monitoring surveys.
(7) If that the grant is used for purposes other
than work relating to the approved business plan, the
Department may demand that the grant be refunded either
in full or in part.
Additional
grants in 2006
157.
As
set out in the chronology in section 3 of this report,
the Department agreed to make additional funds available
to the Association for the 2006 Battle. These additional
amounts were as follows:
(1) A grant of £50,000: and
(2) A further grant to a limit of £45,000 of an amount to match
pound for pound corporate sponsorship arranged by the
Association.
158.
I
will deal with the circumstances surrounding each of
these two sums of money below.
Additional
grant of £50,000:
159.
All
of the parties involved in this matter recall that the
further grant of £50,000 was to be paid for two specific
purposes:
(1) An improvement in the carnival aspects of the parade.
(2) The arrangement of proper marketing advice and support for
the Association.
160.
Although
this is the recollection of the parties involved in
the discussions, these conditions were not specified
in a partnership agreement such as that which applied
to the “basic” grant of £95,000. It has been represented
to me that a letter sent to the Chairman of the Association
on 24 February 2006 by Mr de Carteret, the Department’s
Director of Tourism and Marketing, specified the principal
conditions surrounding the additional grant of £50,000.
Paragraph 3 of the letter begins as follows:
“The key point is that the new money should
not be seen as simply a top up for those elements of
the Association’s budget which are currently short of
funding. The new money will only be available if the
Association can demonstrate that it can deliver the
improvements which have been highlighted. You will
recall that Daniel Austin from the Jersey Arts Centre
was present at our meeting together with Donna [Le Marrec]
and had some extremely positive suggestions as to how
the parade and carnival activities even for this year
might be significantly improved.”
161.
Later
the letter reads:
“Turning to the marketing objectives, we are
concerned that both visitors and local attendees appear
to be reducing. This is a trend which must be reversed
through an expanded marketing programme. We would suggest
in the first instance that the 2006 Battle needs to
look and feel different from its predecessors in order
to create more interest and therefore the desire to
attend. To some extent this could be achieved from
a new parade and carnival ideas but we suggest in addition
an increased marketing programme to enhance awareness
and encourage numbers.”
162.
In
my view, the recording of the terms of this grant and,
as importantly, the Association’s acceptance of them
were not properly recorded.
Matching
grant of £45,000
163.
It
is common ground between all the parties that this further
amount would only be paid to the extent that it matched
corporate sponsorship arranged by the Association.
As far as I can discover the formal terms on which this
offer were made are nowhere captured in formal correspondence
between the Department and the Association.
164.
It
has been suggested to me that the existing agreement
between the Association and the Department was sufficient
for these purposes. I do not agree. The agreement refers
only to an annual grant of £95,000. It does not refer
in any way to the payment of £45,000 with which I am
concerned here. As a result it does not refer to the
purpose of the payment or the conditions on which it
was made. This is not satisfactory.
165.
The
only written confirmation of the purpose of this grant
before the day of the 2006 Battle takes the form of
Mr de Carteret’s manuscript annotation of the Department’s
Purchase Order which refers to the arrangement for a
celebrity to attend the 2006 Battle. I have not been
able to find any written communication with the Association
setting out the conditions attaching to the grant or
any written confirmation from the Association confirming
acceptance of the conditions.
166.
I
note that the Minister signed a Ministerial Decision
on 27 September 2006 (ie more than a month and a half
after the Battle) which described the purpose of the
payment as follows:
“The funds are being given to the Battle of
Flowers Association to assist with the development of
the event in line with the aspirations of the Department
and the Association.”
167.
This
does not reflect accurately the memories of people who
were involved in discussions over this payment in June
and July 2006. They recall that the payment was made
to finance the invitation to a celebrity and this is
what is recorded in Mr de Carteret’s annotation of the
Purchase Order form that he raised.
168.
It
is true that the Council’s minutes record that efforts
were made to arrange matching commercial sponsorship
and to make arrangements for the Battle to be attended
by a celebrity. But it is also clear from the minutes
that the Council was not clear about the precise nature
of the obligation it was assumed to have accepted.
169.
The
full amount of this grant was paid notwithstanding that
the Association had not arranged the matching corporate
sponsorship and that, at that point, the Association
had not contracted for the attendance of a celebrity
at the 2006 Battle.
170.
I
understand that decision to make the payment was made
by Senator Philip Ozouf, the Minister, without previously
seeking the Department’s advice.
171.
In
the event, as I have shown, the grant was paid from
the Tourism Development Fund as the Department’s budget
was fully committed and notwithstanding what I understand
were misgivings on the part of the Fund’s Advisory Panel
(albeit unminuted).
Findings
172.
Whilst
it is possible to understand the desire to ensure that
the Battle is successful, the practice of offering grants
orally subject to certain conditions, failing to record
those conditions properly and then making cash payments
even if the conditions are not met can only serve to
encourage recipients to ignore any conditions attaching
to grants from States departments.
173.
The
final payment of £45,000 is only one example of this.
After all, the partnership agreement between the Department
and the Association specifies that:
“The Association will ensure that robust corporate
governance principles have been agreed and are in place”.
174.
It
is evident from the analysis set out in this report
that the Association has failed to meet this obligation.
175.
In
2006, the result appears to have been that the Association
was provided with funds that it proved unable to spend
wisely.
Recommendation
6: In principle, the States should not make further
grants available to the Association until the Association
has implemented reforms intended to achieve the recommendations
set out in this report.
176.
The
experience of 2006 demonstrates that the Association’s
organisation does not justify confidence that the Department’s
grant will be spent wisely. Consequently, the States
would be ill advised to make further grants to the Association
until reforms intended to achieve the purpose of the
recommendations set out in this report have been implemented.
177.
I
recognise that it will take some time to agree the necessary
reforms with the Association and to implement them with
the result that there may be insufficient time for this
to happen before the 2007 Battle. As the Battle of
Flowers is an important event in projecting the Island’s
reputation and is valued by many of the Island’s people
it may be desirable to allow the Association some time
to implement this report’s recommendations.
Recommendation
7: The normal arrangements concerning offering and making
grants should apply to Ministers as well as departmental
officials.
178.
Where
grants are offered subject to conditions, oral offers
should be confirmed in writing so that no doubt is permitted
over the nature of the conditions. Similarly, where
a Minister makes a decision against the advice of a
Department’s Accounting Officer, it is important that
both the decision and the advice are formally recorded
as otherwise the possibility is created that either
or both the decision and the advice will be misunderstood.
C Swinson
Comptroller & Auditor General
Morier House, St Helier, Jersey, JE1 1DD
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