Assembly takes a leap of faith over CISE

Last week members voted through legislation to give immunity to the directors of the regulatory arm of the new set-up that rose from the ashes of the CISX.

But it was an illusory debate.

One where the new chief minister, Jonathan Le Tocq, was treading a tightrope – giving the impression it was all very normal and actually had very little to do with the States anyway, while driving through a policy letter that gave at the very least tacit government approval to the new body.

As Deputy Scott Ogier alluded, the difference in personnel between the collapsed CISX and the new CISE is very little, so what assurances do members have that the reputational risks have gone?

According to Deputy Le Tocq, the answer was in the new structure.

Of course, the new set-up has the hand of government on it – Commerce and Employment minister Kevin Stewart has been beavering away in the background and only the day after the debate he again met the key players at the exchange.

Government has a non-participatory shareholding giving it powers over the exchange; this is said to broadly mirror the set-up with CISX, but the agreement was not published in the Billet so the public has not seen the terms of it.

The Policy Council report's focus was on the end game. The action of giving immunity to the regulatory arm was not in itself too much of an issue – it was the lack of public political scrutiny of what lay behind it that was.

It was like seeing a warning light, but deciding to drive on in case lifting the bonnet revealed more problems. Best just stick some tape over the light.

When the CISX was set up, it was done through a States resolution that explicitly gave support.

During this latest debate, the States approved legislation that had already been enacted behind closed doors by the Legislation Select Committee.

So again government's fingers were in the pie, so to speak, seeing fit to rush in legislation without full parliamentary scrutiny.

There is nothing necessarily wrong in that, but these are powers more usually associated with emergency measures such as import bans or economic sanctions against Russia.

By the time it reached the chamber, everything was a fait accompli. The exchange was up and running – for two months, it had been using the protection members were asked to approve.

The GFSC has overall regulatory control and the new ordinance is not retrospective – any decisions made prior to 20 January are not covered by it.

There were a few lonely voices speaking out last week, although it appeared only one member, Martin Storey, voted against the rubber-stamping exercise.

He had questioned the governance set-up of the new exchange, unsure that it provided the appropriate division of responsibilities.

The regulatory arm is a wholly-owned subsidiary of the company it is supervising.

'The duty of the directors of a company is to serve the best interests of its members, its shareholders. If the directors of the subsidiary have the same owner as the company that they are trying to regulate, it seems to me there's an inbuilt conflict of interest,' said Deputy Storey.

Government sees the exchange as a large economic enabler for business in the island.

The restructure, according to Deputy Stewart, involved his department, Law Officers and other officers, and 'makes the exchange fit for 21st century corporate governance principles'.

Deputy Le Tocq said that the key thing was they were separate legal entities with separate boards of directors.

'It has a much greater separation of commercial and regulatory functions than the old exchange,' he said.

Shortcomings in the set-up of the old CISX have been laid bare in recent months, not least in the Tubby report, although we now know its findings are heavily disputed by the founder members.

Given the standing of that report, and the subsequent decisions including those in the States, it is strange that the new chief minister said he could not comment on Tubby's findings because he had not been given a copy.

He said the report was leaked before it has been validated by the whole CISX board.

If this is all about Guernsey's reputation, which members kept being told it was, and the new structure was the answer, has there been sufficient government oversight here?

Much of last week's decision was a quick leap of faith.