Decision
Mr. X and the Department of Finance
From Office of the Information Commissioner (OIC)
Case number: 140063
Published on
From Office of the Information Commissioner (OIC)
Case number: 140063
Published on
Whether the Department was justified in refusing access to certain records relating to the special liquidation of Irish Bank Resolution Corporation Limited
Conducted by the Information Commissioner in accordance with section 34(2) of the FOI Act
In a request dated 15 November 2013, and received by the Department on 6 December 2013, the applicant sought access to the monthly and any other reports of the Special Liquidators of IBRC to the Minister related to the liquidation process, the minutes of any meetings held between the Minister or any officials in the Department and the Special Liquidators, and any briefing documents prepared for such meetings. In a decision dated 16 January 2014, the Department suggested that the records sought were subject to a "range of exemptions", but it refused the request primarily on the basis of sections 26(1)(a) (information obtained in confidence) and 27(1) (commercially sensitive information) of the FOI Act. The schedule of records accompanying the decision also referred to section 20 of the FOI Act (deliberations of public bodies) in relation to the meeting minutes and the briefing documents. In a letter received by the Department on 31 January 2014, the applicant requested an internal review of the Department's decision. In a decision dated 20 February 2014, the Department affirmed its original decision to refuse the request under sections 20(1), 26(1)(a) and 27(1) of the FOI, but also expressly invoked section 31 of the FOI Act (financial and economic interests of the State and public bodies) in relation to all of the records concerned. The applicant applied to my Office for a review of the Department's decision on or about 14 March 2014.
During the course of the review, Ms. Melanie Campbell, Investigator, contacted the parties to determine whether it would be possible to work towards a full or partial settlement of the matter. For his part, the applicant agreed to narrow the scope of his request to the particular topics or types of information of interest to him, though numerous items covering a large number of records were identified. The Department maintained, however, that it owes a duty of confidence to the Special Liquidators in relation to the reports provided and that it would not be practicable to attempt to extract any meaningful information from the other records at issue because of the level of sensitive information involved. The Department also made further submissions in support of its position.
Following further consideration of the matter, Ms. Campbell accepted that the Department had met its burden of showing that the requested records were exempt from release. While she agreed with the Department that sections 26, 27, and 31(1)(c) were of relevance, she considered sections 31(1)(a) and (b) to be the most applicable exemptions and advised the applicant accordingly in an email dated 5 December 2014. The applicant replied in a submission dated 19 December 2014, arguing that maximum possible transparency is required in relation to the banking crash generally and the IBRC special liquidation in particular. He stated that he wished for the matter to proceed to decision.
Accordingly, having completed my review in accordance with section 34(2) of the FOI Act, I have decided to conclude the matter by way of a formal, binding decision. In carrying out my review, I have had regard to the submissions made by the applicant and the Department, including the letter from the Special Liquidators dated 14 April 2014 that was provided in support of the Department's submission dated 15 April 2014. I have also had regard to the Irish Bank Resolution Corporation (IBRC) Act 2013 and the Progress Update Report on the special liquidation of IBRC that was published on 6 June 2014. In the interests of clarity, I should point out that this review was carried out under the provisions of the FOI Acts 1997 to 2003 notwithstanding the fact that the FOI Act 2014 has now been enacted. The transitional provisions in section 55 of the 2014 Act provide that any action commenced under the 1997 Act but not completed before the commencement of the 2014 Act shall continue to be performed and shall be completed as if the 1997 Act had not been repealed.
As Ms. Campbell explained to the applicant, the records covered by his original request consisted of over 1,400 pages of documents of complex subject matter relating to a large number of third parties. At the applicant's request, Ms. Campbell outlined the contents of the records in very general terms in order to allow him to identify the particular topics or types of information of interest to him. In response, the applicant agreed to exclude from the monthly reports of the Special Liquidators certain detailed information regarding the loan portfolios, the financial position of IBRC, and the professional fees incurred or forecasted, as well as information about legal matters and on-going litigation, but he stated that he continues to seek access to the following:
in respect of the monthly reports of the Special Liquidators:
summary information month-by-month on the net position of the loan portfolios
information on the various UK and US matters, staff/HR issues, and IT issues referred to in the reports
summary information on the net financial position of IBRC month-by-month
the monthly totals of the professional fees incurred by firm or independent consultant
the executive summary included in each report;
in respect of the other reports of the Special Liquidators:
the net position as regards actual and forecasted fees paid to or forecasted for each firm
information on project plans and estimated outcomes (apart from the substance of litigation planned or the substance of the response to legal claims or to the conduct of negotiations or to the substance of negotiation strategy).
In addition, the applicant stated that he continues to seek access to the meeting minutes and briefing documents.
Accordingly, the issue before me is whether the Department's decision to refuse access to the records containing the items of information identified above was justified under the FOI Act.
Before setting out my findings, I should point out that while I am required by section 34(10) of the FOI Act to give reasons for my decisions, this is subject to the requirement of section 43(3) that I take all reasonable precautions to prevent disclosure of information contained in an exempt record or matter that, if it were included in a record, would cause the record to be exempt. This constraint means that, in the present case, the extent of the reasons that I can give is limited. However, I am mindful of the burden of proof under section 34(12)(b) of the Act, which requires the Department to show to my satisfaction that its decision to refuse to grant the request was justified.
I should also explain my approach to the granting of access to parts of records. Section 2 of the FOI Act defines "record" as including "anything that is a part or a copy" of a record. Section 13 of the FOI Act provides for the deletion of exempt information and the granting of access to a copy of a record with such exempt information removed. This should be done where it is practicable to do so and where the copy of the record thus created would not be misleading. However, I take the view that neither the definition of a record nor the provisions of section 13 envisage or require the extracting of particular sentences or occasional paragraphs from records for the purpose of granting access to those particular sentences or paragraphs. Generally speaking, therefore, I am not in favour of the cutting or "dissecting" of records to such an extent.
I agree with Ms. Campbell that sections 31(1)(a) and (b) are the most relevant exemptions to consider in the circumstances of this case. Section 31(1) states that a "head may refuse to grant a request under section 7 in relation to a record (and, in particular, but without prejudice to the generality otherwise of this subsection, to a record to which subsection (2) applies) if, in the opinion of the head-
( a ) access to the record could reasonably be expected to have a serious adverse affect [sic] on the financial interests of the State or on the ability of the Government to manage the national economy,
( b ) premature disclosure of information contained in the record could reasonably be expected to result in undue disturbance of the ordinary course of business generally, or any particular class of business, in the State and access to the record would involve disclosure of the information that would, in all the circumstances, be premature, or
( c ) access to the record could reasonably be expected to result in an unwarranted benefit or loss to a person or class of persons."
Section 31(2) sets out a list of the types of records to which this section may apply, including (e) "the regulation or supervision by or on behalf of the State or a public body of the business of banking or insurance or the lending of money or of other financial business or of institutions or other persons carrying on any of the businesses aforesaid"; and (i) "property held by, or on behalf of the State or a public body and transactions or proposed or contemplated transactions involving such property". Subsection (1) does not apply, however, if the public interest would, on balance, be better served by granting rather than by refusing the request (section 31(3) refers).
The Department claimed from the outset of this case that the information sought is inherently confidential and commercially sensitive, but the basis for its claims was unclear apart from the fact that the liquidation process was still ongoing and, in particular, that the sale of the assets of IBRC remained underway. In its submission dated 15 April 2014, the Department referred to "contractual arrangements" providing for a duty of confidence, but Ms. Campbell queried whether such a duty of confidence could be regarded as effective for the purposes of the FOI Act (section 26(2) of the FOI Act refers). Ms. Campbell also referred the Department to recent media reports indicating that the liquidation process is nearing completion.
However, in subsequent submissions, the Department clarified the status of the Special Liquidators and explained why confidentiality is regarded as necessary to the liquidation process notwithstanding the significant progress which has been made thus far. Based on the information before me, I accept that the role of the Special Liquidators is similar to that of a Court appointed liquidator and that the reference to "contractual arrangements" was misleading. The Special Liquidators were in fact appointed by Ministerial Order pursuant to and in accordance with section 4 of the IBRC Act rather than by a contract for services, and their fees are paid out of IBRC assets, not directly from public funds.
As described by the Department, the "special liquidation of IBRC can, to a large extent, be seen as an amalgam, with certain limited but key modifications, of the compulsory liquidation and creditors' voluntary liquidation procedures under the Companies Acts, as applied to IBRC". While the Minister, rather than the Court or a committee of inspection, oversees the special liquidation of IBRC, I accept that the rights, duties and obligations of the creditors, employees, directors, depositors, debtors, shareholders and other key stakeholders concerned are meant to be, in all material respects, equivalent to the rights, duties and obligations of such parties had IBRC been wound up by means of a Court liquidation or a creditors' voluntary liquidation. I accept that the same is true of the rights, duties and obligations of the Special Liquidators themselves. Thus, the Special Liquidators owe a duty of care not only to the Minister but to each of the parties involved.
The case file includes a copy of the engagement letter between the Special Liquidators and the Minister dated 7 February 2013, the same day that the Ministerial Order appointing the Special Liquidators was made. The letter sets out the terms and conditions on which the parties agreed that the Special Liquidators would provide their services and specifies, among other things, that all communications supplied by the Special Liquidators to the Minister shall be supplied on a confidential or restricted basis and shall not be disclosed without the Special Liquidators' prior written consent. The Department's most recent submission, however, referred to the reasons for the condition of confidentiality:
"[T]he position of the Department and the Special Liquidators is that the disclosure of such information where sales processes are on-going could be detrimental to the continuation and completion of those sales. As I mentioned previously the portfolios currently being sold are subsets of the [named] portfolios frequently referred to in the documents and reports concerned. Information contained in both the reports and meeting notes regarding the portfolios and market interest in those portfolios could material impact on the ability of the Special Liquidators to maximise the value of the remaining loans. In addition we also highlight the on-going legal actions being taken against the bank in respect of previous sales processes and disposals; the Special Liquidators must maintain the confidentiality of those processes in order to avoid prejudicing IBRC's position in relation to that litigation or any litigation that has been threatened against the bank.
The Special Liquidators have made it clear that the disclosure of confidential information shared with the Department would negatively impact on the ability of the Special Liquidators to provide open and meaningful reports to the Minister. In such a scenario this could impact on the ability of the Special Liquidators to discharge their duties under the IBRC Act and it would also impact on the ability of the Minister/Department to properly oversee the liquidation of the bank, which is also a requirement under the IBRC Act."
Previous submissions by the Department also referred to the legal challenges IBRC has faced in relation to the loan sales which have already taken place. Thus, while the majority of the assets of IBRC have been sold, the Department claims that even "historic" information relating to the loan portfolios remains sensitive because of its relevance to the current sales processes and because the completed sales processes remain open to challenge. The Department's position is supported by the letter from the Special Liquidators dated 14 April 2014, which includes the following statement:
"We confirm that the content of monthly and other reports (Record 1 to 3) furnished by the Special Liquidators to the Department of Finance were and continue to be of a highly confidential and commercially sensitive nature, and further that such reports were disclosed on the basis that they would be treated as such by the Department. With regard to Record 4, we agree that meetings between the Special Liquidators and the Minister/Department officials also concerned matters of a highly confidential and commercially sensitive nature, and as such minutes of those meetings, and the surrounding documentation are also of a highly confidential and commercially sensitive nature.
In order for the Department to disclose any Records 1 to 3, the express prior written consent of the Special Liquidators/KPMG is required. We confirm that we have not, nor would we, consent to the disclosure by the Department of Records 1 to 3 on foot of the Request that has been received."
The letter makes additional statements regarding the sensitivity of the records in connection with the issue of the public interest. I consider that the views of the Special Liquidators regarding the confidential and commercially sensitive nature of information relating to the IBRC liquidation process must necessarily be given significant weight. They are, quite simply, the experts on the matter and have been entrusted, by virtue of their appointment by the Ministerial Order made pursuant to and in accordance with section 4 of the IBRC Act 2013, with the winding up of IBRC on behalf of the State.
In any event, it is my understanding that a liquidator operates in a fiduciary capacity in relation to the company concerned, in a similar manner to a lawyer-client relationship. A fiduciary relationship requires trust, good faith, and confidentiality in relation to third parties. According to the Preamble of the IBRC Act 2013, liquidation was considered necessary by the Oireachtas, "in the public interest, . . . to help to address the continuing serious disturbance in the economy of the State". The Preamble also states that "it is necessary in the public interest to ensure that the financial support provided by the State to IBRC is, to the extent achievable, recovered as fully and efficiently as possible". It is also noteworthy that section 7(4) of the IBRC Act provides that the terms and conditions of appointment of a special liquidator shall be as fixed by the Minister.
It is apparent that confidentiality is regarded by both the Special Liquidators and the Minister as necessary to facilitate the liquidation process and to allow for the free exchange of information relevant to IBRC's interests and the Minister's role in overseeing the liquidation process. For instance, the Progress Update Report published in June 2014 identifies the following as one of the factors successfully mitigating key loan sales risks in relation to strong stakeholder relations: "We ensured all information in relation to the sales process remained confidential and any communications were clear". Thus, I am satisfied that the assurance of confidentiality with respect to the communications between the Special Liquidators and the Minister or his officials is considered to have been a contributing factor in the success achieved to date in recovering the State's financial support to IBRC as the Oireachtas intended. In light of the IBRC Act, the condition of confidentiality as set out in the Engagement Letter could also be regarded as being protected by law.
The applicant does not dispute that there is a need for at least some confidentiality with respect to the work of the Special Liquidators. However, he challenges what he regards as "the implicit case . . . being made for absolute confidentiality in all material aspects of the liquidators' work other than in respect of the limited data which they themselves released into the public domain and which the Department has released". He considers that we "remain in the realm of a blanket refusal to grant any data [in a manner] contrary to the spirit of the FOI Act, all the more so when considering the central place of the IBRC special liquidation in the campaign to restore order in the public finances".
However, if confidentiality is regarded as necessary to facilitate the liquidation process, it is reasonable to expect that a breach of confidentiality would undermine the process and thus hinder the efforts being taken on behalf of the State to "restore order in the public finances". Certain relationships require a free exchange of information that only an assurance of confidentiality can provide. I accept that the Minister's relationship with the Special Liquidators is one such relationship for as long as the liquidation process remains ongoing. Without an assurance of confidentiality, it is likely that the Special Liquidators would be placed in an untenable position in trying to provide the duty of care that is owed to all stakeholders concerned in the IBRC liquidation while reporting to the Minister as required. As the Special Liquidators state in their letter dated 14 April 2014: "[I]t is likely that such a disclosure would negatively impact on the Special Liquidators' ability to continue to provide open and meaningful reports on the liquidation process to the Department. Such an inhibition could in turn impact on the ability of the Special Liquidators to discharge their duties under the IBRC and other applicable liquidation." In the circumstances, I am satisfied that granting the applicant's request, in full or in part, while the liquidation process remains ongoing, could reasonably be expected to have a serious adverse effect of the ability of the Government to manage the national economy. I therefore find, subject to consideration of the public interest, that section 31(1)(a) applies.
In addition, I accept that banking is a particular class of business for the purposes of section 31(1)(b) of the Act. As stated in section 3 of the IBRC Act, one of the purposes of the special liquidation is "to restore confidence in the banking sector by furthering the reorganisation of the Irish banking system in the public interest". It is also intended "to underpin Government support measures in relation to the banking sector". I accept that disclosure of the information requested at this time could reasonably be expected to result in an undue disturbance of the business of winding up IBRC in the manner intended by the Oireachtas in order restore confidence in the Irish banking sector. In other words, having regard to the purposes of the IBRC Act, it is reasonable to expect that disclosure of confidential information while the liquidation process remains ongoing could cause further disruption to the banking sector and thus access to the records concerned would involve disclosure of the information that would, in all the circumstances, be premature. I therefore find, subject to consideration of the public interest, that section 31(1)(b) also applies.
In his submissions, the applicant has stressed the need for maximum transparency in relation to the manner in which the special liquidation is being managed. He refers in particular to the fact that the professional fees being incurred in relation to the liquidation ultimately reduce the State's eventual return from the sale of IBRC's assets and thus are effectively being paid out of taxpayer money. I agree of course that there is a very strong public public interest in ensuring maximum openness and accountability in relation to the use of public funds. The Special Liquidators have been entrusted with the winding up of the defunct bank which has cost Irish taxpayers billions of euro. The sale of IBRC's assets will mean that some of these costs will be recouped, but it is true that the significant professional fees being incurred in the process will reduce the overall amount recovered. Thus, the costs associated with the liquidation process will indeed be paid at least indirectly out of public funds.
However, the amount of taxpayer money involved has yet to be determined, with the success of the liquidation process being a significant factor in the equation. The IBRC Act recognises a public interest in the State's financial support to IBRC being recovered as fully and efficiently as possible. I therefore do not see how, on balance, it could serve the public interest to risk undermining the liquidation process while it remains ongoing by disclosing information that could inhibit the exchange of information between the Special Liquidators and the Minister. As noted above, the Special Liquidators owe a duty of care not only to the Minister but to all stakeholders involved. I accept that it would be difficult for them to discharge their duties efficiently and effectively without an assurance of confidentiality in relation to the exchange of information that they regard as sensitive. Thus, I find that granting the applicant's request would contravene the public interest recognised by the Oireachtas in the IBRC Act.
Moreover, I find that the public interest in openness and accountability in relation to the liquidation process has been served to some degree by the publication of the Progress Update Report in June 2014. I note, for instance, that the Progress Update Report provides more up-to-date information on the overall costs and fees associated with the liquidation process than the records at issue in this case, and with respect to the firms of KPMG, A&L Goodbody, and Linklaters, it provides details regarding the headcount and the number of hours involved. As the applicant has pointed out, the Special Liquidators have also appeared before the Oireachtas Finance Committee. It is true, as the applicant suggests, that the information that has been made publicly available would have been carefully prepared for public dissemination, but this is not to say that there are not valid reasons for maintaining the confidentiality of the communications made in confidence between the Special Liquidators and the Minister, at least for the time being. In the circumstances, I do not believe that the pubic interest would, on balance, be better served by granting than by refusing the applicant's request. I conclude that the Department's decision was justified in this case. However, I would expect the Department to consider making further information available once the liquidation process is completed.
As I have found that sections 31(1)(a) and (b) apply, it is not necessary for me to make findings on the additional claims for exemption made by the Department in relation to the records concerned.
Having carried out a review under section 34(2) of the FOI Act, I hereby affirm the decision of the Department in this case.
A party to a review, or any other person affected by a decision of the Information Commissioner following a review, may appeal to the High Court on a point of law arising from the decision. Such an appeal must be initiated not later than eight weeks after notice of the decision was given to the person bringing the appeal.
Peter Tyndall
Information Commissioner