Month: July 2011

“SANDSTORM” PERSONAL DATA AND THE BCCI COLLAPSE

Posted on | by Robin Hopkins

The Tribunal’s recent decision in Sikka v IC and HMT (EA/2010/0054) is a good illustration of how FOIA exemptions (here concerning prejudice to international relations and personal data) may be trumped by the overwhelming interest in the public being informed about corporate wrongdoing on a massive scale – including the public knowing the names of those involved in that wrongdoing. Some topical resonance perhaps.

It is also another useful illustration of how personal data should not be assessed on a “one size fits all” basis, but should (where appropriate) be analysed by category. In other words, distinguish between, for example, companies, senior management, employees and customers.

Background

In March 1991, the Bank of England instructed Price Waterhouse to undertake an audit of The Bank of Credit and Commerce International. Price Waterhouse submitted a draft of its report, known as the “Sandstorm” report. The report was never finalised, but the Bank of England relied on the draft to justify its decision to order BCCI immediately to close down its activities in the UK. That led to the collapse of BCCI into insolvency, owing creditors around the world something in the region of US$10 billion.

By the time of the request for a copy of this report (March 2006), an almost complete copy of the Sandstorm Report had been published on the internet, even though it had never been formally published by the Bank of England, albeit with certain names redacted and certain sections missing. The Bank of England relied upon section 40(2) (personal data) and section 27(1)(a) (prejudice to international relations) in refusing to disclose this remaining information. The Commissioner agreed. For the most part, the Tribunal did not.

Prejudice to international relations

The Tribunal agreed that section 27(1)(a) was engaged, but decided that the public interest favoured disclosure. At paragraph 31, it said this:

“Although the material proposed to be redacted under this exemption comprises just a few sentences in a 44 page report, it does contribute a very relevant element to the story as a whole. And we do not think that the public interest is materially reduced by the appearance of much of the same information in other published reports. The public has an interest in seeing how each of those who carried out an investigation illuminated the facts and assessed the actions of those who were involved, whether they contributed to the problems, tried to resolve them or played a neutral role. The weight we apply to this element of public interest has been heavily influenced by our view of the importance of the events surrounding the collapse of BCCI, the serious ramifications it had for many innocent people caught up in it and the questions it raised about the regulation and auditing of a large international institution.”

Personal data

A number of categories of allegedly personal data were identified. An interesting category was the names of companies, from which it was argued that individuals could be identified. The Tribunal was not persuaded by the evidence as to the risk of identifiability.

In any event, as regards senior management, it took the view that “those having [such] positions in either BCCI or other organisations that were closely involved in the unlawful elements of its activities should be identified”, given the seriousness of the issue.

The Commissioner had decided that the names of employees should not be disclosed, whether or not their involvement with BCCI had previously been raised in the course of criminal proceedings. He argued as follows. If they had been convicted, it might be unfair to raise their involvement again some 15 years or more after the event. If they were acquitted, or faced no criminal action, there would be unfairness in blighting future employment prospects by disclosing, in 2007, their involvement with BCCI some years previously. The Tribunal disagreed in part. Its view was that the question of disclosure in these circumstances should turn on the seniority of the employee. At paragraph 44, it said this:

“As regards the potential impact on future employment prospects of those who were acquitted or never prosecuted, we believe that any truthful job application and curriculum vitae will, in any event, include mention of time spent in the employment of BCCI. We do not think that those individuals mentioned in the confidential schedule, whose names we say should be disclosed, should be encouraged to omit or misrepresent this part of their career history, given the criticism voiced in the Sandstorm Report and the importance of employee competence and honesty to future employers in the banking sector.”

As regards the personal data of BCCI customers, the Tribunal distinguished between those whose hands were clean with respect to the BCCI fraud (do not disclose) and those whose hands were not (disclose).

Much turned on the gravity and public profile of the BCCI collapse. In these circumstances, the Tribunal found that information aired in a public trial was likely to remain in the public domain (contrast Armstrong v IC and HMRC (EA/2008/0026)), and that the passage of time undermined rather than strengthened the argument in favour of individual privacy.

Robin Hopkins

IMPORTANT NEW DECISION ON LATE RELIANCE, COST OF COMPLIANCE AND COMMISSIONER’S DISCRETION

Posted on | by Robin Hopkins

In Sittampalam v IC and BBC (EA/2010/0141), the Tribunal has considered a number of important questions. Framed generally (i.e. outside the specific factual context of this case), they are as follows. I add the “short answer” to the questions straight away, and then give some detailed analysis of each in turn below:

(1)  Can a public authority rely on the cost ‘exemption’ under section 12 FOIA at a late stage as of right? Answer: no.

(2)  If not, does the Commissioner have a discretion to allow late reliance on section 12? Answer: yes.

(3)  If he does, can he take into account developments after the time at which the request was refused – and in particular, can he decide that, due to those later developments, disclosure should not be ordered, even though the information should have been disclosed at the time when the request was handled? Answer: yes.

(4)  When allowing late reliance on section 12, can the Commissioner require the public authority to answer a disaggregated or narrowed version of the original request, which might bring it within the cost limit? Answer: yes.

Can section 12 be relied on as of right?

First, can a public authority claim late reliance on the cost ‘exemption’ under section 12 FOIA as of right? To put it another way, is the law on late reliance on section 12 the same as the law on late reliance on the exemptions under Part II of FOIA (which may be relied upon late as of right).

The Tribunal’s answer was “no”. This was in light of APPGER (explained in my post here), where the Upper Tribunal explained that section 12 was different from other exemptions. Section 12 is about saving public expenditure; if the requested information has already been retrieved, the expenditure has already been incurred, so there can be no saving and thus no reliance on section 12 from that point onwards.

In this case, the Tribunal concluded that (see paragraph 48):

“The proper time for raising reliance on s12 is the time required by section 17(5), i.e. promptly and in any event not later than the twentieth working day after receipt of the request. Later reliance – at least up to the conclusion of an internal review – is not a matter of right but is to be controlled by reference to the scheme and purposes of the Act.”

Does the Commissioner have a discretion to allow late reliance on section 12?

Subject to the APPGER qualifier – namely that the section 12 cost-saving exemption cannot be claimed when the cost has already been incurred – the Tribunal found that the answer to this question is “yes”.

When might late reliance on section 12 be claimed? One example would be where, because of the nature of the requested information, a public authority is able to rely on a Part II exemption without having to locate or retrieve the requested information. If the Part II exemption falls away (for example, if the Commissioner decides that it is inapplicable), the authority may then need to locate and retrieve the information, and it may be able to raise section 12 for the first time at that stage.

Can the Commissioner take into account developments after the refusal of the request?

The next question considers this scenario. The Commissioner decides that the public authority should have disclosed the requested information at the relevant time. He considers, however, that – because of events subsequent to the time at which the request was refused – disclosure would now be inappropriate. Is this allowed under FOIA?

Another way of looking at this is to ask whether the Commissioner has a discretion to order that “no steps be taken”, notwithstanding a public authority’s wrongful refusal of a request. To understand this issue, one must consider the wording of FOIA itself. Section 50(4) provides that, where a public authority has failed to comply with section 1 (disclosure duties and so on) or sections 11-17 (procedure for refusing a request), then “the decision notice must specify the steps which must be taken by the authority for complying with the requirement and the period within which they must be taken” (my emphasis). Where the Commissioner has found such a failure, this question arises: does section 50(4) mean that he must always direct that steps be taken, or does it simply mean he must stipulate what steps if any are to be taken?

In Gaskell v IC (EA/2010/0090), the Tribunal decided that the Commissioner has no such discretion: the Commissioner must always make a “steps direction”, and he cannot allow events subsequent to the relevant time to determine whether disclosure is ordered or not. The concern of the Tribunal in Gaskell was that such a discretion would give public authorities two bites of the cherry: if their refusal of the request failed (when judged by reference to the time of the handling of the request), they could invite the Commissioner to use his discretion to decline to order disclosure anyway, because of subsequent developments.

In Sittampalam, the Tribunal has taken a different view. It found that the Commissioner does have this discretion to consider subsequent events and, if appropriate, decline to order disclosure. Such cases will, however, be “exceptional” (see paragraph 60). This Tribunal took the view that the Tribunal in Gaskell had not been presented with scenarios illustrating the pitfalls of the “no discretion” position (see paragraphs 58-60). In support of its conclusion about this discretion, the Tribunal said as follows (paragraphs 53-54):

“Stanley Burnton J (as he then was) in Office of Government Commerce v IC [2008] EWHC 774 (Admin); [2010] QB 98; at [98] regarded it as arguable that the Commissioner’s decision as to the steps required to be taken by the authority might take account of subsequent changes of circumstances. In our view, that is not merely arguable but is correct, and flows from the nature of the Commissioner’s jurisdiction and its subject matter, and from the wording of the Act.

The Commissioner, when acting under section 50, is not merely deciding whether an information requester was or was not entitled to information at the time when the request was dealt with. He must also decide what is to be done. The Commissioner has a role both as guardian of the public interest in the appropriate disclosure of information held by public authorities and as a guardian of data protection rights. In our view the statute leaves to him a measure of discretion over what is the appropriate enforcement of information rights in a particular case. It would be perverse, in our view, if he were wholly debarred from taking into account fresh circumstances, not in existence at the date when the request was originally dealt with.”

Can the Commissioner require a public authority to answer a reformulated or narrowed request?

The Tribunal went on to consider whether, when allowing late reliance on section 12, the Commissioner can do so subject to the public authority handling the request in a prescribed way. It considered two possibilities.

First, is the Commissioner is entitled to allow the late reliance on terms as to disaggregation of the request, so as to prevent reliance on section 12 in relation to information that can be provided under the cost limit? The Tribunal concluded, albeit “with some hesitation”, that this is permissible (see paragraph 73):

“If during the Commissioner’s investigation the public authority is to be allowed to change its response to the request with retrospective effect, so as to raise a defence which should have been raised earlier, it does not seem unreasonable or out of line with the statutory scheme to say that the requester might also in a suitable case be allowed to refine or clarify the terms of the request retrospectively. In effect, the Commissioner would say to the public authority: ‘I will permit you to raise section 12 late but, for fairness’ sake, only on terms that you agree to permit the requester to narrow his request and that you agree to treat the narrowed request as validly made.’”

Secondly, is the Commissioner entitled to prescribe the steps to be taken so as to put the requester in the position that he would have been in if the public authority had complied with its duty to advise and assist under section 16. Compliance might enabled the requester to resubmit his request in a narrower form to which section 12 would not have been a defence.

The Tribunal again found that this was permissible, this time “with greater confidence”. It considered the case law on the relationship between sections 12 and 16. It agreed with Roberts v IC (EA/2008/0050) that entitlement to rely on section 12 is not conditional upon compliance with section16. It took the view, however, that “compliance with section 16 may be taken into account where the question is one not of entitlement but of discretion. If this is correct, it should enable the Commissioner to give greater practical effect to s16 than hitherto”. In other words, whenever late reliance on section 12 is claimed, public authorities should pay extra attention to their duties under section 16.

Robin Hopkins