FOI response - McGill & Co correspondence

Date received: 5 Feb 2019
Date responded: 15 Feb 2019

Information requested

You asked us for correspondence surrounding the request for a loan over the past six months between: 

• Scottish Enterprise and McGill 

• Scottish Enterprise and KPMG 
• Scottish Enterprise and Santander 
• Scottish Enterprise and Scottish Government 

Response

Please find the correspondence attached by email in pdf format. Throughout the correspondence, you will note that some personal, commercial and confidential information has been redacted under sections 38(1)(b), 33(1)(b), 36(2) and of FOISA 2002, reasons why we have applied these exemptions are explained at the end of this letter. 

We appreciate that there is a lot of information for you to review, therefore if you have any questions my colleagues in the communications team would be happy to discuss these or indeed any other details of our FOI response with you.  

Given that this subject has attracted a significant amount of media coverage recently, and has now become a matter of public interest, we will shortly publish this response on our media centre to make this information available to all interested parties. 

Exemptions  

Section 38(1)(b) - Personal Information  

The exemption contained in section 38(1)(b) of FOISA has been applied to some of the withheld information you requested, in this case names, email addresses and contact details of Scottish Enterprise, Scottish Government, Santander, KPMG and McGill staff.  

Section 38(1)(b) together with Article 5(1) of the GDPR creates an exemption from disclosure where the information requested constitutes the personal data of a third party and disclosure of that data would breach any of the data protection principles set out in the Data Protection Act 2018 (“DPA”).  Article 5(1) states that “personal data shall be processed lawfully, fairly and in a transparent manner in relation to the data subject.” As an absolute exemption, there is no need to consider the public interest in the application of this exemption. 

Information has been withheld from you under this exemption in respect of names of individuals which constitutes as personal data.  I am satisfied that the information that has been withheld constitutes the ‘personal data’ of the individuals concerned, as defined in section 1(1) of the DPA 2018. 

SE has examined whether or not disclosure of the information you have requested, insofar as that is personal data, would breach the requirements of the first data protection principle.  

Fairness 

In assessing whether release of the information would be fair, we have had regard to the Scottish Information Commissioner’s Exemption Briefing Series on the section 38 exemption, and to guidance produced by the UK Information Commissioner, who has overall responsibility for data protection issues throughout the UK.  In line with that guidance, and in coming to the decision to withhold personal data on the basis that it would be unfair to release it, we have taken into consideration: 

• seniority of individuals  

• any potential damage or distress which may be caused by disclosure of the information;  
• whether the information relates to the public or private life of the individual; and  
• the expectations of the data subjects with regard to the release of the information.   

Disclosure of the individuals’ personal data into the public domain may cause them damage or distress. It would not be within the expectation of the individuals that their personal data would be put into the public domain under FOISA.  

Release of the information would therefore be unfair and consequently would be in breach of the first data protection principle and therefore also unlawful. Given that the disclosure would be unfair, and therefore unlawful, in terms of not complying with the first data protection principle, it is not necessary to go on to consider any of the conditions in schedules 2 or 3 of the DPA 2018, or other aspects of lawfulness.  The information must be withheld under section 38(1)(b) of FOISA, taken together with Article 5(1) of the GDPR.   

Section 33(1)(b) - Commercial Interests 

This section allows information to be withheld where its disclosure under the Act would, or would be likely to, prejudice substantially the commercial interests of any person (including, without prejudice to that generality, a Scottish public authority). This applies in this case to information relating to the company’s Turnaround Plan, Strategic Review, Financials, Shareholders, suppliers, creditors.  Analysis on McGill provided to Scottish Enterprise by KPMG has also been withheld under this exemption. This relates to information on the company’s financials and projections. 

Release of this information would have the result of causing real, significant and substantial prejudice to all the parties involved.   

Harm Test – Substantial Prejudice 

Release of this information would have the result of substantially prejudicing KPMG and third-party companies’ ability to compete against other businesses about whom similar information is not in the public domain. In my view, disclosure of the information would cause the companies real, significant and substantial prejudice. Release of the information provided by KPMG could have a negative impact on the Administrator being able to undertake their statutory duties or the outcome of any sale of the business.  

The Public Interest Test 

I recognise that there is a public interest in decision-making processes within public authorities being as open and transparent as is possible.  I also recognise that making certain information available can increase the accountability of public authorities for decisions that are made that may have an impact on the wider public, and in particular the expenditure of public money by SE. 

However, balanced against these considerations, there is also a public interest in ensuring that SE can protect its assessments of business opportunities in order to enable it to spend public funds as effectively as possible.  I must also have regard to the public interest in protection of the privacy of any individual which would be diminished by the release of the requested information.   I consider that there is no public interest or benefit in releasing information which could have an adverse effect on the commercial interests of third parties.  However, allowing commercial parties to maintain confidentiality in their commercial positions for prospective commercial transactions is important to maintaining and supporting the proper and efficient operation of free markets, which is of serious concern and benefit to the public.  As such I consider that the public interest also favours the withholding of this information. 

On public interest grounds, I have therefore concluded that, in respect of the commercially sensitive information requested, the public interest is better served in withholding the information. 

Section 36(2) - Confidential Interests  

Section 36(2) of FOISA applies to information which was obtained by a public authority from a third party which, if disclosed by the public authority which obtained the information, would constitute a breach of confidence actionable by the third party who gave the information to the authority, or by any other person. 

The information withheld under this exemption was received by SE from KPMG. The nature of the withheld information and the circumstances in which it was provided to SE are such that there is an implied duty of confidentiality.  The withheld information is not common knowledge and not in the public domain. I am of the opinion that it is information which a reasonable person would understand as involving an obligation of confidentiality, and that it has the necessary quality of confidence to be actionable.  If the information were to be disclosed to you, harm would be caused to the third parties who provided the information.  I therefore consider that the exemption in section 36(2) applies to the information. 

The exemption in section 36(2) is an absolute exemption.  This means that the exemption is not subject to the public interest test set out in FOISA.  However, in terms of the common law of confidentiality, I must nonetheless take into account the public interest to decide whether or not this exemption is applicable to your request. 

Where there is a balance between the public interest in maintaining an exemption and the public interest in disclosure, in relation to the common law public interest test (which is applicable here), there is a presumption in favour of maintaining confidentiality.   

There is a public interest in SE maintaining the confidence of the third parties, and it is also in the public interest for SE to avoid taking any steps that could lead to a court action.  I must also have regard to the public interest in protection of the privacy of any individual which would be diminished by the release of the requested information. 

On the other hand, the general public interest in making information accessible to the public to improve the accountability of SE is also relevant here.  I cannot see however that release of information that SE is under an obligation to respect as confidential can be justified in the public interest in this case. 

Therefore, having weighed the public interest arguments in favour of disclosure against the public interest arguments in favour of withholding the information under the exemption, I am of the view that the public interest lies in maintaining the exemption and withholding the information.