Whether the Department was justified in refusing access to certain records relating to Anglo Irish Bank and other Irish banking institutions during the period of November 2008 to December 2009

Conducted by the Information Commissioner in accordance with section 34(2) of the FOI Act

Background

In a request dated 1 October 2013, the applicant sought access to records numbered 1 to 24 on a schedule of record made available to him in the context of a previous request relating to Anglo Irish Bank (Anglo). The Department refused access to 20 of the 24 records requested under various exemption provisions of the FOI Act. On 13 June 2014, the applicant applied to this Office for a review of the Department's decision.

I have now completed my review in accordance with section 34(2) of the FOI Act. In carrying out my review, I have had regard to the submissions made by the applicant, the Department, and the following affected third parties: PricewaterhouseCoopers (PwC), Bank of America Merrill Lynch (Merrill Lynch), the Central Bank, National Treasury Management Agency (NTMA), Irish Bank Resolution Corporation Limited (IBRC) (as the successor to Anglo), Bank of Ireland Group (BoI), and Allied Irish Bank (AIB). I have also examined the records concerned. In the interests of clarity, I should point out that this review was carried out under the provisions of the FOI Acts 1997-2003 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the commencement of the 2014 Act shall continue to be performed and shall be completed as if the 1997 Act had not been repealed.

Scope of the Review

As numbered and described by the Department in its schedule of records, the records at issue are as follows:

No. 1 - PwC Report. Project Atlas II. Working Draft - 20 October 2008 (refused under sections 26, 27, 28, and 31 of the FOI Act)
No. 3 - PwC Report. Project Atlas II. Working Draft - 31 October 2008 (refused under sections 26, 27, 28, and 31 of the FOI Act)
No. 4 - PwC Report. Project Atlas II. Working Draft - November 2008 (refused under sections 26, 27, 28, and 31 of the FOI Act)
No. 5 - PwC Report. Project Atlas II Volume 1. Overview Working Draft - 11 November 2008 (refused under sections 26, 27, 28, and 31 of the FOI Act)
No. 6 - PwC Report. Project Atlas II Volume 1. Overview Working Draft - 17 November 2008 (refused under sections 26, 27, 28, and 31 of the FOI Act)
No. 7 - Merrill. Lynch. Presentation to Irish Department of Finance Discussion Materials. 18 November 2008 (refused under section 26 of the FOI Act)
No. 9 - PwC Report. Project Atlas II. - November 2008 (refused under sections 26, 27, 28, and 31 of the FOI Act)
No. 11 - PwC Report. Project Atlas III - 17 December 2008 (refused under sections 26, 27, 28, and 31 of the FOI Act)
No. 12 - Merrill Lynch Project Atlas Anglo - 19 December 2008 (refused under sections 26, 27, 28, and 31 of the FOI Act)
No. 13 - Arthur Cox - Review of MOP Report on Anglo - 21 December 2008 (refused under section 22 of the FOI Act)
No. 14 - PwC Report. Project Atlas Draft Property Values Review - January 2009 (refused under sections 26, 27, 28, and 31 of the FOI Act)
No. 15 - Merrill Lynch Project Atlas Anglo update - January 2009 (refused under sections 26 and 27 of the FOI Act)
No. 16 - Merrill Lynch Project Atlas Anglo Review of Loan Book - 12 January 2009 (refused under sections 26 and 27 of the FOI Act)
No. 17 - PwC Response to Department of Finance Queries regarding PwC Draft Property Values Review - 13 January 2009 (refused under sections 26, 27, 28, and 31 of the FOI Act)
No. 18 - Arthur Cox. High Level Material Legal Issues Report - 15 January 2009 (refused under sections 26, 27, and 28 of the FOI Act)
No. 19 - PwC Report. Project Atlas Draft Property Values Review - 4 February 2009 (refused under sections 26, 27, and 31 of the FOI Act)
No. 20 - PwC Report. Project Atlas - Anglo Irish Bank Corporation Plc Summary Report Extracts - 20 February 2009 (refused under sections 26, 27, and 31 of the FOI Act)
No. 22 - PwC Report. Project Stephen. Working Draft - 6 May 2009 (refused under sections 26, 27, 28, and 31 of the FOI Act)
No. 23 - PwC Report. Project Stephen. Working Draft - 29 May 2009 (refused under sections 26, 27, 28, and 31 of the FOI Act)
No. 24 - PwC Report. Project Europe. 23 December 2009 (refused under sections 26, 27, and 31 of the FOI Act).

This review is concerned solely with the question of whether the Department's decision to refuse access to the records identified above was justified.

Preliminary Matters

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.

In addition, I wish to 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.

Analysis and Findings

The PwC reports
Records 1, 3-6, 9, 11, 14, 17, 19, 22-23
Records 3-6, 9, 11, 14, 19, 22-23 were prepared by PwC under contract for the Irish Financial Services Regulatory Authority (IFSRA) and make express reference to section 33AK of the Central Bank Act 1942, as amended. Record 1 was also prepared by PwC under contract for the IFSRA; while it does not make express reference to section 33AK of the Central Bank Act 1942, it is similar in nature to the other Project Atlas reports that do refer to section 33AK and reference to an expectation of confidential treatment is made in a cover letter to the report. Record 17 was not prepared for the IFSRA, but I accept that it was prepared in response to queries raised by the Department in relation to valuations provided in record 14; the close connection between record 17 and record 14 is therefore a relevant consideration. Record 17 also contains information on individual borrowings; it is not disputed that a common law duty of confidence generally exists in relation to the banking information of individual borrowers (see, e.g., Walsh v. National Irish Bank Limited [2008] 2 ILRM 56).

Briefly described, section 33AK of the Central Bank Act is a secrecy provision that prohibits the disclosure of certain confidential information by personnel from the Central Bank and the Financial Regulator, which is now part of the Central Bank. In its initial submission to this Office dated 25 July 2015, the Department stated that disclosure of the PwC reports, with the exception of record 24, is prohibited under section 33AK and that the information was provided to it on the understanding that it would be treated as confidential on that basis. However, the Department did not expressly refer to section 32(1)(a) of the FOI, which is a mandatory exemption provision that applies where the disclosure of a record is prohibited by an enactment not specified in the Third Schedule to the FOI Act. The Department also did not explain the basis upon which the records were provided to it by either PwC or the Central Bank. Thus, the relevance of the secrecy provision was initially unclear.

Subsequently, however, in a submission dated 6 August 2015, the Department explained that the records were made available to the Minister under section 30 of the Credit Institutions (Financial Support) Scheme 2008, which provides for the confidential treatment of any information made available to the Minister under the Scheme. Moreover, in comprehensive submissions dated 28 August 2015, the Central Bank provided further information regarding the background to the records.

In pertinent part, the Central Bank explained that the reports relate to two connected projects, Project Atlas and Project Stephen, which were undertaken by PwC for the former IFSRA. Prior to the banking guarantee announced by the Minister on 30 September 2008, PwC had already been appointed by the IFSRA to conduct financial assessments of the institutions concerned. The letters of engagement with PwC which are relevant to the records at issue, dated 9 October 2008 and 25 November 2008, respectively, reference the fact that the contracts between PwC and IFSRA were subject to section 33AK of the Central Bank Act. The Central Bank described section 33AK as deriving "primarily from the obligations of 'professional secrecy' that arise as a result of certain EU law obligations contained within what were previously called the Supervisory Directives and are now called the supervisory EU legal acts". The Central Bank explained that, while record 1 does not reference section 33AK, it was an early working draft of record 9 and was drafted in the context of Project Atlas, which in turn was subject to the requirements of section 33AK. The Central Bank also noted that record 17 was likewise prepared in the context of Project Atlas, which indicates that it was also subject to the confidentiality provision.

According to the Central Bank, "the confidential information contained in the reports concerns the business of the Banks and their customers which came to the knowledge of PwC through their employment as consultants to IFSRA", and therefore section 33AK applies. This aspect of the Central Bank's submissions is supported by a submission made by PwC on 13 April 2015.

The Central Bank further explained that the information concerned was disclosed to the Minister pursuant to the limited circumstances prescribed by section 33AK(5)(z) and also, in conjunction with section 33AK(5)(b), with the required consent of the Banks under the Credit Institutions (Financial Support) Scheme 2008 (S.I. No. 411 of 2008). Section 30 of the Credit Institutions (Financial Support) Scheme 2008 provides:

"Subject to the requirements of the Treaties governing the European Communities (within the meaning of the European Communities Act 1972 (No. 27 of 1972)) and the Statute of the European System of Central Banks and of the European Central Bank, and in accordance with applicable law, the Minister, the Governor and the Regulatory Authority may disclose to each other any information which they receive (including information relating to a period before the covered institution availed itself of the guarantee under this Scheme) concerning a covered institution or its subsidiaries and may use such information in respect of the performance of this Scheme or in the case of the Central Bank (including the Regulatory Authority), the performance of its statutory functions. All covered institutions shall consent to any disclosure of information and provide such information as the Minister requires to perform his or her functions under the Act of 2008 and this Scheme. All such information shall be treated as confidential."

Section 33AK(6) requires any person to whom confidential information is disclosed to "comply with the provisions on professional secrecy in the Supervisory Directives in holding and dealing with information provided to them by the Bank". The Central Bank therefore maintained that section 32(1)(a) of the FOI Act applies. Alternatively, the Central Bank presented arguments in support of the Department's decision to refuse access to the reports under sections 26, 27, 28, and 31 of the FOI Act.

Having regard to the contents of the records and the submissions of the Central Bank, I accept that records 1, 3-6, 9, 11, 14, 17, 19, 22-23 fall within the ambit of section 32(1)(a) of the FOI Act, which, as noted above, is a mandatory exemption provision that applies where the disclosure of a record is prohibited by an enactment not specified in the Third Schedule to the FOI Act. As neither 33AK of the Central Bank Act nor section 30 of the Credit Institutions (Financial Support) Scheme 2008 is listed the Third Schedule, it is not clear to me why section 32 was not expressly invoked by the Department despite its reference to the secrecy provision in its submissions. Nevertheless, I am satisfied that section 32(1)(a) applies and that it is therefore not necessary to consider the other exemption provisions relied upon by the Department (or by the Central Bank in the alternative) with respect to these records.

Record 20
In contrast to the PwC reports discussed above, record 20 is described in a covering letter as a summary report that excludes confidential and commercially sensitive information on individual bank customers or loan balances.  In its submission dated 6 August 2015, the Department admitted for the first time that record 20 "is now in the public domain". According to the Central Bank, however, it was actually published in full on the Department's website on 20 February 2009. A visit to the Department's website confirms that it is available in full online. (See http://www.finance.gov.ie/news-centre/press-releases/ministerial-statement-publication-pricewaterhousecoopers-report and http://www.finance.gov.ie/sites/default/files/Anglopwc.pdf). It is therefore entirely unclear to me why the Department refused the applicant's request for access to a copy of the report under sections 26, 27, and 31 of the FOI Act. Nevertheless, in the circumstances, the report falls outside the ambit of the Act by virtue of section 46(2) of the Act.

Record 24
Record 24 is a report that was produced by PwC for the Department under contract terms providing in essence for the confidential treatment of the report. Entitled "Project Europe: Business Plans Reviews", it provides information on the restructuring plans submitted by BoI, AIB, and Anglo to the European Commission. Access was refused under sections 26, 27, and 31 of the FOI Act, but it seemed that section 26 was the primary exemption provision relied upon.

Section 26(1)(b) is a mandatory exemption that applies where "disclosure of the information concerned would constitute a breach of a duty of confidence provided for by a provision of an agreement or enactment (other than a provision specified in column (3) of the Third Schedule of an enactment specified in that Schedule) or otherwise by law". Under section 26(2), the confidentiality exemption does not apply to a record prepared by a staff member of a public body or a person who is providing a service for a public body under a contract for services "in the course of the performance of his or her functions unless disclosure of the information concerned would constitute a breach of a duty of confidence that is provided for by an agreement or statute or otherwise by law and is owed to a person other than a public body or head or a director, or member of the staff of, a public body or a person who is providing or provided a service for a public body under a contract for services".

In Mahon v. Post Publications [2007] IESC 15, Fennelly J confirmed that the requirements for a successful action based on a breach of an equitable duty of confidence, at least in a commercial setting, are found in the judgment of Megarry J in Coco v. A. N. Clark (Engineers) Ltd. [1969] R.P.C. 41, at 47:

"[T]hree elements are normally required if, apart from contract, a case of breach of confidence is to succeed. First, the information itself ... must 'have the necessary quality of confidence about it'. Secondly, that information must have been imparted in circumstances importing an obligation of confidence. Thirdly, there must be an unauthorised use of that information to the detriment of the party communicating it."

Fennelly J restated the requirements of the equitable doctrine of confidence as follows:

"The information must in fact be confidential or secret: it must, to quote Lord Greene, 'have the necessary quality of confidence about it';
It must have been communicated by the possessor of the information in circumstances which impose an obligation of confidence or trust on the person receiving it;
It must be wrongfully communicated by the person receiving it or by another person who is aware of the obligation of confidence."

In submissions dated 27 July 2015 and 17 August 2015, respectively, BoI argued that the report contained confidential and commercially sensitive information notwithstanding the passage of time since the report was prepared. BoI pointed out that the report includes projections for its performance for the six year period from 2009 to 2014 and includes what it regards as commercially sensitive information in respect of joint ventures with another party. In addition, BoI identified a number of other items of information which its says have not been "market disclosed", and it set out its specific concerns regarding the potential release of such materials. Generally speaking, the concerns relate to the negative impact disclosure could have in relation to BoI's investors, analysts, shareholders and the general market. According to BoI, the information upon which the report is based was provided to the Department in the course of its regulatory engagements and for the specific purpose of PwC's review "in confidence and on the strict understanding that it would be treated by the Department as confidential". BoI emphasised that "detail in respect of the topics referenced [in the submission] - which continue to be items of material strategic significance for Bank of Ireland - is not generally in the public domain, and the issue of commercial sensitivity continues to apply (e.g. company strategy, contracts with third parties, confidential financial or project information, capital and liquidity projections etc)". BoI also referred to its compliance with the legal and regulatory requirements governing disclosures by listed institutions.

In a submission dated 5 August 2015, AIB objected to the release of record 24 insofar as it affects its interests on the basis that it provides information on its financial plans at the time and also its strategic consideration of its business operations. According to AIB, the information is commercially sensitive and "non-public", which I take to mean of a private or confidential nature. It also noted: "AIB as a listed company makes all of its required market disclosures through stock exchange announcements and the publication of its full year and half year results."

In a submission dated 27 August 2015, the Special Liquidators of IBRC objected to the release of any of the records at issue (apart from record 20 and record 7 to the extent that it contains information previously disclosed under FOI). They referred to the professional secrecy obligations that apply with respect to any records provided to the Minister under section 30 of the Credit Institute (Financial Support) Scheme 2008 and section 33AK of the Central Bank Act. They also argued that the release of any record containing customer information would fundamentally breach customer confidentiality. In addition, the Special Liquidators expressed concern regarding the litigation that IBRC is involved in; they state that disclosure of the sensitive information in the records at issue "would potentially prejudice IBRC's position in the current ongoing litigation and threatened litigation", referring to a specific case as an example. They asserted that the records at issue are exempt under section 23 of the FOI Act on the basis that disclosure could reasonably be expected to prejudice or impair the fairness of such proceedings. The Special Liquidators also suggested that access should be refused under section 22(1A) of the FOI Act, because the records relate to the subject matter of the Oireachtas Banking Inquiry. However, the Special Liquidators did not make any specific arguments based on the contents of record 24 or any of the other records at issue.

The submissions indicate that BoI and AIB regard the report as containing confidential information about undisclosed strategic plans and business operations. I also accept that BoI and AIB regard the information concerned as commercially sensitive notwithstanding the passage of time. I note that section 28 of the Credit Institutions (Financial Support) Scheme 2008 authorised the Minister, following consultation with the Governor and the Regulatory Authority, to direct a covered institution to draw up a restructuring plan to ensure compliance with the objectives of the Scheme, but according to the Department, no such directions were issued. Rather, the restructuring plans were produced in order to comply with European State Aid rules. In any event, it is apparent that the plans were made available to the Department and PwC for a restricted purpose related to the banking guarantee and the need to stabilise the financial sector in accordance with the Credit Institutions (Financial Support) Scheme 2008. In the circumstances, and having regard to the submissions made by BoI and AIB, I accept that the Department owes a duty of confidence to these two existent institutions with respect to the information contained in the report and that section 26(1)(b) of the FOI Act therefore applies to the information affecting their interests.

However, based on my examination the report, I regard the information on Anglo's restructuring plan as distinguishable in light of the nature of the options under consideration at the time (including the assumptions upon which the options are based) and the fact that Anglo was subsequently merged with another banking institution to become what is now known as the IBRC and then placed in special liquidation. I also note that, according to the IBRC Progress Update Report published on 13 March 2015, "significant progress" has been made "in deleveraging the loan books of IBRC and managing other aspects of the liquidation". In the circumstances, it seems to me that the information in the report relating to Anglo's restructuring plan at the time is truly historic and obsolete. No specific claim has been made, nor do I accept, that the professional secrecy obligations relating to section 33AK of the Central Bank Act apply, and I find no basis for concluding that disclosure of the report would result in a breach of customer confidentiality. It is also entirely unclear to me how any of the information in the report could be of any relevance to any ongoing or threatened litigation. I therefore do not accept that the release under FOI of the information in the report relating to Anglo would constitute an unauthorised use of the information to the detriment of Anglo or its successor, IBRC, or would otherwise be wrongful. Accordingly, I am not satisfied that the Department owes a duty of confidence to Anglo or the IBRC or any other third party with respect to the restructuring plan relating to Anglo.

Similarly, I find no basis for concluding that section 27 or 31 applies with respect to the report insofar as it relates to Anglo's restructuring plan. As stated, I do not see how the report is relevant to any ongoing or threatened litigation. In any event, as both section 22(1A) and section 23 are discretionary exemptions which have not been invoked by the Department, I find that they need not be considered in this case.

The Arthur Cox reports - records 13 and 18

Although the Department's schedule of records refers to section 22 of the FOI Act only in relation to record 13, in a submission to this Office dated 25 July 2014, the Department stated that both record 13 and record 18 have been refused "on the basis that they constitute legal advice privilege". The Department explained that both records were provided by the Minister's legal advisor in the matter, Arthur Cox Solicitors, and were produced for the Minister in the context of conducting legal due diligence on Anglo Irish Bank in advance of the recapitalisation/nationalisation of the bank in January 2009.

Section 22(1)(a) states that access shall be refused to records which would be exempt from production in proceedings in a court on the ground of legal professional privilege.

Legal professional privilege enables the client to maintain the confidentiality of two types of communication:
confidential communications made between the client and his/her professional legal adviser for the purpose of obtaining and/or giving legal advice, and
confidential communications made between the client and a professional legal adviser or the professional legal adviser and a third party or between the client and a third party, the dominant purpose of which is the preparation for contemplated/pending litigation.
Unlike several other of the exemptions in the FOI Act, the provision at section 22(1)(a) does not provide for the setting aside of that exemption where to do so would serve the public interest.

Having examined the records concerned, I accept that they consist of legal advice that would be exempt from production in proceedings in a court on the ground of legal professional privilege. I am therefore satisfied that section 22(1)(a) applies as claimed.

The Merrill Lynch reports
According to the Department, the Merrill Lynch reports were produced for the NTMA under terms of engagement providing for confidentiality. Section 26(1)(a) was the only exemption claimed in relation to record 7, but section 27 was also claimed with respect to records 12, 15, and 16. Access to record 12 was also refused under sections 28 and 31 of the FOI Act. In a submission dated 16 April 2015, Merill Lynch expressed its support in general terms for the position taken by the Department with respect to withholding the four records concerned, but no specific arguments were advanced. The Department subsequently explained that the Merrill Lynch records were made available to it by the NTMA under section 14 of the National Treasury Management Agency Act 1990, as amended.

In a submission dated 10 August 2015, the NTMA confirmed that it had retained Merrill Lynch as its financial advisor by letter of engagement dated 26 September 2008 and that the four Merrill Lynch records were produced under the terms of that contract. However, the NTMA made no objection to the release in full of records 7, 15, and 16. It objected to the release in part of record 12 on the basis of section 28 of the FOI Act, but outlined the parts of record 12 in relation to which it has no objection to release.

Records 7, 15, and 16
I note that, while record 12 includes some information regarding individual borrowers, this is not the case for records 7, 15, and 16. Record 7 is simply an earlier draft of record 8, to which access has been granted by the Department. Record 15 seems to be just a list of the information required at the time from Anglo Irish Bank for monitoring due diligence. Record 16 is a due diligence update, but the information provided does not appear to be very detailed or sensitive. The NTMA has agreed to the release of these records. As indicated above in relation to record 24, IBRC's general objections to the release of any records containing information not previously disclosed are not sufficient to establish a basis for exemption. In the circumstances, I am not satisfied that the Department's decision to refuse access to the records 7, 15, and 16 was justified.

Record 12
Record 12, on the other hand, appears to be a detailed due diligence report, dated 19 December 2008, that includes information on the borrowings of certain identifiable individuals and companies. It is not in dispute that a common law duty of confidence exists in relation to the banking information of such persons; I therefore find that section 26(1)(b) applies insofar as record 12 contains such information.

However, the NTMA, the body for which the report evidently was prepared, has agreed to the release of the remainder of the report. The report discusses a "5 year plan" that was dated 28 November 2008. Any such plan would have expired in 2013 in any event, but in the case of Anglo, it would have been superseded its nationalisation and then special liquidation. Otherwise the report provides an assessment of such matters as Anglo's general loan portfolio, capital, funding and liquidity at the time. Shortly after this report was generated, the decision was taken to nationalise Anglo. It seems to me in the circumstances that (apart from the information on the borrowings of identifiable individuals and companies, as outlined by the NTMA) the information is now truly historic and that there is a strong public interest in disclosure in any event. I therefore find that the Department's decision to refuse access to record 12 in full was not justified and that the record should be released subject to the redactions outlined by the NTMA.

Decision

Having carried out a review under section 34(2) of the FOI Act, I hereby vary the decision of the Department in the following terms:

I annul its decision in relation to records 7, 15, and 16 and direct that access be granted in full.
I annul its decision in relation to record 12 and direct that access be granted subject to the redactions outlined by the NTMA (copy of redacted record to be forwarded to the Department with this decision).
I annul its decision in relation to record 24 and direct that access be granted subject to the redaction of the information relating to the restructuring plans of BoI and AIB.
I affirm its decision in relation to remainder of the records at issue on the grounds stated above.

Right of Appeal

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