Parliamentary and Health Service Ombudsman / Improving Services / Selected Cases / Access to Official Information / Investigations Completed July 2004

Dr Hawley asked the Export Credit Guarantee Department (ECGD) for information, including reports, documents, memos and other correspondence, relating to allegations of corruption against BAE Systems in South Africa. ECGD refused to provide much of the information requested, citing Exemptions 2, 4, 7, 13 and 14 of the Code. Dr Hawley sought a review, but ECGD still maintained that those exemptions were appropriate. While the Ombudsman criticised ECGD for their failure to consider the harm test in relation to each relevant document to which they believed Exemption 2 applied, she nevertheless accepted that ECGD were justified in withholding the bulk of the information sought by Dr Hawley under Exemptions 2, 7(b) and 13. She welcomed ECGD’s agreement to release to Dr Hawley the remainder of that information. The complaint was partially upheld.

1. Dr Hawley complained that the Export Credits Guarantee Department (ECGD) had refused to provide her with information that should have been made available to her under the Code of Practice on Access to Government Information (the Code). I have not put into this report every detail investigated by the Ombudsman’s staff but I am satisfied that no matter of significance has been overlooked.

The complaint

2. On 9 September 2003 Dr Hawley sent an e-mail to ask ECGD, under the Code, to provide information (including reports, documents, memos and correspondence) relating to corruption allegations involving BAE Systems in South Africa. ECGD declined to provide much of the information requested, citing Exemptions 2, 4, 7, 13 and 14 of the Code (relating, respectively, to internal discussion and advice; enforcement and legal proceedings; effective management and operations of the public service; third party’s commercial confidences; and information given in confidence).

3. On 24 October 2003 Dr Hawley wrote to ECGD asking them to review their refusal to provide her with all of the information she had sought. Among other things, she said that ECGD had failed to give any reasons for their conclusion that Exemptions 2, 4, 7, 13 and 14 applied to the information requested. She said that the Ombudsman had criticised government departments for failing to explain why they had used particular exemptions. She also said that, given the fact that ECGD was a government department backed by taxpayers’ money and, given the potential for corruption to undermine the integrity and effectiveness of a particular contract, it was clearly in the public interest to know what internal assessments ECGD made of corruption allegations in relation to contracts it had supported; what measures it had taken to monitor, assess and act upon those allegations; and what co-operation it had either sought or offered to other government departments, the South African authorities, BAE Systems and law enforcement authorities in connection with the allegations. She asked ECGD to again consider releasing, within 20 working days:

(a) the written no bribery warranty from BAE Systems in connection with the South African contract;

(b) internal informal assessments and post-issue management reports of the corruption allegations involving BAE Systems in South Africa;

(c) correspondence between ECGD and other UK government departments including law enforcement agencies, the South African Authorities and BAE Systems concerning the Export Credits corruption allegations;

(d) ECGD’s written due diligence procedures, especially with regard to corruption, agents and commission payments; and

(e) the percentage level of agency commission in relation to contract price underwritten by ECGD on the contract between BAE Systems and the South African government.

4. On 17 December 2003 ECGD replied to Dr Hawley. They maintained their refusal to provide her with the information, saying that:

(a) the documents requested related to internal discussions between ECGD and other government departments; ECGD had informed Dr Hawley of the steps that they had taken in relation to the allegations, but release of the actual documents would prevent ECGD from carrying out future discussions with the necessary candour (Exemption 2); (b) release of the documents would prejudice any future legal proceedings; ECGD might not disclose information that could undermine the effectiveness of law enforcement processes (Exemption 4);

(c) release of the documents would harm and/or undermine the effectiveness of the management of the due diligence system (Exemption 7); the disclosure of ECGD’s methods in this respect would prejudice the attainment of the objectives of due diligence; and

(d) the documents were of a commercially sensitive nature and/or were given to ECGD in confidence; the information that BAE Systems had provided to them was either commercially confidential and/or was provided on the basis that it was commercially confidential and that it would continue to remain so (Exemptions 13 and 14).

5. ECGD said they felt that they had provided explanations for their reliance on particular exemptions as far as was possible, except where the provision of such an explanation would have meant having to disclose the very information they had decided could not be disclosed. They pointed out that the Code did not give a right of access to documents, only to information, and said that they also felt that in this case the reasons for non-disclosure of the information outweighed the public interest in disclosure. They told Dr Hawley that, if she remained dissatisfied, she could complain to the Ombudsman.

Departmental comments on the complaint

6. The Chief Executive of ECGD said that they had not refused to provide Dr Hawley with information except where that information was exempt. He said that ECGD appreciated the Ombudsman’s general recommendation that, where practical, the provision of documents was the best way of making information available but that in this case the documents contained information over and above what they had provided to Dr Hawley and this information was exempt. The Chief Executive said that ECGD’s business involved handling a range of sensitive material, including political, economic and commercial information, and that where ECGD had been unable to release information they had indicated which exemptions applied. He said that ECGD were clear in their view that Dr Hawley was not entitled, under the Code, to the requested documents, and that they were not obliged under the Code to release any documents, as the Code gave an entitlement only to information, not documents.

The Code of Practice on Access to Government Information

7. Before the Freedom of Information Act 2000 came fully into force on 1 January 2005 the Ombudsman was able to consider complaints that, in breach of the Code, bodies which are listed in Schedule 2 to the Parliamentary Commissioner Act 1967 as being within her jurisdiction, had refused to provide information which was held by them. Refusal to supply information might have been justified if the information fell within one or more of the exemptions listed in part II of the Code (see paragraphs 8 to 13). The Code gave no right of access to documents: the right, subject to exemption, was only to information. Both of the Ombudsman’s predecessors, however, took the view that the release of the actual documents was often the best way of making available information which was recommended for disclosure.

8. In the preamble to Part II of the Code, under the heading ‘Reasons for confidentiality’, it stated that:

‘The following categories of information are exempt from the commitments to provide information in this Code. In those categories which refer to harm or prejudice, the presumption remains that information should be disclosed unless the harm likely to arise from disclosure would outweigh the public interest in making the information available. References to harm or prejudice include both actual harm or prejudice and risk or reasonable expectation of harm or prejudice. In such cases it should be considered whether any harm or prejudice arising from disclosure is outweighed by the public interest in making information available.’

9. Exemption 2 was headed ‘Internal discussion and advice’ and read:

‘Information whose disclosure would harm the frankness and candour of internal discussion, including:

• proceedings of Cabinet and Cabinet committees;

• internal opinion and advice, recommendation, consultation and deliberation;

• projections and assumptions relating to internal policy analysis; analysis of alternative policy options and information relating to rejected policy options;

• confidential communications between departments, public bodies and regulatory bodies.’

10. Exemption 4 was headed ‘Law enforcement and legal proceedings’ and the parts that appear to be relevant to the consideration of this particular case read as follows:

‘(a) information whose disclosure could prejudice the administration of justice (including fair trial), legal proceedings or the proceedings of any tribunal, public inquiry or other formal investigations (whether actual or likely) or whose disclosure is, has been, or is likely to be addressed in the context of such proceedings;

(b) information whose disclosure could prejudice the enforcement or proper administration of the law, including the prevention, investigation or detection of crime, or the apprehension or prosecution of offenders;

(c) information relating to legal proceedings or the proceedings of any tribunal, public inquiry or other formal investigation which have been completed or terminated, or relating to investigations which have or might have resulted in proceedings;

(d) ...

(g) ...’

11. Exemption 7 was headed ‘Effective management and operations of the public service’. Paragraph (b) read:

‘Information whose disclosure would harm the proper and efficient conduct of the operations of a department or other public body or authority, including NHS organisations, or of any regulatory body.’

12. Exemption 13 was headed ‘Third party’s commercial confidences’ and read: ‘Information including commercial confidences, trade secrets or intellectual property whose unwarranted disclosure would harm the competitive position of a third party.’

13. Exemption 14 was headed ‘Information given in confidence’. Paragraph (a) read: ‘Information held in consequence of having been supplied in confidence by a person who: gave the information under a statutory guarantee that its confidentiality would be protected; or was not under any legal obligation, whether actual or implied, to supply it, and has not consented to its disclosure.’

Assessment

14. Before turning to the substantive issue of whether or not the information requested by Dr Hawley should be released to her, I shall look first at how ECGD handled her request. Until the advent of the Freedom of Information Act 2000, all requests for information should have been treated as if made under the Code, irrespective of whether or not it was referred to by the applicant. Information should have been provided as soon as practicable and the target for responses to simple requests for information was 20 working days from the date of receipt. While this target might have been extended when significant search or collation of material was required, an explanation should have been given in all cases where information could not be provided. It was also good practice in such cases for departments to identify in their responses the specific exemptions in part II of the Code on which they were relying in making that refusal. Further, they should have made the requester aware of the possibility of a review under the Code, and of the possibility of making a complaint to the Ombudsman if, after completion of the review process, they remained dissatisfied.

15. Did ECGD’s handling of Dr Hawley’s request comply with these provisions? Dr Hawley made her information request on 9 September 2003, and ECGD replied on 15 October 2003. While that is slightly outside the 20 working days for reply envisaged by the Code, the information requested by Dr Hawley was not straightforward and I consider it to be not unreasonable for ECGD to have taken a little longer than the target time to reply to her. However, ECGD did not respond to Dr Hawley’s review request, made on 24 October 2003, until 17 December 2003. Although the Code lays down no specific timescale for carrying out a review, this clearly took longer than it should have done. That was a little disappointing, in particular since in all other respects ECGD complied fully with the handling requirements of the Code, for which I commend them.

16. I now turn to the question of the information sought by Dr Hawley, and it may be helpful if I first describe in brief the type of information withheld by ECGD. The information comprises some 40 or so documents. It consists of various communications within ECGD, and external communications with/from other government departments, such as the Foreign and Commonwealth Office, the Ministry of Defence and the Department of Trade and Industry and other interested parties, as well as from the British High Commission in Pretoria and BAE Systems. Those communications include letters, e-mails, telexes, briefing and Parliamentary Questions. The information also includes ECGD’s due diligence procedures.

17. ECGD have cited a number of exemptions from the Code as a basis for withholding the information sought by Dr Hawley. However, they have mostly not related those exemptions to specific documents or to particular pieces of information: rather they have simply applied five Code exemptions to the entirety of the information sought by Dr Hawley. With the information contained in over 40 documents at issue, it is clearly not going to be the case that all five exemptions will apply across the board, and it would have been helpful if a more selective approach could have been taken. In particular, it is not clear to me which part or parts of Exemption 4 ECGD intended should apply to the information, which causes difficulty in that some parts of that exemption require the application of a harm test and others do not. For that reason, I have decided not to consider the applicability of Exemption 4 to the disputed information.

18. I shall therefore begin by considering the applicability of Exemption 7(b). This exemption was intended to prevent the disclosure of information where such disclosure would be damaging to the work of the department concerned, and ECGD have cited this exemption in particular in the context of their due diligence procedures. They have said that these procedures were designed to minimise the occurrence of fraud in ECGD-supported business and contend that making them public would alert potential fraudsters to the kind of checks ECGD carry out, and thus prejudice the attainment of the objectives of due diligence. Dr Hawley, however, has expressed the view that, if ECGD’s due diligence procedures were appropriately rigorous and companies realised what was expected of them in terms of corporate governance, that created a strong argument for saying that disclosing those procedures would be likely to help decrease fraud and even improve corporate compliance. I have seen the procedures in question and note that they contain, among other things, risk indicators and possible sources of information for detecting and/or checking such indicators in respect of particular transactions for which ECGD are being asked to provide cover: having seen those procedures I can sympathise with the argument that to make more widely available details of those checks and balances which ECGD have in place to prevent risks such as fraud occurring would be to undermine their effectiveness. I therefore accept that, in principle, Exemption 7(b) can be applied to ECGD’s due diligence procedures. However, Exemption 7(b) is also subject to the harm test outlined in paragraph 8 above, and I need to consider whether the public interest in releasing the information outweighs the harm that would be caused if the information were to be released into the public domain. This is a finely balanced argument because it seems to me that these procedures are precisely the kind of internal guidance that the Code envisaged, in paragraph 3(ii) of Part I, as being made more widely available in order to enhance public understanding. However, that paragraph also makes it clear that such guidance should not be released if release could prejudice any matters of the kind that should properly be kept confidential under Part II of the Code. On balance, I consider that releasing the information would do more harm than good. While it is clearly in the public interest for it to be known that ECGD has such procedures in place, I recognise the strength of the case that releasing the detail of the procedures would allow those who wish to circumvent them to have a much better understanding of what would be likely to set alarm bells ringing. Accordingly, I am satisfied that ECGD were entitled to withhold the details of the due diligence procedures under Exemption 7(b).

19. A small amount of information contained in the documents was provided to ECGD direct by BAE Systems. It is clear from my examination of that information that it was provided on the understanding that it was confidential and that it would not be released. All of that information relates in broad terms to BAE Systems’ commercial practices. Having considered that information I am satisfied that Exemption 13 can be applied to it, and that release of it could potentially cause harm to that company’s commercial position. I do not therefore recommend its release. In these circumstances I see no need to consider also the applicability of Exemption 14 to that material, although I note in passing that ECGD were again unspecific about which part of Exemption 14 they thought applied.

20. I shall now look at whether or not the remaining exemption cited by ECGD, Exemption 2, which relates to internal discussion and advice, can be applied to the information in the documents (in practice the bulk of it) that has not already been discussed in this report. That information largely comprises briefing prepared by ECGD, correspondence between ECGD and other government departments, and other internal and external communications (and external communications not covered by Exemption 4(c)) containing deliberation and discussion relating to the South Africa Defence Package. I should start by emphasising that Exemption 2 does not afford any protection to purely factual information, of which these documents contain a good deal. That being so, I consider that ECGD are unable to rely on that exemption as a ground for denying Dr Hawley any such information that might be contained in those documents, and I therefore recommended that it should be released to her. In reply, the Deputy Chief Executive of ECGD agreed.

21. The general purpose of Exemption 2 is to allow government departments the opportunity to consider matters, particularly those which are likely to prove sensitive or contentious, on the understanding that their thinking will not be exposed in a manner likely to inhibit the frank expression of opinion. I recognise the strength of the argument that advice and recommendations of the kind contained in the documents in question depend on candour for their effectiveness, and that the value of this advice could be substantially reduced if it were thought that it would be made available to a wider audience. I am satisfied, therefore, that such advice and recommendations are covered, in principle, by Exemption 2.

22. However, that is not the end of the matter. As I explained above in relation to Exemption 7(b) (paragraph 18), the Code makes it clear that, where exemptions refer to harm or prejudice, the presumption remains that information should be disclosed, unless the harm likely to arise from disclosure would outweigh the public interest in making the information available. I should at this point reiterate that I have seen nothing in the papers to suggest that ECGD have considered the harm test on an individual basis in relation to each of the documents to which they believed Exemption 2 applied, which warrants my criticism.

23. Against this background I have carefully considered the undisclosed material. Dr Hawley has argued that ECGD is a government department backed by taxpayers’ money and that, given the potential for corruption to undermine the integrity of a particular contract, it is clearly in the public interest for the information she seeks to be placed in the public domain. ECGD have said that to release any more information to Dr Hawley than they already had would prevent them from carrying out future discussions with the necessary candour. In sensitive cases such as this, where the issues are very much live, it is particularly important for officials to be able to hold discussions with complete frankness, without fearing that their thinking will be exposed to the public gaze. That being so, I do not consider that the public interest in having access to all of the remaining non-factual information in these documents is strong enough to outweigh the potential harm to the frankness and objectivity of future advice which might result from its disclosure. I accept, therefore, that in practice, Exemption 2 can be applied to much of the non-factual information contained in the documents and that this should be withheld. Nonetheless, there remains some information, the release of which seems to me to be unlikely to harm the quality of any future advice, and I recommend that it be made available to Dr Hawley. In making this recommendation I should draw attention to the fact that, in parallel to this investigation, I have been investigating a very similar complaint by Dr Hawley against the Foreign and Commonwealth Office (FCO). Some of the material is common to both departments and I have come across information that FCO have released but which ECGD, when they were asked for it, withheld. It seems to me that, even though it may result in a degree of duplication, ECGD should also release that information to Dr Hawley. In response, the Deputy Chief Executive of ECGD said that in the particular circumstances of this case ECGD were prepared to comply with that recommendation.

24. While I recognise that the Code requires the release of information rather than specific documents, my experience, and that of my predecessors, has shown that the simplest way in which to meet a request for information is often by releasing the actual documents concerned. In this case, I consider that it would be most helpful for Dr Hawley to have an edited version of the documents in question with any withheld information simply blocked out, and I so recommended to ECGD. In reply, the Chief Executive of ECGD agreed that most of the information would be released by means of edited versions of the relevant documents, except for information originating from FCO which would be provided in narrative format at their request.

Conclusion

25. I found that ECGD were justified in withholding much of the information sought by Dr Hawley under Exemptions 2, 7(b) and 13 of the Code. I welcome ECGD’s acceptance of my recommendation to release the remainder of the information to Dr Hawley, and regard that as a satisfactory outcome to this complaint.

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Last updated: 10 June 2005