Loans to third parties made by the Scottish Government

The request was successful.

Dear Scottish Government,

(1) Please provide a list of all loans made to third parties by the Scottish Government for amounts in excess of £1.5m in the period 1 January 2016 to 17 August 2018. Please exclude loans made to other government agencies.

(2) For each loan, please provide:
Name of party
Date loan granted
Amount of loan
Purpose of loan
Interest rate charged
Basis of repayment
Current balance (amount owed)

Please acknowledge receipt of my request.

Yours faithfully,

Mr Paterson

Scottish Government

Dear Mr Paterson
 
I am writing to confirm the receipt of your FOI request.
 
It will be answered within the statutory deadline.
 
Best regards
 
Marta Gawlak
 

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Scottish Government

1 Attachment

Dear Mr Paterson,
 
Please see attached.
Best regards,
 
Marta Gawlak
 
_____________________________________________
From: Gawlak M (Marta)
Sent: 24 August 2018 10:46
To: '[FOI #512252 email]'
<[FOI #512252 email]>
Subject: RE: FOI - SX - Loans to third parties made by the Scottish
Government - Mr Paterson
 
 
Dear Mr Paterson,
 
I am writing to confirm the receipt of your FOI request.
 
It will be answered within the statutory deadline.
 
Best regards
 
Marta Gawlak
 

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Dear Scottish Government,

Message for Gordon Wales, Chief Financial Officer

I am writing to request an internal review of Scottish Government's handling of my FOI request 'Loans to third parties made by the Scottish Government'.

The response to my FOI request (FOI/18/02239) has been to refer me to a response to another FOI request (FOI/18/02172) and therefore to claim information is readily available to me (although it was released after my request). My appeal is that the information sought in my request is different from the information requested and released in FOI/18/02172. I have presented both requests below for comparison:

My request:
(1) Please provide a list of all loans made to third parties by the Scottish Government for amounts in excess of £1.5m in the period 1 January 2016 to 17 August 2018. Please exclude loans made to other government agencies.

(2) For each loan, please provide:
Name of party
Date loan granted
Amount of loan
Purpose of loan
Interest rate charged
Basis of repayment
Current balance (amount owed)

FOI/18/02172
"A list of the quantum of loans or equity investments (specified in each case if a loan or an investment) over £100,000 provided by the Scottish Government to private sector businesses from January 2016 to date (as recent information as possible). The information was also to include the interest rate (if applicable), how much funding was provided, the repayment profile and the private sector entity that benefitted from the loan / investment."

Please acknowledge receipt of my request for internal review.

Yours faithfully,

Mr Paterson

Dear Scottish Government,

FOI/ 1802239

Message for Gordon Wales

I refer to my request for Internal Review, dated 13 September 2018, please acknowledge receipt of my request for internal review.

Yours faithfully,

Mr Paterson

Mr Paterson left an annotation ()

Legal backstop for response to request for internal review: 11 October 2018

Mr Paterson left an annotation ()

Notes
Appendix to FOI/18/02172 sets outs “loans advanced” by the Scottish Government between January 2016 and August 2018.

It is probable that loan (34) relates to the first loan to Ferguson Marine:
Loan (34) £15m @ 15% interest. Bullet payment at end of loan
Jim McColl has confirmed to the media that the interest rate is 15% but not the loan period.

It is possible that loan (35) relates to the second loan to Ferguson Marine:
Loan (35) £6m @ 13% interest. Bullet payment at end of loan
Jim McColl has confirmed that the full amount of the second loan (£30m) has not been drawn down.

“Bullet payment at end of loan” indicates that interest on the loans accumulates and is payable only when the loan is finally repaid. The duration of the loans is not given in the FOI and it may be the case that the interest rates refer to rate over the duration of the loan rather than each year.

Scottish Government

1 Attachment

Dear Mr Paterson,

 

Please see the attached acknowledgement letter regarding the review of
this case.

 

Kind Regards,

 

 

Jamie Hamilton

Tax Division | Budget and Sustainability | Scottish Exchequer | Scottish
Government

Telephone: 0131 244 5311, Area 3D-North | Victoria Quay | Edinburgh | EH6
6QQ

[email address]

 

 

 

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Dear Scottish Government,

Message for Jamie Hamilton

Reminder - FoI 18/02239 Request for internal review.

This is a reminder that a response to my request for internal review is due. Please note that the date of 11 October 2018 is a legal backstop and not a due date.

Yours faithfully,

Mr Paterson

Scottish Government

1 Attachment

Dear Mr Paterson,

 

Further to my letter of 28 September 2018, please find attached a response
to your request for a review of the above case.

 

Kind regards,

 

Jamie Hamilton

Tax Division | Budget and Sustainability | Scottish Exchequer | Scottish
Government

Telephone: 0131 244 5311, Area 3D-North | Victoria Quay | Edinburgh | EH6
6QQ

[email address]

 

 

 

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Dear Scottish Government,

Message for Jamie Hamilton

Thank you for your response to my request for an internal review. The review is a significant improvement on the initial response. The initial response referred me to a response to another FOI request (FOI/18/02172). Information in this response was heavily redacted citing ‘section 33 (1) (b) Commercial Interest’ and ‘section 33 (2) (b) Financial Interest’ under FOISA. I wish to highlight the following matters which I may bring to the attention of the Scottish Information Commissioner:

1. False use of section 33 (1) (b) and (2) (b) Commercial Interest / Financial Interest.

Comparison of the two responses (to my request for internal review and the original response) shows that false use has been made of section 33 (1) (b) and (2) (b) in the original response.

2. Changed reason for redaction to section 30 (c) (conduct of public affairs).

The response to my request for internal review includes redactions under section 30 (c). This reason for redaction was not given in the original response.

3. Information redacted is already in the public domain / continuing false use of section 33 (1) (b) (commercial interests).

I refer to your reference numbers in Annex 1:

Ref (11): It is now in the public domain that the Scottish Government granted a loan of £15 million to Ferguson Marine Engineering Limited in September 2017 (see Scottish Government FOI/18/01889). The interest rate of 15% on the loan has been publicly released by Jim McColl, director and ultimate controlling party of Ferguson Marine Engineering Limited in an article in The Times, “Tycoon Jim McColl says he will sue CMAL over ‘albatross’ ferry deal as storm rages over £45m loan” published 23 September 2018.

Ref (13): Details of the conversion of the loan granted by the Scottish Government into shares in Burntisland Fabrications Limited is published in the company’s 2017 Annual Report available from Companies House: “Significant financial investment that has been received in the form of convertible debt, of which £35 million has been drawn down to the date of the Auditor's Report. Upon receipt of such funds, the amounts were immediately converted from debt to the issuance of Class B shares.”

I also refer to Question S5W-18837 in the Scottish Parliament answered by Derek Mackay (26/09/2018): “The Scottish Government expanded the loan facility made available to BiFab to allow the completion of the BOWL contract and convert that loan to a minority equity stake in the new company. That amount will be determined by the extent to which the loan is used towards the completion of the BOWL contract. The shareholding will not exceed 38%.”

Yours faithfully,

Mr Paterson

Mr Paterson left an annotation ()

Reason given for redaction under section 30(c) conduct of public affairs:

"An exemption under section 30(c) of FOISA applies to some of the information you have requested including the names of the recipients and the purposes of the loans in cases 6, 7, 8, 11 and 12. This exemption applies to information whose disclosure would, or would be
likely to, prejudice substantially the effective conduct of public affairs.

It is essential for officials to be able to communicate, often in confidence, with external stakeholders on a range of issues, including issues of an operational or financial nature. The Scottish Government can only provide effective support to some loan recipients where this is provided in confidence with some degree of anonymity due to the nature in of the environment in which the loan recipient operates. It is important that the Scottish Government is able to engage effectively in discussions to ensure that any financial support or other issues are supported as robustly as possible and that sufficient research has been undertaken, sought, communicated and developed to ensure that we are engaging in work that is in the interests of best value for the people of Scotland before consideration of whether financial funding should be provided and when. Disclosing the full terms of the loan in these cases is likely to undermine stakeholder trust in the Scottish Government and will substantially inhibit negotiations of this type of issue in the future. In addition, disclosing the terms on which the Scottish Government lend for specific purposes would dilute our negotiating position and make it much more difficult to negotiate with sponsors on The Scottish Government’s behalf. This would significantly harm the Government’s ability to carry out many aspects of its work, and could adversely affect its ability to gather all of the evidence it needs to make fully informed decisions. "

Dear Scottish Government,

FOI 18/02239: Publication of response

Please ensure that the response to my request for an internal review is published on the Scottish Government's disclosure website on a prompt basis.

Yours faithfully,

Mr Paterson

Mr Paterson left an annotation ()

Appeal to Scottish Information Commissioner

Scottish Ministers have provided redacted information relating to my request. I request disclosure of information held in the public interest. I am appealing against Scottish Ministers’ use of section 30 (c) and 33 (1) (b) as reasons for redaction. I am not appealing against Scottish Ministers’ use of section 38 (1) (b) ‘personal data’ as a reason for redaction.

I highlight the following matters:

1. General public interest argument for full disclosure: Maintaining and increasing public confidence in public institutions - such as the government and parliament.

Subjecting public money to scrutiny builds public confidence in public institutions such as governments and parliaments. Scrutiny - by parliament and by the general public - reduces both the possibility and public perception of corruption or other wrong-doing in government decision-making. It encourages both the efficient and effective use of public resources and supports collective learning by experience. It helps protect both public ministers and private contractors through processes which are seen to be above board. Conversely, secrecy with public funds damages and in the long-term undermines public confidence in public institutions. I believe these loans have not been debated In the Scottish Parliament even in private session.

2. Scottish Ministers false use of commercial prejudice / conduct of public affairs.

The Scottish Information Commissioner needs to consider if Scottish Ministers are making false use of section 30 (c) ‘conduct of public affairs’ and section 33 (1) (b) ‘commercial interests’ as a shield to restrict disclosure and to prevent public and political scrutiny. Rather than prejudice the commercial interests of an entity or Scottish Ministers conduct of public affairs, it may be beneficial for disclosure for the entity’s existing / prospective customers and suppliers, employees and local communities.

Comparison of the two responses (to my request for internal review and the original response) shows that false use has been made of section 33 (1) (b) and (2) (b) in the original response. Some information previously redacted under section 33 (1) (b) is no longer redacted and section 33 (2) (b) is no longer used as a reason for redaction.

3. Changed reason for redaction to section 30 (c) (conduct of public affairs).

The response to my request for internal review includes redactions under section 30 (c). This reason for redaction was not given in the original response.

4. Information redacted is already in the public domain / continuing false use of section 33 (1) (b) (commercial interests) / false use of section 30 (c) (conduct of public affairs).

As information is already in the public domain, disclosure of information in my request can not prejudice the commercial interests of the parties concerned or undermine Scottish Ministers conduct of public affairs.

I refer to the reference numbers in Annex 1 to the response:
Ref (11): It is now in the public domain that the Scottish Government granted a loan of £15 million to Ferguson Marine Engineering Limited in September 2017 (see Scottish Government’s response to Freedom of Information request FOI/18/01889). The interest rate of 15% on the loan has been publicly released by Jim McColl, director and ultimate controlling party of Ferguson Marine Engineering Limited in an article in The Times, “Tycoon Jim McColl says he will sue CMAL over ‘albatross’ ferry deal as storm rages over £45m loan” published 23 September 2018.
Ref (13): This relates to Burntisland Fabrications Limited and the information is already in the public domain. Details of the conversion of the loan granted by the Scottish Government into shares in Burntisland Fabrications Limited is published in the company’s 2017 Annual Report available from Companies House: “Significant financial investment that has been received in the form of convertible debt, of which £35 million has been drawn down to the date of the Auditor's Report. Upon receipt of such funds, the amounts were immediately converted from debt to the issuance of Class B shares.”
I also refer to Question S5W-18837 in the Scottish Parliament answered by Derek Mackay (26/09/2018): “The Scottish Government expanded the loan facility made available to BiFab to allow the completion of the BOWL contract and convert that loan to a minority equity stake in the new company. That amount will be determined by the extent to which the loan is used towards the completion of the BOWL contract. The shareholding will not exceed 38%.”

Dear Scottish Government,

Second reminder

FOI 18/02239: Publication of response

Please ensure that the response to my request for an internal review is published on the Scottish Government's disclosure website on a prompt basis.

Yours faithfully,

Mr Paterson

Scottish Government

Dear Mr Paterson

Your FOI review response can be accessed at the flowing link:

https://beta.gov.scot/publications/foi-1...

Kind regards

FOI Unit

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Scottish Government

1 Attachment

Dear Mr Paterson,

Further to previous correspondence, please see attached.

Kind regards,

Marta Gawlak

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Dear Scottish Government,

Message for Marta Gawlak

Thank you for the update. I believe the other redacted loans relate to SPRUCE Funding - and the loans are held by TCL / Praxis and Amber Infrastructure Group - information already in the public domain. Is it really worth wasting any more time ?

Yours faithfully,

Mr Paterson

Scottish Government

1 Attachment

Dear Mr Paterson,

Please see attached.

Kind regards,

Marta Gawlak

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Mr Paterson left an annotation ()

Information Commissioner:

"The Commissioner believes that, had proper consideration been given to the information already in the public domain and whether, in this case, the disclosure would cause the substantial prejudice required for an exemption to be engaged, then it is highly likely that the Ministers would have disclosed the withheld information at the time they dealt with the request, rather than following an application to the Commissioner. Such disclosure may have obviated the need for an application to be made to the Commissioner, and avoided what could be considered unnecessary work for both the Commissioner's staff and those of the Ministers."