LOBO loans

Jamie Griffiths made this Freedom of Information request to Brighton and Hove City Council

This request has been closed to new correspondence. Contact us if you think it should be reopened.

Waiting for an internal review by Brighton and Hove City Council of their handling of this request.

Dear Brighton and Hove City Council,

1. How many Lender Option Borrower Option (LOBOs) contracts do you have on your books?

2. When were they signed and by whom?

3. With which financial institutions were they taken out?

4. Who advised the council to enter the LOBO(s)?

5. Since each Contract has been signed, has the lender exercised their option and changed the interest rate?

6. If so, please specify the dates of the interest rate changes and the revised interest rates.

7. Please provide a copy of the original, signed LOBO agreements.

Yours faithfully,

Jamie Griffiths

Brighton and Hove City Council

This is an update regarding your request for information under the Freedom
of Information Act 2000, ref: FOI:4638/2015

Please see link to attachment

This update can also be viewed online at:
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Brighton & Hove City Council
Hove Town Hall
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Hove, BN3 4AH
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Jamie Griffiths left an annotation ()

Contracts not provided - no reason given.

Jamie Griffiths

Dear Brighton and Hove City Council,

Please pass this on to the person who conducts Freedom of Information reviews.

I am writing to request an internal review of Brighton and Hove City Council's handling of my FOI request 'LOBO loans'.

In particular the Council has provided no response to part 7 of my request ("Please provide a copy of the original, signed LOBO agreements.")

If the Council wishes to apply an exemption to the LOBO agreements then it is obliged to state under which section of the Freedom of Information Act 200 it wishes to do so.

Please note the following:

1. Exemptions under Section 43 are qualified exemptions and are therefore subject to the public interest test.
2. Exemptions under Section 41 are also subject to the public interest test by virtue of the inherent public interest test contained in the common law duty of confidence

In order to assist with the review allow me to set out both the general and specific public interest in disclosing the LOBO loan agreements:

- Generally, there is a public interest in disclosure in order to ensure there is transparency in the accountability of public funds
- Specifically, there is a public interest in disclosing the LOBO loan agreements because LOBO loans are very long term loans and also complex financial instruments with embedded derivatives which could adversely affect the Council's financial position and endanger its ability to carry out essential services. There is also considerable likelihood that they represent poor value for money when compared with PWLB loans over the same period. In order to assess the fair value of the loans and make the true financial position of the Council publicly known it is essential that the contracts are disclosed.

I accept that the contracts may contain information which is confidential for other reasons (e.g. signatures, bank account details) but please note that many other UK local authorities have provided LOBO loan agreements with this information redacted.

A full history of my FOI request and all correspondence is available on the Internet at this address: https://www.whatdotheyknow.com/request/l...

Yours faithfully,

Jamie Griffiths

Freedom Of Information, Brighton and Hove City Council

Dear Mr Griffiths,

 

Thank you for your email. I acknowledge your request for an Internal
Review of FOI 4638, under appeal reference IA 15014.

The purpose of an Internal Review is to reassess what has been, or has not
been, provided as part of an FOI or to review the quality of the
information provided. It is a final opportunity for the council to make
changes or amendments to the information provided.

 

I shall write to you by 19 June 2015 with the outcome of the review.

Regards,

Adam Rezazadeh | Information Governance Officer (Security and Standards
Team) | 4th Floor | Kings House | Grand Avenue | Hove | BN3 3LS |

 

 

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Freedom Of Information, Brighton and Hove City Council

1 Attachment

Dear Mr Griffiths,

 

Please see the attached document for the outcome of your internal review
of FOI 4638.

Regards,

Adam Rezazadeh | Information Governance Officer (Information Governance
Team) | 4th Floor | Kings House | Grand Avenue | Hove | BN3 3LS |

 

Notice to recipient:
The information contained in this electronic mail message is intended only
for the use of the individual to whom it is addressed
and may contain information which is privileged and confidential, the
disclosure of which is prohibited by law.
If the reader of this message is not the intended recipient, please note
that any dissemination, distribution or copying of this
communication is strictly prohibited. If you have received this
communication in error please notify the sender immediately.
Thank you in anticipation of your co-operation.

You can visit our website at http://www.brighton-hove.gov.uk

Please consider the environment, only print out this email if absolutely
necessary.

Please Note:  Both incoming and outgoing Emails may be monitored and/or
recorded in line with current legislation.

Jamie Griffiths

Dear Adam,

Thank you for your response to my request for an internal review of the Council's response to my FOI request 'LOBO loans, a full history of which can be found online at https://www.whatdotheyknow.com/request/l...

Because no reason was provided in the original response I hope you will allow me to challenge the outcome of the internal review. Otherwise I will have no choice but to turn to the Information Commissioner's Office.

Firstly, you invoke Section 40(2) of the FOIA when you state that disclosure of account numbers, signatures etc would leave the Council exposed to fraudulent actors. However, this information could easily be redacted (as many other local authorities have done when responding to similar requests) without destroying the additional information I require, namely the loan repayment date, the formula determining interest rate and the frequency of Lender's Option Dates. All of these are necessary to determine the fair value of the loan and gain a true understanding of the Council's financial position.

Secondly, I am glad that you have taken my public interest arguments on the side of disclosure into account but I am afraid that the public interest test has been applied incorrectly and that to much weight has been given to the factors you name in favour of non-disclosure.

You say that scrutiny of the LOBO loan contracts by the pubic will not change the agreements of current loans. This may be so but there is a substantial public interest in understanding the interest rate risk and refinancing risk to which, through becoming counterparty to complex financial instruments with embedded derivatives, Brighton and Hove City Council may have exposed itself.

You also state that the loans were taken out after consultation with Treasury Advisors, presumably to reassure me that the decisions were subject to some external scrutiny. However, there is reason to believe that Butlers, the Treasury Manangement Advisors in place at the time the LOBO loan agreements were signed might have been subject to a conflict of interest since ICAP, the company of which Butlers is a subsidiary, also has subsidiaries which act as brokers in LOBO loan deals (and earn commission on those deals).

Finally, you assert that revealing the requested information could limit the Council's ability to obtain best value for money, without drawing a causal link between disclosure and any prejudice to the Council's commercial interests. When looking to the market for borrowing in future the Council's ability to obtain favourable rates will be determined overwhelmingly by its overall level of indebtedness, income and outgoings, not by the specific details of individual loan contracts. Furthermore, if the Council has materially damaged its financial standing by entering into these LOBO contracts then this is not currently reflected in the Council's Statements of Accounts and adds further weight to the public interest argument in favour of disclosure.

In short, I do not feel that the arguments in favour of non-disclosure which you have set forth outweigh the arguments in favour of disclosure. I urge you to remember that the spirit of the FOIA is to release information by default and to apply qualified exemptions only when there are very strong public interest arguments against disclosure. I therefore urge you to reconsider your decision.

If redacting and scanning the requested documents proves too troublesome I would accept, in addition to the information already provided, the following details for each loan:
- Maturity/repayment date
-Dates of interest payments
-Initial interest rate and any rule/formula determining subsequent interest rates
-The date of the first Lender's Option Date (or 'LOBO Date', 'Change Event' etc)
-The frequency of Lender's Options Dates

Yours sincerely,

Jamie Griffiths