LOBO loans

Waiting for an internal review by Rhondda Cynon Taf County Borough Council of their handling of this request.

Jamie Griffiths

Dear Rhondda Cynon Taff 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

Gummer, Claire, Rhondda Cynon Taf County Borough Council

Dear Mr Griffiths

Thank you for your request for information which is receiving attention.

We are looking into this matter and shall contact you again in due course.

Yours sincerely

Claire

Claire Gummer
Corporate Governance Team
Legal & Democratic Services
Rhondda Cynon Taff C.B.C.
The Pavilions
Cambrian Park
Clydach Vale
Tonypandy
CF40 2XX

Tel: (01443) 424111
Fax: (01443) 424114
Email: [email address]

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Gummer, Claire, Rhondda Cynon Taf County Borough Council

Dear Mr Griffiths

The Authority's response to your Freedom of Information Request is set out below.

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

Rhondda Cynon Taf currently has 4 LOBO contracts

2. When were they signed and by whom?

2 LOBO's were signed in July 2003, the other 2 were signed in July 2004. The Group Director, Corporate Services entered into the agreements.

3. With which financial institutions were they taken out?

Barclays
Dresdner
Depfa

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

Before entering into the LOBO Agreement advise was taken from the Council's Treasury Management Consultants at that time.

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

Since signing the contracts the lender has not 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.

N/A

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

We are unable to provide copies of the original, signed LOBO agreements. This is because the information is classed as exempt under Section 43 (commercial interests) of the Freedom of Information Act, namely information can be withheld if its disclosure would, or would be likely to prejudice the commercial interest of any person.

This is a qualified exemption and we have therefore applied the public interest test. In making this decision we have weighed such factors as the Council's desire to be open and transparent in all its dealings against the need to ensure that it is able to contract openly in the market place and also to protect the commercial interests of those companies and bodies it deals with.

Accordingly, insofar as this element of your request is concerned and in accordance with Section 17 of the Freedom of Information Act ("the Act") this email acts as a Refusal Notice.

As you may be aware you have a right of appeal against this decision. If you wish to exercise this right please set out in writing your grounds and send your appeal to the Council's Principal Democratic Services Officer. Her name is Mrs. Christine Macey and she may be reached at [email address] or on 01443 424076.

Yours sincerely

Claire
 
Claire Gummer
Corporate Governance Team
Legal & Democratic Services
Rhondda Cynon Taff C.B.C.
The Pavilions
Cambrian Park
Clydach Vale
Tonypandy
CF40 2XX
 
Tel:  (01443) 424111
Fax: (01443) 424114
Email:  [email address]

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Jamie Griffiths left an annotation ()

Contracts withheld, Treasury Advisors not named.

Jamie Griffiths

Dear Rhondda Cynon Taff Council,

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

I am writing to request an internal review of Rhondda Cynon Taff Council's handling of my FOI request 'LOBO loans'.

Specifically, I feel that the responses provided to parts 4 and 7
of my request are inadequate.

In response to the question "Who advised the council to enter the LOBOs?" the council responded: "Before entering into the LOBO Agreement advise was taken from the Council's Treasury Management Consultants at that time." I feel that more explanation is required here - is there a record of who was acting as the council's Treasury Management Consultants at the time each contract was signed? If so, can this information be provided?

In response to part 7, "Please provide a copy of the original, signed LOBO agreements" the council responded: "We are unable to provide copies of the original, signed LOBO agreements. This is because the information is classed as exempt under Section 43 (commercial interests) of the Freedom of Information Act, namely information can be withheld if its disclosure would, or would be likely to prejudice the commercial interest of any person.

This is a qualified exemption and we have therefore applied the public interest test. In making this decision we have weighed such factors as the Council's desire to be open and transparent in all its dealings against the need to ensure that it is able to contract openly in the market place and also to protect the commercial interests of those companies and bodies it deals with."

The MoJ has provided very clear guidance on exempting information due to commercial interests. This guidance contains the following:

"It is important to note, however, that a simple assertion by an individual or body that there would be prejudice to his or its interests is not sufficient. The assertion must be supported by reasoned argument, and where practicable by empirical evidence. In particular it is not sufficient for a body simply to mark a document commercial in confidence for the information in it to be exempt."

Similar guidance from the ICO (on applying the prejudice test) also states that "The authority must be able to show
how the disclosure of the specific information requested would or would be likely to lead to the prejudice." In other words a causal link must be established. I feel the Council has failed to establish such a causal link here between disclosure of the documents and prejudice to its ability to "contract openly in the market place".

As for any supposed prejudice to the commercial interests of the lenders please note that numerous local authorities have fully responded to similar requests, providing digital copies of the LOBO loan contracts. Lenders named in these contracts have included Barclays, Dresdner and DEPFA. In
other words, the contracts used by all lenders named in the response are already publicy available. Furthermore, these are all large financial institutions with very large loan books. Disclosure of the details of a tiny number of these loans could never cause substantial prejudice to their commerical interests.

I appreciate that the Council has acknowledged a general public interest in disclosure but it has failed to weigh the specific interest in scrutinising these particular loan contracts which, according to Department for Communities and Local Government Borrowing and Investment Live tables make up over 44% of Rhondda Cynon Taff Council's long term debt. There is a public interest in benchmarking these loans against equivalent PWLB loans to determine whether the Council has exposed itself to unneccessarily high borrowing costs, interest rate risk or refinancing risk.

Furthermore, since the activities of the Treasury are incidental to Council being able to carry out its primary functions (and not strictly commercial activities) there is a great public interest in scrutinising decisions which could place these primary functions (e.g. providing essential services) at risk.

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

Gummer, Claire, Rhondda Cynon Taf County Borough Council

Dear Mr Griffiths

Thank you for your email.

Your request for an internal review of your Freedom of Information Request has been passed to the Service Director of Legal & Democratic Services, who will look into the matter and be in touch in due course.

Yours sincerely

Claire
 
Claire Gummer
Corporate Governance Team
Legal & Democratic Services
Rhondda Cynon Taff C.B.C.
The Pavilions
Cambrian Park
Clydach Vale
Tonypandy
CF40 2XX
 
Tel:  (01443) 424111
Fax: (01443) 424114
Email:  [email address]

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