Dear Competition and Markets Authority,

In 2010/11 the Competition Commission waived through the transfer of Butlers (a trading division of ICAP providing Treasury Management Advice to councils, housing associations, and universities to CAPITA (Sector Treasury Services - STS).

In its report, the Competition Commission provided redacted details of Butlers and STS profits - namely "transactional income" from brokerage on LOBO loans to public sector clients, income not declared in either companies annual accounts.

Refer to Tables 1 and 2 for details: https://assets.publishing.service.gov.uk...

Please provide full and unredacted copies of the accounts (including Tables 1 and 2 of the report) provided by Butlers and STS to the Competition Commission, so as to reveal the profits/ margins being generated from LOBO Loan lending to public sector organisations including councils, housing associations and universities.

I understand such profits may have had a significant bearing on the "independence" or otherwise of financial advice provided by these firms to public authorities - on billions of pounds of public borrowing - and therefore a substantial public interest case exists.

The CMA in considering this request is likely to cite section 44(1)(a) of FoIA which provides that information is exempt from disclosure where its disclosure by the public authority holding it is prohibited by or under any other enactment, namely section 237 of the Enterprise Act 2002 (‘the EA02’)

As the information requested relates to a) historical trading profits, and b) both of the named companies (namely STS & Butlers) no longer exists post-merger, there should be no blanket application of 44(1)(a), rather the application of a qualified section 43(2) exemption - measured against the public interest test to understand what these advisers to public institutions were actually doing, and the scope and consequences of any relevant conflicts of interest.

Section 237 of the Enterprise Act states:

(2)Such information must not be disclosed—
(a)during the lifetime of the individual, or
(b)while the undertaking continues in existence

Butlers no longer exists as a legal entity (i.e. we are no longer during its natural "lifetime") meaning a section 237 defence does not apply, and Sector/ CAPITA, subsequently renamed 'Capita Asset Services' no longer exists as a going concern & was subsequently disposed of to "Link Asset Services."

Any blanket exemption in these circumstances would demonstrate a general reluctance on the part of the CMA to provide the information requested to the general public, whom these TMA firms were ostensibly required to serve, as advisors to public authorities as stewards of taxpayer funds.

I note the CMA's remit is to: "make markets work well for consumers, businesses and the economy." with duties including:

- investigating mergers which could restrict competition
- conducting market studies and investigations in markets where there may be competition and consumer problems
- investigating where there may be breaches of UK or EU prohibitions against anti-competitive agreements and abuses of dominant positions

The information requested relates to such a merger, whereby both Butlers and Sector "independent" advisors to local government were infact taking undeclared kickback payments from brokers (namely ICAP and Tullet Prebon) when local authority LOBO loans were routed exclusively via these brokerage firms.

That these payments were made and received is a matter of public record by the Competition Commission and 2015 CLG 'Local Government Bank Loans Inquiry', and yet details of such anti-competitive and potentially fraudulent behaviour were neither acted upon by the Competition Commission, nor passed on to other agencies such as the Financial Conduct Authority, CIPFA or DCLG who could have acted upon this information to protect the public purse? Instead the merger was allowed to proceed, reducing four market players to three.

Having accurate information regarding the scale of local government brokerage kickback payments made and received by these firms will assist the Commons Communities and Local Government Select Committee inquiry into LOBO loans ascertain the scale of skewed incentives, which drove inapproriate advice and bank lending to the local government sector. A pursuit one expects both the CMA and Competition Commission would support.

Given the scale of public funds involved (£15bn+) there is a significant public interest case in favour of disclosing this information in full, thus allowing citizens to act upon the information to resolve ongoing market abuse where institutions with duties in this arena to ensure transparency and competitive markets have failed.

Yours faithfully,

Joel M Benjamin

Dear Competition and Markets Authority,

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

I am writing to request an internal review of Competition and Markets Authority's handling of my FOI request 'Supporting documents, profitability and un-redacted report into Butlers-Sector 2010/11 merger'.

The CMA has refused the entire request on the basis that an "undertaking", namely Treasury Management Advice services provided previously by Butlers and Sector still continues under the auspices of Link.

Infact, in relation to the specific nature of the request, the actual activity that is the focus of the request, i.e. the taking of profit from (largely) undisclosed commission/facilitation payments from money brokers on LOBO loans, resulting in market abuse to local authorities by Treasury Management Advisors (TMA) does not constitute an "undertaking" as no service was either contractually sought or provided by the TMA, as the decision as to if and how to borrow was at the sole discretion of the council, not the advisor.

As stated by TMA firm Arlingclose (the one TMA firm not to accept LOBO commissions) to the Communities and Local Government Bank Loans inquiry in 2015:

"We also now know that some treasury advisers were financially rewarded by money broking companies when their advisory clients borrowed LOBOs, even though the decision to do so was entirely at the discretion of the local authority concerned.

Since, it is claimed, that the role of the adviser was to provide merely comparative information together with economic forecasts from a number of unspecified economists in return for a consultative fee, we wonder what service the adviser was providing to the local authority in return for the commissions paid to it by money brokers. It doesn’t appear to have been to rebalance the information asymmetry in favour of their clients. These commissions paid by money brokers often being well in excess of the consultative fee paid by the local authority in the form of an annual retainer."

http://data.parliament.uk/writtenevidenc...

In any case, the market for LOBO loans which drove these facilitation payments/ commissions has not existed since 2012, when the LOBO loan market closed, with introduction of the Localism Act which allowed for the transparent use of stand alone derivatives by councils, and UK Bribery Act which prohibited the payment of facilitation payments, of the type received by Butlers/Sector.

Therefore the specific activity that is the purpose of this request (facilitation payments to TMAs on LOBO Loans) should be seen as historical, and no longer existent.

Additionally, the Treaty of Lisbon (Changes in Terminology) Order 2011 and specifically Article 6(1)(3) and (4) negate s44 of the FoIA 2000. See: http://www.legislation.gov.uk/ukpga/2000...

Section 240 of the Enterprise Act (EU regulation) states: 'This Part does not prohibit the disclosure of information held by a public authority to another person, if the disclosure is required for the purpose of a [F1EU] obligation

The General Data Protection Regulation (GDPR) is a community (EU) piece of legislation and the UK is required by law to follow its articles as of the 25th May 2018.

GDPR Article 6(1)(e) allows for a lawful basis for processing where:

 “processing is necessary for the performance of a task carried out in the public interest or in the exercise of official authority vested in the controller”

It is essential to realise that s6(1)(e) is made up of two clauses joined by the co-
ordinating conjunction “OR” Section 8 of the Data Protection Act 2018 (DPA 2018) says that the public task basis will cover processing necessary for:
 the administration of justice;
 parliamentary functions;
 statutory functions;
 governmental functions; or
 activities that support or promote democratic engagement.

However, this is not intended as an exhaustive list. The release of the unredacted Butlers - Sector merger review would support and promote informed democratic engagement with the public, and is in the public interest.

Additionally, release of the full unredacted report would further the CMA's statutory functions, namely to 'prevent anti-competitive behaviour in the regulated industries.'

Art 9(2)(g) GDPR
Art 9(2)(g) states: 
 processing is necessary for reasons of substantial public interest, on the basis of
Union or Member State law which shall be proportionate to the aim pursued, respect the essence of the right to data protection and provide for suitable and specific measures to safeguard the fundamental rights and the interests of the data subject;

Section 10 of the DPA 2018
Sets out a 10(1)(b) - point (g) (substantial public interest) -(g) relates to
Art 9(2)(g) (Recital 51) - processing is necessary for reasons of substantial public
interest, on the basis of Union or Member State law which shall be proportionate to the
aim pursued, respect the essence of the right to data protection and provide for suitable
and specific measures to safeguard the fundamental rights and the interests of the data
subject;

It is clearly of substantial Public Interest to know the full content of the unredacted Butlers - Sector merger review as LOBO loans promoted and sold to public authorities by these entities which made up the bulk of their trading profits 2003-2010 have been in the news consistently since 2015.

Furthermore legal cases has been lodged by 15 Authorities which directly relates to LOBO Loans.
The public interest should be assessed by reference to the circumstances at or around the time when the request is considered by the public authority (including the time of any internal review)

FOIA Section 2(2)(b) requires the authority to consider whether “in all the circumstances of the case”, the public interest in maintaining the exemption outweighs the public interest in disclosure. 

Article 86, recital 154
Article 86 - Personal data in official documents held by a public authority or a public body
or a private body for the performance of a task carried out in the public interest may be
disclosed by the authority or body in accordance with Union or Member State law to which
the public authority or body is subject in order to reconcile public access to official
documents with the right to the protection of personal data pursuant to this Regulation.
Recital 154 - This Regulation allows the principle of public access to official documents to
be taken into account when applying this Regulation. Public access to official documents
may be considered to be in the public interest. Personal data in documents held by a
public authority or a public body should be able to be publicly disclosed by that authority
or body if the disclosure is provided for by Union or Member State law to which the public
authority or public body is subject. Such laws should reconcile public access to official
documents and the reuse of public sector information with the right to the protection of
personal data and may therefore provide for the necessary reconciliation with the right to
the protection of personal data pursuant to this Regulation. The reference to public
authorities and bodies should in that context include all authorities or other bodies
covered by Member State law on public access to documents. Directive 2003/98/EC of the
European Parliament and of the Council¹ leaves intact and in no way affects the level of
protection of natural persons with regard to the processing of personal data under the
provisions of Union and Member State law, and in particular does not alter the obligations
and rights set out in this Regulation.

In particular, that Directive should not apply to documents to which access is excluded or restricted by virtue of the access regimes on the grounds of protection of personal data, and parts of documents accessible by virtue of those regimes which contain personal data the re-use of which has been provided for by law as being incompatible with the law concerning the protection of natural persons with regard to the processing of personal data.

Pursuant to Art 86, personal data “may be disclosed by the authority […] in order to
reconcile the right to public access to official documents with the right to the protection of personal data”. This clarifies that the GDPR does not preclude a granting of access. It is the national legislatures’ task to “reconcile public access to official documents and the reuse of public sector information with the right to the protection of personal data” (Recital 154 sentence 4). In this context, it must be considered that against a Member State “a right to access documents might directly be based on Art.11 Charter”. 

Pursuant to the case law of of the ECtHR , the ECtHR recognizes a right to access documents under Art.10 ECHR if: 
 (i) the party requesting access has a social “watchdog function which does not
only encompass the press but also NGOs; 
 (ii) the requested information relates to a subject matter that is of public
interest; and 
 (iii) the requesting party acts with the intention to disclose the received
information to the public and thus, to contribute to the public
discourse (ECtHR 14 April 2009 Tarsasag a Szabadsagjogokert v Hungary No.
37374/05; 26 May 2009, Kenedi v Hungary , No. 31475/05; 25 September
2013, Youth Initiative for Human Rights v Serbia No. 48135/06; 28 November
2013, Austrian Association for the preservation, strengthening and establishment of
an economically healthy agriculture and forestry property v Austria No. 39534/07)
Pursuant to Art 52 para 3 Charter, this case law of the ECtHR must be
considered when interpreting Art 11 Charter.

As a member of Debt Resistance UK and Research for Action investigating LOBO loans, a journalist and a blogger, the first criteria is met. The second is met because a group of local authorities has issued a protective claim against Barclays bank regarding its involvement in manipulation of the LIBOR
benchmark rate and the impact of this on their ‘lender-option, borrower-
option’(LOBO) loan transactions with the bank.

Finally the third criteria is met as Debt Resistance will share this with the wider world to help the public better understand the historical issues surrounding LOBO Loans, including the historical failure of regulatory authorities to discharge their statutory duties to prevent market abuse and protect consumers and the general public.
 
The Public Interest FOIA requires that:
“... a public authority shall have regard to the public interest – (a) in allowing public access to information held by the authority, and (b) in the publication of reasons for decision held by the authority.”

In Lord Baker v the Commissioner and the Dept for Communities and Local Government (EA/2006/0043) the Tribunal commented that transparent provision of the full information behind a decision removes any suspicion of ‘spin’ and therefore promotes confidence in public authorities: ‘by making the whole picture available, it should enable the public to satisfy itself that it need have no concerns on the point’.[EA/2006/0043].

Release of the unredacted Butlers - Sector merger review will promote accountability and transparency. Placing an obligation on the CMA and its officials to provide reasoned explanations for decisions made will improve the quality of decisions and administration.

The release of the unredacted Butlers - Sector merger review will promote accountability and transparency in how the spending of public money occurred.

The public interest is best served in the context of transparent private sector delivery of Money
Market obtained Money and how this was used by the Councils who took out LOBO Loans.

The release of the unredacted Butlers - Sector merger review will allow individuals to understand the motivations of Treasury Advisors and resultant decisions made by public authorities to take out LOBO Loans and how this affected their lives and, in this case, it will assist individuals in challenging those decisions via their right to Challenge those Councils who took out the loans via the Local Audit & Accountability Act 2014.

The Information Tribunal in Hogan made this point at paragraph 60: 
 “While the public interest considerations against disclosure are narrowly
conceived, the public interest considerations in favour of disclosure are broad-
ranging and operate at different levels of abstraction from the subject matter
of the exemption.”
Furthermore it is alleged that billions of pounds worth of loans were mis-sold to
public sector organisations upon the advice of Butlers/Sector. The release of the
requested information would shed light on whether or not this was the case or not. A
group of local authorities has issued a protective claim against Barclays bank
regarding its involvement in manipulation of the LIBOR benchmark rate and the
impact of this on their ‘lender-option, borrower-option’(LOBO) loan transactions with
the bank.

The case of Mersey Tunnel Users’ Association v Information Commissioner
and Mersey travel (EA/2007/0052, 15 February 2008), says at paragraph 46 
 “legitimate and serious questions can readily be asked about both the power
to make the payments and the obligation to do so”

If as alleged billions of pounds of LOBO Loans were mis-sold, the release of the full, unredacted Butlers - Sector merger review would provide information as to whether or not such allegations
have foundation or not. 

As well as the general public interest in transparency, which is always an argument for disclosure, there is also be a legitimate public interest in the subject the information relates to. Release of the additional redacted information would help ascertain the extent to which the public were or were not ripped off by Butlers/Sector.

It is the Information in the document, which needs to be subjected to the Public Interest Test, not the document itself.

For these and other reasons I request the redacted information be released. If my request is
denied in whole or in part, I ask that you justify any redaction or blanket refusal by reference to specific exemptions of the act. I will also expect all non-exempt material to be released.

I look forward to your response within 20 working days, as outlined by the act.

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

Yours faithfully,

Joel M Benjamin