Once again, we are indebted to Darryl Magher for his work trying to discover the secrets of Sandwell's "brilliant deal" - so good that Sandwell Council and the avaricious College won't tell us, the people, about it!
PLEASE NOTE THAT THIS IS A TECHNICAL POST CONTAINING THE ACTUAL APPEAL TO THE INFORMATION COMMISSIONER AGAINST THE REFUSAL BY SMBC AND THE RAPACIOUS SANDWELL COLLEGE TO DISCLOSE THE PUBLIC "DEAL" EVEN VIA FREEDOM OF INFORMATION LEGISLATION. IT IS "HARDCORE" AND I AM NOT EXPECTING THE GENERAL READER TO PLOUGH THROUGH IT ALL BUT IT IS IMPORTANT THAT THIS SHOULD BE IN THE PUBLIC DOMAIN - PARTICULARLY GIVEN THE CRAVEN BEHAVIOUR OF THE EXPRESS AND STAR, BBC ET AL. THIS HAS BEEN POSTED TO THE INFORMATION COMMISSIONER BUT IF ANYONE CAN HELP THE CAMPAIGN FOR THE TRUTH (LAWYERS PARTICULARLY) PLEASE GET IN TOUCH.
THE SANDWELL SKIDDER - A COMMUNITY BLOG
e thesandwellskidder@gmail.com t @bcrover (Vernon Grant)
Confidential phone no: 07599 983737
The following document was sent my mail to The Information Commissioner with copies to SMBC and Sandwell College on 25th June, 2014:
COMPLAINT TO THE INFORMATION COMMISSIONER’S OFFICE
FREEDOM OF INFORMATION ACT 2000
25th JUNE, 2014
Concerning matters relating to the former arts centre known as The
Public, West Bromwich and FoI Act requests to Sandwell Metropolitan Borough
Council (1) and Sandwell College (2)
History of the
Requests:
1. In respect of
Sandwell Metropolitan Borough Council (“SMBC”) (all via WhatDoTheyKnow.com):
(a) Request 15/01/14;
(b) Reply 27/01/14;
(c) Request for Internal Review 14/03/14;
(d) Response following Internal Review 11/04/14.
2. In respect of Sandwell College (“SC”) (all via
WhatDoTheyKnow.com):
(a) Request 15/01/14;
(b) Reply (incomplete) 27/02/14 (enclosures finally
disclosed 17/03/14);
(c) Request for Internal Review 16/03/14;
(d) Reply 11/04/14
The above together with all other correspondence relating to
this complaint via WhatDoTheyKnow.com forms part of this complaint. In
particular, I would refer you specifically to the points raised in my Request
for Internal Review addressed to both parties although that document related to
my state of knowledge at that particular date and certain points require
correction, amplification and further explanation. Also, with the passage of
time, some new information has come to light and this is set out below.
IT IS FUNDAMENTAL
THAT THE TERM “LEP” IN RESPECT OF THIS MATTER DOES NOT RELATE TO THE
LOCAL ENTERPRISE PARTNERSHIP BUT TO THE SO-CALLED “LOCAL EDUCATION PARTNERSHIP”
SET UP BETWEEN SANDWELL COUNCIL AND INTERSERVE-RELATED COMPANIES IE. SANDWELL
FUTURES LIMITED (“SFL”).
Save where specifically stated below the following is
generic information in respect of the complaints against both public
organisations.
The Background to the
Requests:
The Public was a large, bespoke, arts and community centre
in central West Bromwich designed by an internationally-renowned architect. It
was principally funded by the taxpayer via The Arts Council, The European
Regional Development Fund and Advantage West Midlands (“AVM” - now defunct and
whose legal responsibilities are believed to now lie with the Department for Business,
Innovation and Skills - “BIS”). The project had a difficult gestation and birth
and was mired in controversy. Eventually SMBC stepped-in to “rescue” the
project although there is some social media evidence that suggests the political
leadership of SMBC had ulterior motives in taking this action. It seems that
the funding bodies effectively washed their hands of the project at this point
although there is a suggestion that there may be either (1) a restriction
against a disposal of the building without the consent of AVM and/or (2) a
restriction against change of use of the building without the consent of AVM,
its successors in title. Certainly the restriction (2) is contained in the
freehold title WM711428 but there is also reference in SMBC documents disclosed
to date which appear at least to show that restriction (1) is also in play. I
am attempting to make further investigations concerning this aspect of the
matter.
As with most matters concerning this case everything has
been kept secret by the parties save where they have been forced to provide
information via FoI requests or they have deliberately leaked information to
the media via their “spin-doctors”. Suffice to say here that from “day one” of
the “rescue” of The Public by SMBC they set about a series of rolling reviews
as to the future of the building. This culminated in them wasting £39,000 ex
vat of taxpayers’ money in Spring 2012 on two ludicrous reports from expensive
property consultants, Jones Lang LaSalle (“the JLL reports”) which they then
declined to publicly disclose. I am not privy to the secret instructions to JLL
but it is clear that their brief – whatever else it included – was to consider
other uses for the building without it be converted for any other purpose
(which JLL themselves recognised would be a costly matter). There is no need
for me to go into too much detail here but two of their £39,000 conclusions
were that the building was most definitely NOT suitable for use as either a
college or a school.
It is also relevant here, as far as Freedom of Information
is concerned, that SMBC fought tooth and nail against disclosing the JLL
reports and specifically
refused to do so pursuant to a FoI request dated 2nd September, 2013
from Mr Brian Crockett (via WhatDoTheyKnow.com “The Public – commissioned
reports” - SMBC reference INT1-338051304). SMBC’s contempt for FoI law was
shown by the fact that despite refusing to make disclosure via the Act they later deliberately leaked
information from the reports to the local Express and Star “newspaper”. (You
will encounter this same modus operandi again below).
In the meantime, SC were having a brand new £77m campus
built for them by Interserve plc (see again below), also in central West Bromwich. There are media quotes
from the time that SC were dissatisfied with the size of their proposed new
building and, for reasons unknown, the “leader” of SMBC, Councillor Darren
Cooper, also complained to the press with regard to this although, of course,
SC is not funded by, and is (allegedly) independent of, SMBC. Accordingly, we are
told that in September, 2012 – at the precise time that SC were moving into
their brand new building – they decided they wanted to grab The Public too and
so approached SMBC to take the multi-million pound building and change its
usage. It appears to be implicit in everything that has come to light thus far
that, having just received a £77M building, there was no way that SC could get
central government funding for a second multi-million pound site in West
Bromwich and nor did they have the capability to borrow the money to acquire
the Public site. For reasons unknown, SMBC took it upon themselves to borrow
the money to convert the building for them.
Both SMBC and SC are publicly-funded bodies and their
spending should be susceptible to public scrutiny. The former is, of course, a
local authority and the latter is a college, funded almost entirely by the
Skills Funding Agency and other government bodies. Nevertheless, they have both
taken every precaution to keep their dealings secret and, in the case of SC,
they have redacted all minutes relating to The Public from the minutes of the
meetings of their Board of Governors (although SOME of these have now come to
light via other FoI requests and further requests are pending). Accordingly,
the events between SC’s grab for the building in September, 2012 and May, 2013
are mostly still secret. On 9th May, 2013 (and this date is
important) SMBC and SC held a number of press briefings announcing to the world
that The Public would be closed as an arts centre and that the building would
be converted for use as a sixth-form college/school opening in September, 2014
thus giving the impression that apart from the legal niceties, this was a “done
deal”. SC were to be given a 25 year “lease” of the building (possibly with
break-clauses although that is still secret 6 months after the “deal” was
signed). I believe that many of the “problems” which are slowly emerging in
respect of this still-secret deal is that there was no, or no adequate planning,
involved and the parties created a very tight timetable to complete the
project. Thus the planning has proceeded on a “back of an envelope” basis and
everything has been done retrospectively to “fit in” with the he pre-ordained political decision by the SMBC “leadership”.
Thus it has now been established that there was no formal appraisal of the proposed scheme before the press conferences and the public announcements on 9th May, 2013 as one would obviously have expected. SMBC hurriedly arranged such an exercise (for what it was worth) at a meeting on 22nd May, 2013 some 13 days after the “deal” had been announced. Unsurprisingly the college deal was chosen as the way forward but, even though this so-called meeting was held after the event, there are three very important matters arising therefrom:
1. It was recognised that the proposal at that time, ie for
SMBC to grant a 25-year lease to SC, could be seen as a “disposal” and with
reference to what I have said above, there is a specific minute from the
meeting which reads: “NB – SMBC is not allowed to dispose of the building”.
There was clearly some concern with regard to this and at this meeting (if not
before) it was decided that although there would be a 25 year lease which would
be registered with HM Land Registry (again see further below) they would simply
call the whole deal a “concordat” and that would solve the “problem”. The
minute specifically reads: “Concordat rather than lease ensures that a change
of use is not viewed as a disposal”. Obviously one of the whole purposes of the
FoI request was to consider the legality of the whole transaction and it is
vital for this (and for many other reasons) that I can see both the “concordat”
and the lease and take suitable legal advice.
2. It was perfectly possible for SMBC to employ a contractor direct for the conversion works (even Interserve Construction Limited) yet at the meeting on 22nd May, 2013 it HAD ALREADY BEEN DECIDED that the multi-million contract for the conversion of the arts centre to a college would not be put out to competitive tender (when Interserve Construction Limited could have tendered if they so wished) but would be gifted to Sandwell Futures Limited (“SFL”) in which SMBC itself has a 10% shareholding. The two other main shareholders in SFL are Interserve-related companies and Dalmore Capital (as successors to Barclays Private Equity). As will be seen, SFL themselves then sub-contracted for Interserve Construction Limited to actually do the fit-out work since SFL are just a “special purpose vehicle” used for channelling BSF monies to various parties and who state in their accounts that they have “no employees”. It is not clear at this stage who within SMBC had already made the decision to gift the contract to Interserve Construction Limited via SFL (more below) but it would appear to be the political leadership of SMBC, in the full knowledge that SFL could not do the actual work but would sub-contact it to Interserve Construction Limited. There has been no suggestion to date that SFL had exclusivity in respect of this work but rather, as we shall see, it just happened to be convenient to use them under an existing procurement arrangement. As above, at this stage, the announcement had ALREADY been made for the college/school to open in September, 2014 and so it would have been an impossibility within that timescale for SMBC to properly put the matter out to tender and to comply with the timescale that it, itself, had devised and imposed upon itself. In those circumstances, it is particularly incumbent on SMBC to show that they have secured best value for the public purse in such a peculiar arrangement but they have refused to disclose all material terms of the various contracts as requested in my original FoI request. I should add that, at this stage, the precise business arrangements between SMBC, SFL and Interserve group companies are opaque but those employees meeting on 22nd May, 2013 were somehow of the view that awarding SFL the contract (rather than Interserve Construction Ltd direct) and to the exclusion of all Interserve’s competitors was in some way beneficial to SMBC – the actual minute reads (my emphasis): “Sandwell Futures would be appointed by SMBC to undertake the work required (opportunity)”. It will be shown below that when SMBC and SC purported to disclose the “concordat” etc. they did so in a way whereby all operative clauses were redacted and only the “boiler-plate” clauses disclosed. One of the reasons given for this is said to be commercial confidentiality but clearly there is a public interest, not least to other potential contractors with SMBC, if there is some sort of existing “side-deal” between SFL and SMBC whereby it is advantageous and “an opportunity” for SMBC to contract solely with SFL and exclude all others. There is an obvious potential conflict of interest here and a very real risk that the public may not get “best value” from such an arrangement. Accordingly the public interest for full disclosure outweighs the rights of the parties to any, or any alleged, “commercial confidentiality” and the full contracts should be disclosed as requested. Incidentally, the figures leaked by SMBC to the media in respect of the conversion costs range from £5.5M to £6.72M which seems an extraordinarily wide “range” and seems to give the especially-favoured contractor considerable leeway to charge above the minimum figure. Yet again it is clearly in the public interest to ascertain whether the overall contract constitutes “best value”.
3. Although SMBC has its own large legal department it regularly outsources work (at considerable cost to the public purse) to private firms of solicitors. It has sought to formalise this by coming to a more specific outsourcing arrangement with Ashfords, Solicitors, based primarily in the South-West of England. At the meeting on 22nd May, 2013 SMBC had one of its own lawyers present and, for reasons unknown, also had a senior partner from Ashfords come up from Exeter to Sandwell to participate. As above, the political decision to close The Public and change it into a college had already been made and announced but the meeting was asked to “objectively” score the college deal against another option ie keeping The Public open. Whatever the merits of this exercise, a decision in favour of the college deal was the only one that was likely to lead to substantial work and, therefore, fees for Messrs Ashfords and to the lay person there appears to be a clear conflict of interest in Ashfords being present. The minutes of the meeting – which have not yet been corrected despite local publicity – appear to show, however, that the Partner from Ashfords was not only present at the meeting but actively participated in the decision-making process which again, to the lay person, appears to be a clear conflict of interest situation. As things turned out, Ashfords were given the legal work by SMBC and were paid a very substantial sum ie £43,230.40p excluding VAT. (I will return to Messrs Ashfords further below in respect of the contractual clauses designed to thwart FoI disclosure).
In my Request for an Internal Review which I have specifically referred you to, I wrote at length about the (now defunct) BSF programme with all its bureaucracy and checks and balances which appears to be the antithesis to this “deal”. Further information does appear to show that SMBC originally advertised the particular BSF contract by OJEU notice 2007/s 154 – 192270 although I have not been able to see this via the internet. It is, however, referred to in the actual BSF contract award notice 2009/s 149-217829. SMBC keep referring to the 2007 notice as being their authority for gifting the contract to Interserve Construction Limited via the artificial “device” of SFL but have yet to disclose a copy nor explain why or how it takes precedence over the 2009 award notice. Even so, and I am not a lawyer, the 2009 Notice does appear to have been drawn in exceedingly wide terms - - for example, it even permits Interserve company Environments for Learning Limited to build crematoria under the Building Schools for the Future programme (!) but the fact is that the anticipated work under the OJEU Notice was to be done UNDER THE BSF scheme which was stopped in 2010 (except for some residuary work under the Priority Schools programme). SMBC are apparently attempting to continue to use it for all educational capital spending for the immediate future even though it is clearly not BSF work and to avoid open procurement (see further below) They may also be purporting to use the scheme for matters which may not be connected with BSF at all. That is not of concern to this complaint (unfortunately) but it is relevant that I should see all the contractual documents related to the college deal to ascertain, with legal advice if applicable, that SMBC have acted within the purported authority provided by the OJEU notices.
Further, it is in the public interest that the parties disclose the costs and cost-calculation process since the public needs to be satisfied that it is getting “best value” from this non-tendered “deal”. As I will return to below, from the little information in the public domain, it does seem that SC are to pay little or even no actual rent under the lease. Rather, allegedly cash-strapped SMBC are borrowing the money for the conversion costs and then SC will repay this over 25 years (seemingly plus interest at Public Works Loan Board rates). It seems that SC were naturally concerned (despite the cushy deal they appear to be getting) to keep the conversion costs to a minimum and, astoundingly, they sought assurances by letter FROM INTERSERVE that they would get “best value” – somewhat akin to turkeys seeking assurances from the farmer that they would live to see Christmas morning. Of course, the redacted documents disclosed pursuant to this process may show some other form of payment mechanism but this appears to be contradicted by references to the appointment of “costs consultants” who, no doubt at considerable cost to the public purse, are apparently to report on the monies expended. From new information it appears that SC wanted to employ their nominated costs consultants but were over-ruled on this by SMBC who, for reasons as yet unknown, insisted on their own choice. Once again, it is public money at stake here. There is also the question of who pays for the costs consultants, the local taxpayer via SMBC or the taxpayer at large via SC.
In recent documents disclosed by SMBC pursuant to a different FoI request SMBC say that the original BSF contract was capped at £425m. Despite the fact that only a small number of BSF scheme schools were actually built the Council’s records appear to show very considerable sums of money being paid to Interserve-related companies. The actual (very widely-drawn) OJEU award for the BSF programme was to an Interserve-linked company called Environments for Learning Limited but there was a facility to set up “special purpose vehicles” to “deliver” aspects of the projects and we are told that (no employee) Sandwell Futures Limited is one such special purpose vehicle. The records show, however, that sums are also being paid to other Interserve-linked companies such as Environments for Learning PFI One Limited, Environments for Learning Sandwell PSP Limited and Building Schools for the Future Investments LLP. There will shortly be further FoI requests as to the extents of the payments but a single FoI to date has shown that SMBC paid out £103M to SFL over 4 years from the “Street Scene” (ie not ostensibly an educational) budget alone. Huge sums appear to have been paid out via other SMBC budgets too. I maintain the argument in my application for internal review document that this particular contract has nothing whatsoever to do with the BSF programme so that any attempt to claim that it does makes the contracts null and void together with any “confidentiality clauses” contained therein. It is also in the public interest to know the total cost of this contract to see whether the £425m cap has, in fact, been breached.
Because this strange arrangement is patently nothing whatsoever to do with the BSF programme there is no exclusivity provision for Interserve companies, including Sandwell Futures Limited to be awarded this multi-million pound contract (even SMBC have not claimed this to date simply saying awarded this multi-million pound contract (even SMBC have not claimed this to date simply saying that they had the legal authority – if they wished - to instruct Interserve Construction Limited via the artificial device of SFL pursuant to the OJEU notice/contract). Accordingly, it was a political decision not to put the fit-out contract out to tender but to gift it to Interserve Construction Limited (“ICL”) via SFL and, therefore, it is incumbent upon SMBC to show that they secured best value. How they can do that having excluded all others is a moot point which is not strictly relevant here but the starting point simply has to be full disclosure of the costs and cost-calculation mechanism in the redacted parts of the documents disclosed to date. There is also the question whether the taxpayer is paying a higher cost to channel the money via SFL rather than simply instructing ICL direct and, if so, why this should be and why this is in the best interests of the taxpayer. It also raises a conflict of interest question in that SMBC has two of its own employees on the board of SFL. One would imagine their responsibilities are to the taxpayers of Sandwell but they also owe a fiduciary duty to the shareholders of SFL too and they are primarily Interserve-related companies and Dalmore Capital. (There is a separate FoI request pending about “firewalls” and how these individuals are prevented from acquiring information which may give rise to further conflicts of interest but that is not strictly relevant here). Clearly all the costings need to be disclosed so that expert advice can be obtained.
(There is a rumour – which being a rumour may, of course, be untrue - that the works are running late. It seems that the “concordat” provides an indemnity from SMBC (ie the taxpayer) to pay taxpayers’ money to the taxpayer-funded SC in the event of delay in the contract. This appears to be implicit in SMBC’s own “Notice of an Executive Decision” dated 10th December, 2013 whereby SMBC were unable or unwilling to give 28 days notice of a “key decision” to set aside allegedly sparse resources as a “contingency” for late completion FROM SMBC taxpayer funds. (Incidentally, this “decision” is further evidence of the “back of an envelope” way the project progressed and how significant decisions were still being made very late in the day). Clearly this is potentially a very serious matter indeed and the public is entitled to know the extent of the potential indemnity and why the local taxpayers of Sandwell is apparently at risk of these costs when funding of SC is not their legal responsibility.
If there is late-running SMBC may be tempted to throw additional taxpayers’ money to Interserve to speed matters up which then begs the question whether such amounts will be paid for by the taxpayer directly or indirectly through the loan repayments by SC. The public is entitled to know the position and, again, whether the local or national taxpayer may end up paying for this. (There is also the question whether Interserve will face penalties for late completion and, if not, why not?)
THE “CONCORDAT”/LEASE
With regard to what is known of the “deal” itself (such disclosure having been heavily redacted by BOTH SMBC and SC):
1. It is known that SC wanted to insert break clauses into the “concordat”/lease but it would APPEAR that such clauses are not operative. This must be ascertained, however. If there are break clauses then this raises serious questions as to the reasonableness of paying Interserve Construction Limited multi-million pounds of taxpayers’ money on the current conversion. If there are no break clauses (save the usual in respect on one party being in breach of the lease terms etc) then that brings us back to the question whether the 25 year is, legally, a disposal and, if so, whether such a disposal is lawful – a question of clear public interest;
2. It APPEARS that SMBC have taken a highly-unusual step in that, despite having allegedly granted a 25-year lease THEY have retained a very expensive maintenance liability. They have mentioned the considerable figure of £300,000 PER ANNUM which is an extraordinary sum. Clearly if SMBC are receiving no or no actual rent on a huge publicly-owned building (just repayment of a loan) then the question must be what other steps they took to seek alternative options for the building. Once again it appears they decided on the college deal without marketing the property in any other way. The grasping SC has played hardball and the local taxpayers of Sandwell are to pick up the tab. On the same subject this is a massive building of some 122,891 sq ft. Even the useless JLL reports stated that a rental of £10.75 psf could be achieved and this is, of course an historic figure and one that did NOT take into account the –now- fact of a multi-million pound conversion. And so, notwithstanding the repayment of any “loan” the College should be paying a minimum commercial rental of £1.3M per annum (£32.5M over the 25 year lease period). Clearly it is in the public interest to know whether the College has avoided paying any real rent so that the question can be asked as to why this should be. This may, of course, be part of the reason the parties are so anxious to hide the details. I should add here that SC has currently taken some other office space in central West Bromwich – allegedly for the short-term – and is paying net rent of £9.11p psf. Luckily, the Landlords are Labour Party Properties Limited!
3. It appears that the aforementioned Ashfords Solicitors were also called upon - very late in the day & just before signature of the agreements (more evidence of retrospective action fitting the political will) to advise whether the “cushy” deal being given by SMBC to SC constituted unlawful state aid. I am not a lawyer but Ashfords appear to have advised that lo and behold, the deal was all legal apart from a query concerning the café (see below). It seems that this was primarily on the grounds that SC is an educational institution and, therefore, non-commercial. I believe this was also an important factor used in persuading the European Regional Development Fund not to seek recovery of the large sums they had paid into the arts centre project and also persuading the legal successors of AVM to lift the restriction on change of use. However, in a minute of SC’s Board of Governors which was originally redacted and only obtained via a separate FoI request the College states that their own lawyers had advised: “The College could have the option to use the building for purposes other than a sixth form centre”. Clearly IF such a clause is contained in the still secret parts of the “concordat/lease”, this would appear to undermine the entire publicly-stated raison d’etre for the project. Further, if there is a clause permitting SC to change use to what are actually commercial undertakings then the question of unlawful state aid becomes pertinent once again and it is in the public interest that these matters are open to scrutiny.
4. Even Ashfords were slightly exercised by the question of the café at the building. The arts centre ran a café and SC are stated to be retaining it for college and public use. Ashfords opined that as the operation of the café by SC would be via arms-length franchise/concession this did not constitute state aid (even though one imagines that SC is likely to receive rent or some other franchise payment?) Clearly it is again a matter of public interest to see what precise arrangements for the operation of the café have been made in the “concordat/lease” as between two publicly-funded bodies and to ensure that a third party is not to profit thereby at public expense.
Turning to the actual “concordat”/lease documents and more specific questions of confidentiality I would start by saying that this is very much a one-off transaction. It is hard to imagine that another such bespoke building will be destroyed in this way or that a local authority will give anyone such a “favourable” deal for such an extended period (25 years). It is hard to imagine that a local authority would try and resurrect the Building Schools for the Future project and apply it to something like this. It is hard to see that a contractor will hold such sway over two public bodies and be given carte blanche to dictate the costings without appropriate checks and balances and/or proper tendering or competition competition. Given the highly unusual terms of the “concordat”/lease insofar as they are known (eg SMBC retaining a massive liability for 25 years for maintenance/repairs; little or no actual rent etc.) it is hard to see that this type of deal is likely to be repeated by anyone let alone the parties to this transaction. It is a real one-off and does not set a precedent in any way. Accordingly, I submit that it cannot be argued that anything related to this “deal” is likely to affect the future relationships between the parties. It should also be noted here that SC in principally funded by the taxpayer at large via central government and that it is highly unusual for a local authority to take it upon itself to borrow money on behalf of a college and to provide it with other significant financial assistance as is the case here. Most local authorities other than Sandwell are facing financial pressure and difficulties in respect of fulfilling their own statutory obligations without taking it upon themselves to fund third parties to whom they owe no responsibility. Accordingly, any disclosure of allegedly commercial information is unlikely to affect the future relationship between SMBC and SC. I will use the shorthand “one-off” where applicable.
The parties have referred to various reasons why the redacted information and other undisclosed information should not be released. There are a couple of minor matters:
1. Non-disclosure of execution signatures. I have dealt with this in the request for an internal review ie I have no wish to see the signatures unless any of the signatories are Kerry Ann Bolister and/or Sarah Melanie Dudley who are both employees of SMBC and Directors of SFL – another contracting party;
2. I do not need details of the joint bank account.
Dealing with the more substantive matters:
Section 21 – Information accessible by other means. Apart from some mainly irrelevant matters the bone of contention here is in respect of the Lease. As long ago as February, 2014, and as part of the original FoI reply in this process, SC stated that they had the lease and that it would be publicly available via HM Land Registry “shortly”. I am informed by a colleague that as at 17th June, 2014 registration had NOT taken place. Thus the document is NOT accessible by other means even though such leases should normally be registered within two months of execution.
Section 41 – Confidential Information. I repeat the argument that if the contracts are unlawful then any confidentiality clauses fail. I repeat the “one-off” argument. There should be no commercial information concealment where the two main parties are both publicly funded bodies.
I am aware that there may be confidential discussions prior to the execution of the agreement documents but submit that once the agreements are signed then any arguments as to the expectations of the parties as to confidentiality are otiose as the provisions of the agreements themselves prevail. Having said that, it cannot be correct that a local authority can seek to gift a contact to a private company, Interserve Construction Limited, without tender and to keep the contents confidential simply by channelling it via the artificial device of third party company – SFL – in which it holds a 10% shareholding. That is inequitable and wrong. Interserve Construction Limited are not a SPV within the meaning of the OJEU notice and so the direction of the multi-million pound contract to them via SFL is a sham. It follows that the parties should not be able to invoke confidentiality where they could have asked Interserve Construction Limited to bid for the work direct but chose instead to use SFL merely to try and “fit” the contract into the defunct BSF scheme and avoid a competitive process (and the time that would have taken). If the contract had been tendered then it would have had to have been advertised and so “public” at least to that extent.
It is also inequitable that some of the contractual documentation should include confidentiality clauses designed to thwart the operation of the FoI Act as between two publicly-funded bodies. It is particularly objectionable that some of the agreements have been prepared by Ashfords Solicitors who, as above, apparently saw fit to involve themselves in the actual decision-making progress that led to this bizarre “deal” in the first place. The two public bodies must have been aware that the public would wish to see details of this odd transaction for the reasons set out above (and others) but have deliberately sought to keep the information secret. As between the two public-bodies there should be no confidentiality from the outset, but certainly none from the time that the agreements were executed and became legally-binding ie late December, 2013.
If the Information Commissioner is not with me on this there is the question of waiver of confidentiality. SC have stated in this process: “The Council and the third party contractors have gone to great lengths to try to protect their confidential information…”. It is said by SC that there was an expectation of confidentiality pre-contract so that to disclose the contract details would be an actionable breach of confidence. Alternatively, there is an equitable obligation of confidence pursuant to the "Coco test". There is even a suggestion that some sort of obligation of confidentiality arose from correspondence between the parties post contract (?) Finally the parties rely on the contracts/leases etc. themselves. The fact of the matter is, however, that as in the case of the JLL reports SMBC have shown total contempt for FoI law and – apparently unilaterally – leaked some of the redacted information, again to the Express and Star “newspaper” who were happy to print same. I submit that the parties cannot pick and choose what allegedly confidential information can be publicly leaked and then seek to maintain confidentiality otherwise. By its actions of partially disclosing some of the redacted information I submit that confidentiality has been waived in its entirety. SC and SFL/Interserve have their remedy, should they choose to exercise it, in respect of what SC itself calls “an actionable breach of confidence” against SMBC.
S41 Trade secrets etc.: It is said that there are a number of trade secrets in the “concordat” etc. that require protection. I repeat the bizarre nature of this transaction and again refer to the “one-off” argument, it is hard to imagine how such an unusual project would have any bearing on future contracts or give future competitors a competitive advantage although SMBC may have ulterior motives here (more below).
SC is seeking to avoid state aid considerations on the basis that it is a publicly-funded educational institution and yet it makes spurious claims that disclosure of its “bespoke financial projections” (ie for spending taxpayers’ money) or the “degree of risk the College has assumed under the concordat” would provide their competitors with a competitive advantage. It is difficult to imagine that an organisation that is wholly reliant on taxpayer funding has “competitors” who would benefit from knowledge of this unique “deal”.
If the Information Commissioner agrees that channelling the contract to ICL via the artificial device of SFL was a sham to avoid a proper procurement process then there is no “absolute exemption” from disclosure.
Section 43 & 43(2): The Parties appear to accept that the public interest test applies in respect of commercial information purportedly redacted pursuant to these provisions. As part of this process SC have produced a detailed “Appendix A” and pointed out each provision where they say the public interest test applies. In each case they argue that the test should be applied in their favour. It will be no surprise that I contend the precise opposite!
There is a specific allegation that disclosure of the redacted information would prejudice or impede the viability of the ongoing project but this is nonsense. The contracts cannot now be changed. They could, of course, be amended by the parties but that is altogether different. The fact that the lease was to be filed at HM Land Registry is indicative of the fact that the arrangements were completed and operative from late December, 2013. There will also be mechanisms within the agreements in respect of cost and time overruns (for what they are worth given the unusual facts). It is now mid-June and Interserve Construction Limited has already substantially destroyed and/or damaged the original interior. Like it or not, the project will have to proceed but that does not mean that other legal remedies may be available in respect of the sordid affair including the possible liability of councillors for losses to the public purse.
It is clearly in the public interest to ascertain how much of the local taxpayers’ money is being used to fund a college which is not the responsibility of SMBC (even if the taxpayer at large will still end up picking up the costs). It is the public interest that those in central government and its agencies who are granting funds to SC should be aware that they are receiving huge financial assistance elsewhere via a third party (SMBC). As the work could not be gifted to Interserve Construction Limited either via the defunct BSF programme or the OJEU Notice the public needs to know the exact financial nature of the sham arrangement to direct the contract via SFL when there is no obvious reason for this apart from avoiding a proper procurement process. It is in the public interest that Interserve Construction/SFL are providing “best value”.
It is not just financial considerations that apply. The public are entitled to know the facts so as to understand them (particularly as this whole “deal” is so bizarre) and, if relevant, to challenge them.
It is said that disclosure of the commercial interests of the parties would affect their ability to participate competitively, be effective in negotiations and successfully enter into transactions with other commercial entities. I repeat the “one off” argument. I also refer to the possible ulterior motive of SMBC trying to keep all this secret since despite the huge payments that have gone to SFL/Interserve already and the £425M “cap”, SMBC have stated in their Medium Term Financial Strategy: “The LEP (ie Sandwell Futures Limited/Interserve) was formed in Spring 2009 and will assist the Council in managing the transformational change to be bought [sic] about in learning through support of £370M in new school facilities”. In other words, SFL/Interserve are apparently already lined up to receive a colossal amount of public money – apparently without tender or competition but under the OJEU Notice – and so is hard to see that disclosure here will cause them any competitive disadvantage (unless, of course, these arrangements turn out to be unlawful).
I will not rehearse all the other ridiculous claims that commercial confidentiality trumps the public interest in disclosure as I think I have made the point but again refer to SC’s Appendix 1 and ask the Information Commissioner to apply the public interest test in each specific case rather than disapply it.
I reserve the right to amend this complaint if further information enters the public domain.
Darryl Magher
25th June, 2014
To: Information Commissioner’s Office
cc Sandwell Metropolitan Borough Council & Sandwell College
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