Freedom of Information Act 2000 (Section 50) Decision Notice

Reference: FS50147637

Freedom of Information Act 2000 (Section 50) Decision Notice

Date: 26 June 2008

Public Authority: Address:

Financial Services Authority 25 The North Colonnade Canary Wharf London E14 5HS

Summary

The complainant requested information from the FSA about Barclays Private Bank's involvement with Columbian drugs money. The FSA refused to disclose the information under sections 31, 40, 43 and 44 of the Act. The Commissioner investigated and found the exemptions at sections 21, 40 and 44 of the Act are engaged. However, the Commissioner found that the exemption and sections 31 and 43 are not. The Commissioner requires the FSA to disclose the information withheld under sections 31 and 43 within 35 calendar days of this notice.

The Commissioner's Role

1. The Commissioner's duty is to decide whether a request for information made to a public authority has been dealt with in accordance with the requirements of Part 1 of the Freedom of Information Act 2000 (the "Act"). This Notice sets out his decision.

The Request

2. The complainant has advised that on 22 October 2006 she made the following request for information to the Financial Services Authority (FSA):

"I am writing to request under the terms of the FSA's freedom of information policy to be supplied with the information you hold with regard to the matters reported on in the article in the Sunday Times with regard to BPB's involvement with Columbian drugs money."

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3. On 22 November the FSA provided a response informing the complainant that it could neither confirm nor deny if information is held by virtue of section 44 and 43 of the Act; and that in respect of section 43 the public interest favoured maintaining the exemption from the duty to confirm or deny.

4. The complainant requested an internal review of this decision on 29 November 2006 and the FSA responded on 10 January 2007. The internal review upheld the original decision to neither confirm nor deny.

The Investigation

Scope of the case

5. On 17 January 2007 the complainant contacted the Commissioner to complain about the way her request for information had been handled. The complainant specifically asked the Commissioner to consider if the FSA were correct to rely on section 44 and 43 of the Act to neither confirm nor deny if information is held.

Chronology

6. The Commissioner began his investigation by writing to the FSA on 28 November 2007. The Commissioner asked the FSA to provide further explanation regarding the application of both exemptions and for an expansion on the public interest test.

7. On 2 January 2008 the FSA responded informing the Commissioner that it was now prepared to confirm to the complainant that the FSA does hold information which falls within the scope of the request. On 15 January 2008 the FSA wrote to the complainant confirming this but informing the complainant that this information was being withheld from disclosure under sections 21, 31, 40, 43 and 44.

8. The Commissioner responded on 16 January 2008 requested a copy of the withheld information and further arguments on the application of the exemptions.

9. On 4 February 2008 the FSA responded providing further explanation regarding the exemptions at section 44 and 43 and on 25 March 2008 the FSA wrote again providing a copy of the withheld information and further arguments in relation to all the exemptions being applied.

Findings of fact

10. On 17 August 2006 the Sunday Times printed an Article entitled `Barclays link in drug cash route. The article stated that:

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"A subsidiary of Barclays Bank has been used to launder drugs money, according to findings of an undercover `sting' operation by law enforcement agencies in America and Canada.

At one stage in the investigation the British government froze $54m held with Barclays Private Bank (BPB) at the request of the United States.

It went on to state:

"Senior Managers at BPB, which serves wealthy clients, were questioned by members of Britain's National Crime Squad (NCS) after a transatlantic investigation identified five accounts linked to a Columbian money laundering scam"

Analysis

Exemption: Section 21 `Information accessible to the applicant by other means'

11. Section 21(1) provides that information which is reasonably accessible to the applicant otherwise than under section 1 is exempt information.

12. The FSA have explained that the information being withheld under section 21 is copies of the newspaper articles cited in the complainant's request, already held by the complainant, and paragraphs within the bundle of information which reflect background information in the public domain from these and other newspaper articles. The FSA have highlighted within the withheld information the paragraphs withheld under section 21. The Commissioner has compared this information with copies of newspaper articles available online through a simple search and provided to him by the complainant and agrees that the information withheld under section 21 reflects the information already held by the complainant and available in online newspaper articles. (timesonline.co.uk/tol/new/uk/article620883.ece)

13. The Commissioner is therefore satisfied that that the information to which section 21 has been applied is reasonably accessible to the applicant and is therefore exempt from disclosure. As section 21 is an absolute exemption there is no requirement to go on to consider the public interest test.

Section 44 `Prohibitions on disclosure'.

14. Section 44 provides that information is exempt if its disclosure by the public authority is prohibited under any enactment. Section 44 has been applied to the majority of the withheld information.

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15. Section 348 of the Financial Services and Markets Act 2000 (FSMA) provides that confidential information must not be disclosed by the FSA without consent. In order to establish if the information is covered by the statutory bar the Commissioner must consider the following questions, these questions relate to the wording of the bar: is the information confidential under the terms of the FSMA; has consent been given; has the information already been disclosed to the public and could the information be provided in the form of an anonymised summary.

16. The Commissioner first considered whether, for the purposes of section 348 of the FSMA, the information is confidential information. Confidential information as defined by section 348 must have been obtained by the FSA as part of its functions as the regulatory body overseeing the financial services industry and be information which relates to the business or other affairs of any person. The legal definition of `person' includes corporations and limited companies.

17. The FSA explained that the information has been received from text removed for publication. This information has either been recorded in documents created by these parties or provided to the FSA orally. The FSA also explained that the information was received for the purpose of carrying out its supervision of that firm, in this instance for assessing the effectiveness of its anti-money-laundering controls, so falls within Section 348.

18. The Commissioner is satisfied that where section 44 has been applied in this case the information was received by the FSA from text removed for publication for the purpose of its functions in relations to the supervision of firms.

19. Section 348 (1) states that confidential information must not be disclosed without the consent of the person from whom the information was obtained; and if different, the person to whom the information relates. The FSA explained that in this case it has received information from text removed for publication and it does not feel that consulting the external sources in questions would be likely to produce their consent to disclosure. Section 348 does not require consent to be sought. However, the Information Tribunal found in decision EA/2005/0019 Slann v Financial Services Authority, that where has not been given that the FSA should consider the likelihood that it would be. In this case it is the opinion of the FSA that consent from the parties would not be given.

20. Section 348 (4) recognises that information is not confidential if it has already been disclosed to the public or is in the form of a summary or collection of information framed so that it is not possible to ascertain information relating to a particular person. The information requested has not already been disclosed to the public and the information is about a specific firm and it would therefore not be possible to provide the information in any form which would not enable the person to be identified.

21. Section 349 of the FSMA states that section 348 does not prevent disclosure of confidential information which is made for the purpose of the carrying out of a public function and permitted by regulations made by the Treasury under this section. In the Information Tribunal decision EA/2005/0019 Slann v Financial

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Services Authority, the tribunal found that the term public functions related to powers conferred on the FSA by legislation and not legislation such as FOIA, to which it was subject. Therefore making a disclosure under FOI was not carrying out a public function.

22. The Commissioner therefore finds that the information is covered by section 348 of the FSMA and that section 44 of the Act is engaged where applied. Section 44 is an absolute exemption and there is no requirement to consider the public interest test.

Section 43 `Commercial Interests'

23. Section 43 provides that information is exempt if its disclosure would or would be likely to prejudice the commercial interests of any person.

24. In considering whether the exemption applies in this case, the Commissioner has applied the tests for `would or would be likely to prejudice' as set out in the Tribunal decision EA/2005/005 John Connor Press Associates v the Information Commissioner. The Tribunal confirmed that "the chance of prejudice being suffered should be more than a hypothetical possibility; there must have been a real and significant risk." (Para 15). This was further expanded in the Tribunal decision EA/2005/0026 Hogan v The Information Commissioner and EA/2006/0060 Bexley v the Information Commissioner.

25. In these cases the Tribunal considered what was meant by "would be likely to prejudice" and when a prejudice based exemption might apply. The Tribunal found that `prejudice must be real, actual and of substance'. It went on to explain that there are two alternative ways in which disclosure can be said to prejudice and that one of these must be shown. Where prejudice `would be likely to occur' the likelihood need not be more probable than not, though it should be real and significant; where prejudice `would' occur, the chance should be greater ? more probable than not. In this case the Commissioner has applied the test for `would be likely to prejudice'.

26. The FSA have stated that the commercial interest of BPB is likely to be harmed by disclosing the information requested in certain ways. The information held by the FSA was obtained by it for the purpose of carrying out its supervision of BPB, in particular assessing the effectiveness of the firm's anti money laundering controls. Disclosure of the information could lead to unfair or unjustified comment and speculation about the firm i.e. that a connection with Columbian drugs money does, or may exist or that the FSA has concerns regarding BPB activities, which could affect the firm's brand and reputation in the market in which they operate and undermine the confidence of existing and potential customers. The firm's ability to secure new funding for its business could also be affected.

27. Furthermore, the FSA argue that the information withheld under section 43 is intrinsically linked to the information withheld under section 44. The FSA explained that to provide the information withheld under section 43 without the information withheld under section 44 would provide the information without any context. The analysis and opinions of the FSA would therefore be seen without

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