Decision Notice 053/2024: Lochaber Smelter: correspondence
Authority: Scottish Ministers
Case Ref: 202101516
Summary
The Applicant asked the Authority for a correspondence between its Director of Economic Development and Deloitte
relating to the Guarantee and Reimbursement Agreement (GRA) between specified dates. The Authority informed the
Applicant that it did not hold any information falling within part one of his request and disclosed in redacted
form information falling within part two of his request, withholding the remainder of the information. The
Commissioner investigated and found that the Authority’s response complied with FOISA.
Relevant statutory provisions
Freedom of Information (Scotland) Act 2002 (FOISA) sections 1(1), (2) and (6) (General entitlement); 2(1)(b)
(Effect of exemptions); 17(1) (Information not held); 30(c) (Prejudice to effective conduct of public affairs);
47(1) and (2) (Application for decision by Commissioner)
The full text of each of the statutory provisions cited above is reproduced in Appendix 1 to this decision. The
Appendix forms part of this decision.
Background
1. On 10 September 2021, the Applicant made a request for information to the Authority. The Applicant asked
for:
- Correspondence (including emails, letters, text messages, WhatsApp messages and internal memos) between
Mary McAllan (Director of Economic Development) and Deloitte around Guarantee management meeting reports in
relation to the GRA between GFG Alliance and the Authority, sent or received between June 2017 and December 2017
- Any letters sent by GFG Alliance or its subsidiaries addressed to, and received by, Mary McAllan between
March 2017 and 18 January 2018.
2. The Authority responded on 10 November 2021. For part one of the request, the Authority provided a formal
notice under section 17(1) of FOISA, and explained that it did not hold the information requested. For part two
of the request, the Authority provided redacted copies of the two documents it identified as falling within scope,
withholding information under sections 30(b)(ii) and 33(1)(b) of FOISA.
3. Later the same day, the Applicant wrote to the Authority requesting a review of its decision. The
Applicant stated that he was dissatisfied with the decision as he did not accept that there was no information
held for part one of his request and he did not consider the cited exemptions applied to part two of his request.
4. The Authority notified the Applicant of the outcome of its review on 9 December 2021, upholding its
original response without modification.
5. On 13 December 2021, the Applicant wrote to the Commissioner, applying for a decision in terms of section
47(1) of FOISA. The Applicant stated that he was dissatisfied with the outcome of the Authority’s review because
he considered it hold more information than it disclosed, section 33 of FOISA did not apply to the withheld
information and, in any case, the public interest favoured disclosure of the information.
Investigation
6. The Commissioner determined that the application complied with section 47(2) of FOISA and that he had the
power to carry out an investigation.
7. The Authority was notified in writing that the Applicant had made a valid application. The Authority was
asked to send the Commissioner the information withheld from the Applicant. The Authority provided the
information and the case was subsequently allocated to an investigating officer.
8. Section 49(3)(a) of FOISA requires the Commissioner to give public authorities an opportunity to provide
comments on an application. The Authority was invited to comment on this application and to answer specific
questions. These related to the Authority’s justification for withholding the information requested under the
exemptions in section 30(b)(ii) and section 33(1)(b) of FOISA.
9. During the investigation, the Authority informed the Commissioner that it wished to withdraw its reliance
on the exemptions in sections 30(b)(ii) and 33(1)(b) of FOISA to withhold the information and instead wished to
apply section 30(c) to that same information (for which it provided supporting submissions).
10. The Authority also notified the Applicant of its change of position, and the Applicant provided
submissions to the Commissioner on the Authority’s decision to now rely on section 30(c) of FOISA to withhold the
information requested.
Commissioner’s analysis and findings
11. The Commissioner has considered all of the submissions made to him by the Applicant and the Authority.
Background: Lochaber Smelter Guarantee
12. The Authority provided detailed background information, the following parts of which may be helpful in
explaining the background of the Lochaber Smelter Guarantee:
- The Lochaber aluminium complex in Fort William is the UK’s last remaining aluminium smelter, the operation
of which is a key component of Scotland’s industrial capability and a major source of employment in the West
Highlands.
- When Rio Tinto decided to review its Lochaber operations in 2016, the smelter faced the prospect of
closure, endangering over 300 jobs in total (direct, indirect and induced). The Authority’s focus at the time was
to avoid the fragmentation of the Lochaber complex, to secure the long-term viability of the smelter and to
realise further industrial and employment opportunities on site.
- In September 2016, as part of the Authority’s wider overall objective to preserve jobs, protect the
economy and sustain the metals industry in Scotland, it indicated a willingness to support any purchaser who would
retain the smelter and associated hydro-power scheme together, and make the necessary commitment to significant
investment in the development of the Lochaber assets. The Authority’s offer included the potential to guarantee
the power purchase obligations of the aluminium smelter and was made known on an even-handed basis to all short-
listed bidders via the vendor (Rio Tinto).
- To deliver its objective for the site, the Authority is standing behind a portion of the power purchase
obligations of the aluminium smelter operator (Alvance British Aluminium Limited (SmelterCo)) in the event that it
cannot pay for the power it is contracted to take from the hydro-electric power station operator (Simec Lochaber
Hydropower 2 Limited (HydroCo)). Both companies are part of the GFG Alliance (GFG) which is a collection of
global businesses and investments.
- The commercial guarantee arrangement (the Guarantee) was entered into in December 2016 by the Authority,
SmelterCo and HydroCo, and guarantees over a 25 year term that the Authority will pay for a percentage of the
power that SmelterCo is contracted to purchase from HydroCo in the event that SmelterCo is unable to do so.
- The nominal value of the Authority’s contingent liability on day one of the Guarantee was £586 million
(i.e. the total amount of payments guaranteed by the Authority across the 25 year agreement), and is the largest
industrial guarantee ever agreed by the Authority.
Limited and Greensill Capital Management Company (UK) Limited (together “Greensill”)) entered administration.
13. The Authority submitted that should the Lochaber guarantee be called in and if other recovery options
prove ineffective, it would have an option to take ownership of the business assets at Lochaber and trade these
assets (directly or through lease arrangements) with the intent of satisfying the ongoing payment obligations
under the Power Purchase Agreement (PPA) or alternatively seek to dispose of the assets through a managed sales
process.
14. The Authority submitted that information within the material remained current and could negatively impact
its ability to operate the assets on effective commercial terms and, potentially, inhibit any sale process to the
detriment of the public purse if the information was disclosed prematurely.
The Authority’s interests
15. In addition to the background information above, the Authority explained that, as a result of its legal
obligations arising from the Guarantee, it had a significant and specific financial and economic interest in the
operation of the smelter to which the information related. In addition, it had an overarching general interest in
the original objectives of the proposal, namely the retention of jobs and the support of the metals industry in
Scotland.
16. The Authority acknowledged that the Commissioner had previously indicated in Decision 144/2021 that he
did not consider the Authority to be a commercial actor in respect of Scotland’s energy sector, but that it may
have other economic interests in relation to the smelter.
17. The Authority considered that its commercial, economic and financial interests in respect of the Guarantee
were manifest and quantifiable, and information within the material remained current. It also submitted that
there was considerable uncertainty with respect to any future scenario involving the smelter, the loss of which
could materially impact upon the local regional economy. It noted that, during the 18 months since the Greensill
collapse, GFG and its primary shareholder, Sanjeev Gupta, had sought to defend and engage in legal action across
multiple jurisdictions in order to preserve operations.
Information falling within scope of the request
18. Section 1(1) of FOISA provides that a person who requests information from a Scottish public authority
which holds it is entitled to be given that information by the authority, subject to qualifications which, by
virtue of section 1(6) of FOISA, allow Scottish public authorities to withhold information or charge a fee for it.
The qualifications contained in section 1(6) are not applicable in this case.
19. The information to be given is that held by the authority at the time the request is received, as defined
in section 1(4). This is not necessarily to be equated with information an applicant believes the authority
should hold. If no such information is held by the authority, section 17(1) of FOISA requires it to give the
applicant notice in writing to that effect.
20. The standard of proof to determine whether a Scottish public authority holds information is the civil
standard on the balance of probabilities. In determining where the balance lies, the Commissioner must first of
all consider the interpretation and scope of the request and thereafter the quality, thoroughness and results of
the searches carried out by the public authority.
21. The Commissioner also considers, where appropriate, any reason offered by the public authority to explain
why it does not hold the information. Ultimately, however, the Commissioner’s role is to determine what relevant
information is actually held by the public authority (or was, at the time it received the request).
The Authority’s submissions
22. The Authority explained it carried out searches of the relevant shared email inbox for the Strategic
Industrial Projects team, using the names of specified Deloitte consultants to identify correspondence within the
relevant date range from Deloitte where Mary McAllan was either the direct recipient or copied in and for emails
from those specified consultants.
23. The Authority confirmed that it found no correspondence within scope of part one of the request, but that
it identified copies of two letters dated 29 September 2017 and 20 November 2018 within scope of part two of the
request (which it disclosed in redacted form to the Applicant).
24. The Authority advised that it also consulted Mary McAllan’s personal assistant, but, given the time
between the date of the request (10 September 2021) and the time period of interest (June to December 2017), no
texts or other methods of correspondence were found.
25. The Authority explained that as Mary McAllan had moved post any relevant material would have been saved in
its corporate record (eRDM). The Authority carried out searches of eRDM, using the following terms:
- “Deloitte email to Mary McAllan”
- “Deloitte email GFG Alliance”
- “Letter Sanjeev Gupta to Mary McAllan”
- “Letter from GFG Alliance “CFG Guarantee review”
26. The Authority stated that the above searches resulted in no documents returned. Given the usual way that
documents are named for filing in eRDM, the Authority explained that it satisfied the above searches would have
captured any relevant information held.
The Commissioner’s view
27. Having considered all of the relevant submissions and the terms of the request, the Commissioner accepts
that the Authority interpreted the scope of the Applicant’s request correctly.
28. The Commissioner also accepts, on the basis of the submissions received, that the Authority took adequate
and proportionate steps in the circumstances to establish if relevant information was held.
29. While the Applicant believed and expected the specified information to be held by the Authority, the
Commissioner is satisfied that this was not the case.
30. Given the explanations and submissions provided, the Commissioner is satisfied that the Authority does not
(and did not, on receipt of the request) hold the information requested by the Applicant in part one of his
request.
31. The Commissioner therefore concludes that the Authority was correct to give the Applicant notice, in terms
of section 17(1) of FOISA, that it did not hold the information requested in part one of his request.
32. The Commissioner is also satisfied that that the Authority identified all of the information falling
within part two of the Applicant’s request and that it does not (and did not, on receipt of the request) hold any
further recorded information falling within scope.
33. The Commissioner therefore concludes that the Authority complied with section 1(1) of FOISA in responding
to part two of the Applicant’s request.
Section 30(c) – Prejudice to effective conduct of public affairs
34. Section 30(c) of FOISA exempts information if its disclosure "would otherwise prejudice substantially, or
be likely to prejudice substantially, the effective conduct of public affairs". This exemption is subject to the
public interest test in section 2(1)(b) of FOISA.
35. The word "otherwise" distinguishes the harm required from that envisaged by the exemptions in sections
30(a) and (b). This is a broad exemption and the Commissioner expects any public authority citing it to show what
specific harm would (or would be likely to) be caused to the conduct of public affairs by disclosure of the
information, and how that harm would be expected to follow from disclosure.
36. The standard to be met in applying the tests contained in section 30(c) is high: the prejudice in question
must be substantial and therefore of real and demonstrable significance. The Commissioner expects authorities to
demonstrate a real risk or likelihood of substantial prejudice at some time in the near (certainly foreseeable)
future, not simply that such prejudice is a remote or hypothetical possibility. Each request should be considered
on a case by case basis, taking into consideration the content of the information and all other relevant
circumstances (which may include the timing of the request).
37. The Authority relied upon section 30(c) (prejudice substantially, the effective conduct of public affairs)
to withhold information in the documents.
The Authority’s submissions on section 30(c)
38. The Authority submitted that it was essential for it to have a productive relationship with companies like
GFG, which run businesses of national and local importance to Scotland. As the Lochaber smelter is a significant
employer in the local area, the Authority had a significant interest in the business through the Guarantee.
39. The Authority provided three key reasons for withholding the information under the exemption in section
30(c) of FOISA, as follows:
Point (a) – Disclosure would weaken the Authority’s ability to negotiate guarantee terms
40. The Authority submitted that it was likely that external lenders will be involved in situations where it
is providing guarantees to support businesses. It would be in these lenders’ interests to negotiate the most
generous guarantee terms possible, thereby passing risk to the Authority (which would be to the detriment of the
Authority’s interests were such a guarantee more likely to be called up). Disclosure would enable future lenders
to form views about the Authority’s likely appetite for risk and on how it takes decisions on these matters, and
would allow them to use this as part of their negotiation strategy. The Authority believed the process of
benchmarking one guarantee against another would ultimately be detrimental to its interests.
Point (b) – Disclosure would make distressed businesses less likely to engage with Authority support
41. The Authority submitted that businesses are extremely hesitant to consider financial intervention
sponsored by it, or its Agencies, due to the risk of this becoming public knowledge, as this would alert customers
and suppliers to the fact that the business was utilising last resort funding to continue to trade. This, in
turn, would adversely affect the business as its customers and suppliers would be less willing to deal with it due
to fear of wasted costs (e.g. where the business was unable to pay for materials ordered), leading to further
difficulties in trading.
42. In the Authority’s view, disclosure would exacerbate the issue by underscoring not only that fact, but
also the underlying basis on which decisions are made about sensitive business operations and situations, and this
risk was not one that arose where a business secured support from a third party which was not a Scottish public
authority. The Authority also believed this would heighten concerns about seeking support from the Authority,
making such support less effective and thereby prejudicing its own commercial interests.
43. The Authority argued that it must be able to assure businesses that sensitive information about their
financial position and future plans will not be released as a result of their involvement with the Authority. In
the Authority’s view, maintenance of trust was important to allow it to engage with businesses in the best
interests of Scotland, with the ultimate aim of preserving employment and growing the economy. It believed that
disclosure of the information would jeopardise its ability to work in partnership with commercial actors such as
GFG in future.
Point (c) – Disclosure would remove the private space for consideration that is required by the Authority to make
decisions in relation to a significant contract with implications for jobs and the economy
44. The Authority submitted that the Guarantee was a live agreement, and it was required to take decisions in
relation to the management of the Guarantee. It argued that release of information relating to the Guarantee,
including the terms of the Guarantee, would inhibit substantially its ability to make such decisions in the public
interest, by removing the private space required for it to do so.
45. The Authority considered that disclosure would also substantially prejudice its relationship with GFG. In
its view, disclosing the content of a live agreement to which GFG is party could negatively impact on GFG’s
financial operations in a number of stated ways. The Authority believed that GFG would likely consider that it
had revealed sensitive details which were shared on a confidential basis in respect of the agreement, which would
be detrimental to GFG and its ongoing relationship with the Authority.
The Applicant’s submissions on section 30(c)
46. The Applicant explained that he did not consider that disclosure of the withheld information presented a
likely or substantially prejudicial risk to the effective conduct of public affairs.
47. The Applicant stated that the Authority has provided no evidence of this risk and that it was clear to him
that the Authority’s change of position was an admission that the previous exemptions did not apply and that it
was simply an attempt to block release of the information requested, rather than a legitimate reason for
withholding the information.
48. The Applicant submitted that much of the Authority’s submissions are based on the hypothetical impact of
disclosure and that the public interest in transparency and accountability, particularly in the case of the deal
in question, is much stronger than the public interest in maintaining the exemption.
49. The Applicant also noted that if there was, in fact, a likely risk of substantial prejudice, then the
Authority would have applied section 30(c) of FOISA in its initial response and at review stage, but it did not.
The Commissioner’s view on section 30(c)
50. Information can only be exempt under section 30(c) of FOISA if its disclosure would prejudice
substantially, or be likely to prejudice substantially, the effective conduct of public affairs.
51. The Commissioner must consider the withheld information with regard to the circumstances at the time of
the Authority’s review outcome. Given the sensitivity of the information and the circumstances surrounding it,
the Commissioner is limited in the reasoning he can set out in this decision notice.
52. The Commissioner notes that the main focus of the withheld information is financial arrangements and
discussions of the commercial companies’ information within the documents which were, at the date of the
Authority’s review response, relatively recent.
53. For example, at the date of the Authority’s review response, the financial viability of the companies
involved (Greensill and CFG) had changed considerably, but the Authority would still have to pay for 80% of the
power that SmelterCo is contracted to purchase from HydroCo in the event that SmelterCo is unable to do so.
54. Having considered the nature and content of the withheld information, together with the submissions of the
Authority and the Applicant, the Commissioner finds that disclosure of the withheld information would, or would be
likely to, have a detrimental impact on the Authority, CFG and the other commercial companies’ ability to continue
in a competitive environment, which, in turn, would, or would be likely to, impede the Authority’s ability to
engage with businesses in the best interests of Scotland.
55. The Commissioner cannot expand on his reasoning here, as to do so would reveal the information being
withheld.
56. Consequently, the Commissioner is satisfied that the Authority was entitled to apply the exemption in
section 30(c) of FOISA to this information.
Public interest test
57. The exemption in section 30(c) is subject to the public interest test in section 2(1)(b) of FOISA. As the
Commissioner has found that the exemption in section 30(c) was correctly applied to the withheld information, he
is now therefore required to consider whether, in all the circumstances of the case, the public interest in
disclosing that information is outweighed by the public interest in maintaining the exemption.
The Authority's submissions on the public interest – section 30(c)
58. The Authority considered there is a public interest in favour of disclosing the information, as part of an
open, transport and accountable government to inform the public debate. It was also accepted the public interest
in the aluminium smelter complex, and in how the government works with companies such as CFG when public funds
involved.
59. However, the Authority considered given the importance of the smelter to Scotland, the public interest
outweighed in withholding information, in protecting the trust of GFG in their relationship with the Authority.
60. The Authority submitted that it was vital importance that it can intervene to protect jobs and the wider
economy, specifically when this involves a guarantee, the public interest lies in protecting some sensitive
information in the service of allowing future interventions.
61. Ultimately, the aim of the intervention was to protect jobs, and the Authority considered it was clearly
in the public interest to withhold information that would jeopardise future such action. There are currently over
200 people employed within the smelter business operating at Lochaber. The public interest lies in protecting
their interests, given the importance not only to the individuals employed at the sites but to the wider economy
of the local area.
The Applicant's submissions on the public interest – section 30(c)
62. The Applicant submitted that the key question around the Lochaber smelter is whether the deal struck by
the Authority with GFG Alliance was sound decision making from a taxpayer value-for-money point of view.
63. The Applicant explained that, in this context, the public interest in discovering whether that is the case
is obvious: this was a multi-million financial commitment and the political and financial risks of such a decision
are clear in how the rescue of companies such as Ferguson Marine, Prestwick Airport, Bifab and Dalzell Steelworks
have developed.
64. The Applicant submitted that full transparency is therefore overwhelming and, without disclosure of the
withheld information, there is no way for the public to establish whether the deal at Lochaber is in the public
interest and there is no accountability.
65. The Applicant also explained that the history of GFG Alliance further increased the public interest in
disclosure of the withheld information. The Applicant noted that GFG’s recent history raised question marks about
the Authority’s decision to go into business with it and, while it may well have been the correct decision, it is
impossible to judge this without all of the facts.
The Commissioner’s view on the public interest – section 30(c)
66. The Commissioner has taken account of all of the relevant submissions from both parties, together with the
withheld information in this case. He is required to balance the public interest in disclosure of the information
requested against the public interest in maintaining the exemption. The public interest, in the context of FOISA,
should be considered as “something which is of serious concern and benefit to the public”.
67. As rehearsed above, the Commissioner has already accepted that disclosure of the withheld information
would, or would be likely to, cause substantial prejudice to the effective conduct of public affairs.
68. Given the significant size of the Lochaber Smelter Guarantee and those potentially affected by the
circumstances surrounding it, the Commissioner accepts that there is clear and substantial public interest in
understanding the finer details of the Guarantee and discussions that the Authority had with CFG and other
companies.
69. However, the Commissioner recognises that this must be carefully balanced against any impact that
disclosure of the withheld information would have had – at the time when the Authority issued its review outcome –
with regard to the Lochaber smelter, the Guarantee itself (underwritten by the Authority) and what the likely
circumstances might be were the Guarantee to be called in.
70. The Commissioner recognises that, were circumstances to arise requiring the Guarantee to be called in,
this would clearly impact the parties involved (including the Authority), the economy of the local area (and the
wider Scottish economy) and the jobs of those individuals employed at the smelter and associated businesses, both
directly and indirectly.
71. In the Commissioner’s view, there is also a substantial public interest in maintaining the exemption in
relation to sensitive information which could adversely impact GFG’s current (and changing) financial situation
and lead to the Guarantee being called in.
72. The Commissioner recognises that such a situation could lead to a number of unwanted circumstances
presenting themselves, for example job losses, the requirement for a new agreement to be drawn up or entered into
by the Authority, and a reduction in crucial commercial information being provided by businesses to the Authority
which would inhibit the Authority’s ability to take fully informed decisions and secure best value for public
money. Such circumstances would clearly impact on the Authority’s position with regard to its ability to
effectively conduct its public affairs, and that would not be in the public interest.
73. On balance, therefore, the Commissioner is of the view that the public interest in withholding the
remaining information outweighs the public interest in disclosing it.
74. The Commissioner therefore finds that the Authority was entitled to withhold the information he has found
to be exempt under section 30(c) of FOISA.
Decision
The Commissioner finds that the Authority complied with Part 1 of the Freedom of Information (Scotland) Act 2002
(FOISA) in responding to the information request made by the Applicant.
Appeal
Should either the Applicant or the Authority wish to appeal against this decision, they have the right to appeal
to the Court of Session on a point of law only. Any such appeal must be made within 42 days after the date of
intimation of this decision.
David Hamilton
Scottish Information Commissioner
17 April 2024
Appendix 1: Relevant statutory provisions
Freedom of Information (Scotland) Act 2002
1 General entitlement
(1) A person who requests information from a Scottish public authority which holds it is entitled to be given
it by the authority.
(2) The person who makes such a request is in this Part and in Parts 2 and 7 referred to as the “applicant.”
…
(6) This section is subject to sections 2, 9, 12 and 14.
2 Effect of exemptions
(1) To information which is exempt information by virtue of any provision of Part 2, section 1 applies only to
the extent that –
…
(b) in all the circumstances of the case, the public interest in disclosing the information is not outweighed
by that in maintaining the exemption.
…
17 Notice that information is not held
(1) Where-
(a) a Scottish public authority receives a request which would require it either-
(i) to comply with section 1(1); or
(ii) to determine any question arising by virtue of paragraph (a) or (b) of section 2(1),
if it held the information to which the request relates; but
(b) the authority does not hold that information,
it must, within the time allowed by or by virtue of section 10 for complying with the request, give the applicant
notice in writing that it does not hold it.
…
30 Prejudice to effective conduct of public affairs
Information is exempt information if its disclosure under this Act-
…
(c) would otherwise prejudice substantially, or be likely to prejudice substantially, the effective
conduct of public affairs.
47 Application for decision by Commissioner
(1) A person who is dissatisfied with -
(a) a notice under section 21(5) or (9); or
(b) the failure of a Scottish public authority to which a requirement for review was made to give such a
notice.
may make application to the Commissioner for a decision whether, in any respect specified in that application, the
request for information to which the requirement relates has been dealt with in accordance with Part 1 of this
Act.
(2) An application under subsection (1) must -
(a) be in writing or in another form which, by reason of its having some permanency, is capable of being used
for subsequent reference (as, for example, a recording made on audio or video tape);
(b) state the name of the applicant and an address for correspondence; and
(c) specify –
(i) the request for information to which the requirement for review relates;
(ii) the matter which was specified under sub-paragraph (ii) of section 20(3)(c); and
(iii) the matter which gives rise to the dissatisfaction mentioned in subsection (1).
