Publication - FOI/EIR release

Loans made to Ferguson Marine Engineering Ltd: FOI release

Published: 13 Nov 2018

Information request and response under the Freedom of Information (Scotland) Act 2002.

Published:
13 Nov 2018
Loans made to Ferguson Marine Engineering Ltd: FOI release
FOI reference: FOI/18/02804  
Date received: 5 October 2018  
Date responded: 12 November 2018
 
Information requested
 
  1. Why did the Scottish Government not advise Audit Scotland until 8th May 2018 of the existence of the loan of £15m from September when it was known that Ferguson Marine Engineering were in financial difficulties from July 2017.
  2. Why did the Cabinet Secretary not advise on 27th June 2018 that the Government had earlier made £15m available to the company when he announced the £30m facility.
  3. Given this perceived threat to take his customer to court as outlined in Mr McColl's statement to the newspaper [Sunday Times, 23 September] I believe that it is also in the public interest to know what measures the Scottish Government has taken during the course of the transactions of £15m and £30m to include any clause, caveat and legally binding agreement that would prevent the winning contractor for the construction of Vessels 801/802 or any person or organisation relating to the contract from taking Caledonian Maritime Assets Ltd or the Scottish Government to a court of law should that situation arise for any whatsoever.
 
Response
 
I enclose a copy of some of the information you requested.  While our aim is to provide information whenever possible, in this instance we are unable to provide some of the information you have requested because exemptions under sections of FOISA apply. The reasons why these exemptions apply are explained below.
 
  1. Why did the Scottish Government not advise Audit Scotland until 8th May 2018 of the existence of the loan of £15m from September when it was known that Ferguson Marine Engineering were in financial difficulties from July 2017.

 Response:

Audit Scotland was advised of the loan facilities provided to Ferguson Marine by Scottish Government officials in the normal course of business during the 2017/18 audit of the Consolidated Accounts. Audit Scotland has access to all relevant documentation relating to any transactions that the Scottish Government may enter into.

The 2017/18 audit of the Scottish Government Consolidated Accounts was published on 27 September 2018 and is available from the Audit Scotland website: http://www.audit-scotland.gov.uk.

2. Why did the Cabinet Secretary not advise on 27th June 2018 that the Government had earlier made £15m available to the company when he announced the £30m facility.

Response:

The Cabinet Secretary for Finance, Economy and Fair Work wrote to the Convener of the Scottish Parliament’s Finance Committee to advise the Committee of the loan facilities provided to Ferguson Marine on 24 April and 27 June this year. The Finance Secretary was under no obligation to inform the Committee at that stage but he did so in the interests of transparency.

Scottish Government officials also advised Audit Scotland of the loan facilities. Expenditure under the agreements has been, and will be, recorded in the Scottish Government’s published Consolidated Accounts for the relevant financial year. 

The commercial loan facilities agreed with FMEL are not identical. The second facility announced by the Finance Cabinet Secretary in June 2018 has a broader purpose that the first. In addition to providing general working capital, the second facility is designed to enable the shipyard to target investment in repair and maintenance capability and to win business opportunities in areas like ship servicing and repair, low carbon marine projects and decommissioning work. For these reasons, the Government and the business agreed to publicise the second facility in June 2018. 

3. Given this perceived threat to take his customer to court as outlined in Mr McColl's statement to the newspaper [Sunday Times, 23 September] I believe that it is also in the public interest to know what measures the Scottish Government has taken during the course of the transactions of £15m and £30m to include any clause, caveat and legally binding agreement that would prevent the winning contractor for the construction of Vessels 801/802 or any person or organisation relating to the contract from taking Caledonian Maritime Assets Ltd or the Scottish Government to a court of law should that situation arise for any whatsoever.

Response:

Under section 25(1) of FOISA, we do not have to provide information which is already reasonably accessible to you.  

The terms and conditions of the June 2018 and September 2017 loan agreements between the Scottish Government and Ferguson Marine have been published in response to previous FOI cases (FOI/18/02035 Review and FoI/18/02244) and can be accessed at https://beta.gov.scot/publications/foi-18-02035-review/ and https://beta.gov.scot/publications/foi-18-02244/.  

Some of the information contained in the loan agreements has been withheld as it is commercially confidential and exempt under section 33(1)(b) – substantial prejudice to commercial interests. The information has commercial value and its disclosure could substantially prejudice the commercial interests of Ferguson Marine.

In addition, we are able to confirm on this occasion that the Scottish Government has taken appropriate legal advice on this matter. An exemption under section 36(1) of FOISA applies to some of the information requested because it is legal advice and disclosure would breach legal professional privilege.

The exemptions above are subject to the ‘public interest test’. Therefore, taking account of all the circumstances of this case, we have considered if the public interest in disclosing the information outweighs the public interest in applying the exemption. We have found that, on balance, the public interest lies in favour of upholding the exemptions.

Reasons for not providing information

Exemptions apply, subject to the public interest test.

An exemption under section 33 (1(b)) of FOISA applies to some of the information you have requested because it relates to commercial information that may prejudice the company. 

This exemption is subject to the 'public interest test'. Therefore, taking account of all the circumstances of this case, we have considered if the public interest in disclosing the information outweighs the public interest in applying the exemption. We have found that, on balance, the public interest lies in favour of upholding the exemption. 

An exemption under section 36(1) of FOISA (confidentiality in legal proceedings) also applies to some of the information requested because it is legal advice and disclosure would breach legal professional privilege.

This exemption is subject to the ‘public interest test’. Therefore, taking account of all the circumstances of this case, we have considered if the public interest in disclosing the information outweighs the public interest in applying the exemption. We have found that, on balance, the public interest lies in favour of upholding the exemption. We recognise that there is some public interest in release as part of open and transparent government, and to inform public debate. However, this is outweighed by the strong public interest in maintaining the right to confidentiality of communications between legal advisers and clients, to ensure that Ministers and officials are able to receive legal advice in confidence, like any other public or private organisation.

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Contact

Please quote the FOI reference
Central Enquiry Unit 
Email: ceu@gov.scot
Phone: 0300 244 4000

 
The Scottish Government 
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Edinburgh 
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