Sunday, 1 December 2013

The Riesco sale – the commercial and legal confidentiality problem

‘On the basis of the information I have been provided and the independent legal advice commissioned, it does not appear to me that the Council is acting unlawfully in its proposed actions, or that the actions proposed are ultra vires. I have not, therefore, identified a reason for me to interfere with the decisions of the democratically elected Members of the London Borough of Croydon.’

So concludes Paul Grady, Croydon’s District Auditor working at Grant Thornton UK LLP, in a letter to me dated 28 November in response to my request that he review whether the Council acted properly or not. The text of the letter set out below. 

Unfortunately Mr Grady is not able publicly to explain matters in fuller detail because he has to be seen to be both independent of the Council, because he regards my request  as being from a private individual (as a local elector), and because he has to be careful not have his independence compromised by the way what he says may be used by those who oppose the Council.

So his reply therefore is worded in a way that does not compromise ‘confidentiality’ and ‘independence’.  This is just another example of the ‘confidentiality’ requirements that plagues the public discussion of the tendering of public services and sale of public assets.
‘Confidentiality’ even constrained the Arts Council from saying whether or not it approved temporary and permanent export licences for the Riesco Collections ale items to be shipped to Hong King for the auction.

In an email  to me dated 19 November James Morrison, Export Licensing Manager, Arts Council England, stated:

 ‘For reasons of legal confidentiality, I am not able to confirm or deny whether a licence application for any or all of the Riesco ceramics has been received.  Under UK and EU law, details relating to a licence application are bound to be treated as confidential.
 I understand that Christie’s are taking questions on this so I think if you contact them you will be able to have your questions below answered in full.’

I emailed Christie’s but have not received a reply.

The Council has also used the grounds of ‘commercial confidentiality’ for not releasing some information about the award of the tender to Christie’s for the auctioning of the Riesco items.  You can see the reply of the Council to Steve Downes’ Freedom of Information request on the award of the tender to provide auction services for the Riesco sales items at:


Money from the sale of the Riesco items is supposed to be invested in Fairfield Halls.  Steve Downes has also been told by the Council in a response to another Freedom of Information request that the Council says that it is ‘commercial confidentiality’ that prevents it releasing publicly a report on the Fairfield Halls and London Mozart Players. The reply can be seen at www.whatdotheyknow.com/request/tendering_for_auction_services#incoming-451493

The ability to hide information in the public interest behind ‘commercial’ and ‘legal’ confidentiality means that citizens across Britain cannot be sure that everything is above board.

The lack of transparency means that the public can have no confidence in what may go on behind the scenes. The more ‘commercial confidentiality’ is used to withhold information from the public, the more cynical of Government and Councils people will become, regardless of which political party is in power.

This is the text of Mr Grady's letter

Mr Sean Creighton
6 Oakhill Rd
London
SW16 5RG

28 November 2013

Dear Mr Creighton

Croydon Council – Sale of 24 pieces from the Riesco collection

I write in response to your previous correspondence dating back to 18 August 2013, in respect of the London Borough of Croydon (the Council) and its proposed sale of 24 pieces from the Riesco collection. I would like to thank you for your patience whilst I enquired fully into this matter before replying to you.

During this period, I noted the launch and subsequent withdrawal of the judicial review application. Following the commencement of court proceedings for judicial review, I paused my work on this matter pending the decision of the court. With the withdrawal of the application for judicial review, I have now completed my work on this matter.

My investigation into this matter included review of a significant volume of documentation obtained from Council officers, including confidential legal advice received by the Council, minutes of committee meetings (including Part B papers) and other relevant documentation, and discussions with various officers, including the Chief Executive, Director of Finance and the Monitoring Officer. I also sought and obtained my own legal advice on the matters in question.

Overall conclusion

On the basis of the information I have been provided and the independent legal advice I
commissioned, it does not appear to me that the Council is acting unlawfully in its proposed actions, or that the actions proposed are ultra vires. I have not, therefore, identified a reason for me to interfere with the decisions of the democratically elected Members of the London Borough of Croydon.

I set out below a summary of my consideration of the matter and my responses to the points that you raised in your correspondence.

Summary consideration

In your original correspondence, you noted that you were unclear whether the Council had the legal right to sell the items and, if they didn't, that the sale could be unlawful.

Legal advice was previously obtained by the Council in 1978 and 1997 in relation to the basis on which the Council holds the collection, and hence its rights to dispose and use proceeds of sale. This legal advice, together with the legal documents concerning the transfer agreement of the collection into the Council's ownership, dating from December 1959, were all recently re-reviewed by counsel in June 2013, when the Council obtained up-to-date legal advice before taking any decision to sell the items in July 2013. I have reviewed in detail the legal advice received by the Council and considered whether in my view the Council's actions are reasonable:

· in respect of the process it has followed in arriving at this decision; and
· in light of the legal advice they have received.

The Council has sought legal advice on its proposed actions and made available to counsel the relevant legal and other documentation pertinent to the matter in hand. The Council has proceeded with its proposed actions following consultation with stakeholders and following a decision made by the relevant Cabinet Member, based on a majority recommendation from the Corporate Services committee. The Council has received legal advice and my review of that advice has not identified any evidence that the Council's position is not legally justifiable. Accordingly it is not, in my view, unreasonable for the Council to proceed in the way it is proposing, given the legal advice it has received, the consultation with stakeholders it has carried out, the democratic decision that was
taken by Members, and the steps the Council has taken to confirm its actions are intra vires.

You noted in your correspondence that "the plan to sell was taken before the historic documents of how the Riesco Collection came into the care of the Council". I am informed by the Council that no documents or evidence have been uncovered recently, meaning that the legal advice obtained by the Council in June 2013 considered all relevant documents. The plan to sell was approved on 24 July 2013 following receipt of that legal advice and after a period of consultation with stakeholders. I am not aware of any information that has recently been made available that was not considered by
counsel in forming their legal opinion on the Council's proposed actions.

The Council’s view, based on the legal advice they have received, is that the sale is legal and not ultra vires. The Council is proposing to continue with the sale on this basis. My review of the way in which the Council has reached its decision and the conclusion that it has reached has not identified any grounds on which their decision to sell the 24 pieces from the Riesco collection might be considered unreasonable.

I also reviewed whether the proposed sale, bearing in mind the Council's Museum Collections Development Policy 2013, would be unlawful on the basis of a breach of legitimate expectation. I obtained my own independent legal advice on this matter which concluded the Council has acted in accordance with the public law doctrine of legitimate expectation, which essentially allows a public authority to resile from a representation where there is a good public interest reason for doing so.

Conclusion

I have reviewed the Council's proposed actions. In my view, the Council is not acting
inappropriately and I have not identified a reason for me to interfere with the decisions of the democratically elected Members of the London Borough of Croydon. On the basis of the information before me, I have seen nothing which I believe requires me to take action as the Council's external auditor in respect of the Council's decisions to date and proposed actions in this matter.

I would like to take this opportunity to thank-you for taking the time to write to me and raising your concerns with me. Should you feel there are any further matters that should be brought to my attention, please do not hesitate to write to me.

Yours sincerely
Paul Grady
Director
Grant Thornton UK LLP

(Grant Thornton UK LLP
Grant Thornton House
Melton Street
London NW1 2EP
T +44 (0)20 7383 5100
www.grant-thornton.co.uk)

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