Ombudsman’s opinion on the definition of commercially sensitive information in agreements signed between the government and private companies

The Office of the Ombudsman received questions from MaltaToday Journalist, Mr James Debono, with regards to the definition of commercially sensitive information in agreements signed between the government and private companies.

Since the matter is of substantial public interest, the Office of the Ombudsman is publishing the full text of the Ombudsman’s reply.

Mr Debono asked the Ombudsman

1.      How can the issue of commercially sensitive information be resolved when government is faced by demands for the publication (in parliament) of contracts signed with private companies or companies belonging to other states?

2.      When it comes to agreement between the government and private companies in sectors like energy provision through power purchase agreements and contracts for the operation of public transport, should transparency take precedence on commercial sensitivity or there a way to strike a balance? Would you recommend any particular procedure?

Reply by the Office of the Ombudsman

The Ombudsman shall not comment on the references made in your questions to specific commercial agreements concluded by government with private companies that are currently in the public domain and the subject of healthy political controversy.

The Ombudsman shall limit his comments to the general principles of good public administration that your questions address:

1.         It needs to be generally accepted that it is only through the process of correct and timely information on the actions of the Executive that transparency can be assured and accountability secured.  These values are of the essence of democracy and have to be safeguarded at all times.

2.         Providing information should therefore be the rule; withholding it the exception.  This means that the right of the public to be informed translates into the duty of the Executive to inform the public.

3.         The Executive is answerable to Parliament that has the right and the duty to inquire into the conduct of public affairs.  It has therefore the right to be fully informed by Government to be in a position to judge, approve or disprove of the actions of the Executive.  At that level the balance of the right to be informed in case of doubt should be tipped in favour of disclosure.

4.         The right to be informed, like all other basic rights, is not absolute.  There are constitutional and statutory limitations, specifically meant to protect the national interest of the other rights of individuals including those of legal persons.  It is in the definition of these limitations that conflicts of interpretation arise.  It is an area that needs to be constantly kept under review to ensure that limitations to this basic right are kept to what is strictly necessary.

The limitations of the constitutional fundamental right of freedom to receive ideas and information without interference, set out in sub-article 2 of Article 41 of the Malta Constitution, are further elaborated in the Freedom of Information Act.  This is meant to establish a right to information held by public authorities in order to promote added transparency and accountability in Government.  Part V of that Act lists conclusive reasons for not disclosing official documents.  The interpretation of the provisions of this Act, their application as well as the promotion of their observance by relevant public authorities lies, by law, in the hands of the Information and Data Protection Commissioner.

Judged from the strict perspective of the principles of good public administration, the Ombudsman is of the opinion that, when Government is faced by demands for the publication in Parliament of contracts negotiated with commercial entities for the provision of services, the following guidelines should apply:

a)                  The Executive has a wide margin of appreciation on whether or not to provide information during the process of negotiation.  At that stage, it should be guided by public interest and is entitled to take any measure it deems fit to ensure that negotiations would not be prejudiced by untimely disclosure.

b)                  Once an agreement is finalised, it should, in principle, be made available to Parliament within a reasonable time and submitted to public scrutiny.  Non-disclosure should be an exception and strictly regulated by law, regulation or protocol.  These agreements generally involve the expenditure or commitment of public funds and often entail long term binding commitments that could involve successive administrations.  The underlying constitutional principle should clearly be that the electorate, through their representatives in Parliament, have the right to know what agreements that affect their lives have been concluded by the Executive, entrusted by them to administer public affairs.  At that stage exceptions allowing absolute non-disclosure need to be restrictively interpreted.

Non-disclosure can only be justified on the grounds of national interest.  It has to be adequately proved that substantial harm would result to the national interest if the document is published and that non-disclosure to avoid such prejudice is in the national interest.  It is accepted that an agreement could contain commercially sensitive information that could undermine the protection of commercial interests of a natural or legal person including intellectual property.  In such case, the Executive would be entitled to refuse access to such a document but this only and if there is no overriding public interest that requires disclosure.

In such circumstances, if only parts of the requested document are covered by this exception, the remaining part of the document should be released.  Care should therefore be taken when negotiating agreements of this nature to ensure that the other contracting party is aware of the Executive’s obligation to respect the right to Freedom of Information and of the limitations of that right.  Clearly determining of what is in the national or public interest is not to be tainted by political expediency or the sensitivity of the contracting parties.

The Ombudsman would like to draw your attention to Article 4 of the Regulation (EC) 1049/2001 of the European Parliament and of the Council of Europe regarding public access to European Parliament, Council and Commission documents.  The exceptions to the duty of disclosure listed in that Article though not binding in Malta, form part of the European Code of Good Administrative Behaviour that all Member States are enjoined to observe.  One has to be motivated by these guidelines when determining whether transparency should take precedence on commercial sensitivity.  It is clear that in some cases non-disclosure is totally unjustified.  In others it could be justified to disclose the whole document with the exception of commercially sensitive information in the public interest.

It is the Ombudsman’s opinion that this area lacks definition and needs to be studied to determine with more precision the parameters within which non-disclosure would be justified in the public interest.  In this respect I have suggested that the Freedom of Information Act be revisited to bring it in line with more progressive legislation.

The issue becomes more delicate but perhaps even more impellent when one considers the right of the Executive not to disclose agreements to Parliament even when they contain commercial sensitive information.  In the light of the principles stated above, it is the Ombudsman’s opinion that there should be no reason why Parliament should not be fully informed of the contents of such agreements, even if in a limited and restricted manner.

The Ombudsman have suggested that one way to strike a correct balance between the interests of all parties involved would be to have a protocol that would establish how such information could be transmitted to the Leader of the Opposition and/or to Select Committees of the House.  This under confidentiality thus excluding them from being in the immediate public domain.  This could be done subject to agreed safeguards.

A similar process has already been adopted in certain laws as in the Malta Citizenship Act (Chapter 188) which provides that the Leader of the Opposition was to be a member of the Monitoring Committee to monitor the workings of the individual investor programme.

Considering the principles of good administration and also those of institutional and constitutional correctness, it does not seem proper that Parliament or at least the Leader of the Opposition is not privy to commercial agreements, even if they contain sensitive commercial information.  It does not seem to be correct that this is so when it is not only the Government that is fully aware of the contents of these agreements but also top civil servants, executives of public authorities, consultants and technocrats.

On a final note, one can safely observe that sharing information on commercial agreements, as far as this is possible in the public interest and within the stated limits, is surely one of the most effective ways to prevent and combat corruption in the management of public affairs.

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