Macquarie threatens government over FOI request

In response to a letter notifying Macquarie of the FOI request, the investment bank's general counsel, Michael Herring, wrote to the head of Treasury, Ken Henry, warning that releasing the information would "found an action" for breach of confidence.

"Given the mutual understanding between Macquarie and Treasury that the document was confidential, as recorded on the face of the document, we would regard the disclosure of the document as an unauthorised use of the information and its release would found an action for breach of confidence as set out in section 45 of the FOI Act," Mr Herring wrote.

BusinessDay reported in May that an FOI request to Treasury had identified correspondence sent by Macquarie's government relations lobbyist, Trevor Burns, within hours of the collapse of US investment bank Lehman Brothers in September 2008 that sparked the most critical phase of the financial crisis. With Macquarie's share price under sustained attack from short-selling hedge funds, by early October the government had guaranteed deposits in all local institutions and implemented a wholesale funding guarantee.

Mr Herring's letter to Dr Henry has revealed fresh details about Mr Burns' original correspondence. The letter shows that Macquarie Group was forwarding an email from another Macquarie lobbyist, Kris Neill, to Chris Barrett, the head of Treasurer Wayne Swan's office.

While Mr Herring's letter to Dr Henry argues that the correspondence was confidential because the email was marked as confidential, Mr Murphy's response to BusinessDay's application for the documents confirmed that labelling information as confidential does not immediately make it confidential under the act.

But Mr Murphy who sat in judgment on whether to release the same document he had received in the first instance ruled that the information "was within the context of a mutual understanding that Treasury would treat it as confidential".

He detailed a "longstanding understanding with the Macquarie Group that correspondence sent to me in confidence is received in confidence". Mr Murphy argued in his ruling it was "practice" that correspondence between the parties would be treated as confidential.

Asked at a mediation session in the Administrative Appeals Tribunal (AAT) last week to explain the "longstanding" and "mutual" understanding, lawyers for Treasury undertook to provide an affidavit explaining its special agreement with the bank. Lawyers for Treasury told BusinessDay at the AAT that Macquarie continued to oppose release of the email.

Treasury has twice refused the release of the correspondence to BusinessDay, including in an internal review by Mr Murphy despite him being the recipient of the email in dispute under the FOI.

Lawyers for Treasury argued at the AAT there was no potential for a conflict of interest in Mr Murphy adjudicating on the release of an email of which he was the recipient as he was "not the subject" of the email.

Treasury said it would not release the correspondence because that would prejudice the flow of information to government about the operations of the economy and breach confidentiality.

BusinessDay argued there was a public interest in the release of the email given the ongoing liability to the Australian taxpayer from the wholesale funding guarantee used by banks.