61 Op. Att'y Gen. 361 (1972)

 
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6 September 1972

Wisconsin Attorney General Opinions

Investment Board
Public Records

The Investment Board can only deny members of
the public from inspecting and copying portions
of the minutes relating to the investment of
state funds and documents pertaining thereto
on a case-by-case basis where valid reasons
for denial exist and are specially stated.

JOHN R. PIKE, Executive Director,
Wisconsin Investment Board

You have requested my opinion whether the
Investment Board has legal authority to
preclude members of the general public from
inspecting or copying any portion or minutes
of the board relating to the investment of
state funds and every document relating
to such investments.

It is my opinion that the board
is without such power.

The board acting through its custodian can
only deny inspection and copying on a
case-by-case basis as hereinafter discussed.

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By reason of Sections 25.156, 25.16, 25.17,
25.18, 889.08(2), Stats., you are the legal
custodian of such records except as may be
otherwise provided by special statute.

See Sections 14.58(13), (17), (18),
25.17(7)(b), 41.17, 41.18(2), Stats.

I find nothing in Sections 14.58, 15.07,
15.76, 16.40, 25.14-25.40, 41.17, 41.18,
210.05, Stats., or other statutes referred
to in Section 15.761, Stats., (with the
possible exception of Section 71.20(4) by
reason of Section 71.11(44)) which would
indicate a legislative intent or statutory
basis for exempting the records of the
Investment Board from general
inspection and copying statutes.

It is also notes that Sections 16.40(12),
(13), 16.41, 16.42, Stats., require the
director to furnish the Secretary of the
Department of Administration with such
reports of investments as he may require
and grants the secretary free access to
all financial accounts of every state
department, that Section 25.17(51), Stats.,
requires the director to have the records
and accounts of the board audited at least
annually by the Legislative Audit Bureau
and that Section 25.17(52), Stats., requires
maintenance of certain records for reporting
to the Department of Administration.

Insofar as certain of the documents of
investments are in the custody of the State
Treasurer, sec 19.25, Stats., is indirectly
in point as to access to these records by
certain state officers.

The minutes of the board and all papers and
documents relating to the investment of state
funds, which are in your possession "or to
the possession or control of which" you "may
be lawfully entitled, as such" officer, are
public records within the meaning of
Sections 16.80(2)(a), 19.21(1), Stats.

As public records they are subject to
inspection and copying by any person
using proper care during office hours
subject to reasonable regulations as
the custodian may provide.

Section 19.21(2), Stats.

If demand for inspection and copying is made
at reasonable time and place, the custodian
can only withhold inspection if he determines
that the public interest in withholding
inspection exceeds the public interest,
expressed in statute, in permitting
inspection.

Specific reasons must be given when
inspection is withheld and the person seeking
the same can then resort to court action to
test the sufficiency of such reasons.

Statements that the records are
"confidential" or that permitting inspection
would be "contrary to the public" interest
are merely legal conclusions and are not
a substitute for specific reasons which
must be given in each case.

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State ex rel. Youmans v. Owens (1965),
28 Wis.2d 672,
137 N.W.2d 470;

Beckon v. Emery (1967),
36 Wis.2d 510,
153 N.W.2d 501;

58 OAG 67 (1969);

60 OAG 9 (1971),
dated January 21, 1971,
to District Attorney, Dane County;

60 OAG 43 (1971),
dated January 26, 1971, to Chairman,
Department of Industry, Labor
and Human Relations;

60 OAG 285 (1971),
dated August 10, 1971, to Secretary,
Department of Natural Resources;

60 OAG 470 (1971),
dated December 31, 1971, to Secretary,
Department of Transportation.

In Youmans the court stated that Section
19.21, Stats., will be construed in pari
materia with Section 66.77, Stats., and
that the policy guidelines for holding
closed meetings set forth in Section
66.77(3), Stats., will be applicable
to the question of confidentiality
of records under Section 19.21, Stats.

I am enclosing copies of the opinions to the
Secretary of the Department of Natural
Resources and the Secretary of the Department
of Transportation referred to above in which
the exceptions listed in Section 66.77(3),
Stats., and certain other common law
exceptions are discussed.

As a state administrative agency, the State
Investment Board has only such powers as are
expressly granted by statute or necessarily
implied and its administrative rules must
be in accord with statutory policy.

American Brass Co. v.
State Board of Health (1944),
245 Wis. 440,
15 N.W.2d 27;

Josam Mfg. Co. v.
State Board of Health (1965),
26 Wis.2d 587,
133 N.W.2d 301.

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Any overall rule or policy barring any
inspection or copying would,
in my opinion, be void.

Without question, portions of the board's
meetings should be conducted in executive
session, and certain documents relating to
investments should on a case-by-case basis,
be withheld from inspection.

Subsections (d), (e) and (f) of Section
66.77(3), Stats., may form the basis for
closed sessions or withholding inspection
depending upon the circumstances.

Subsection 66.77(3)(d) provides:

66.77(3)(d)

Deliberating or negotiating on the
purchasing of public property, the
investing of public funds, or
conducting other public business
which for competitive or bargaining
reasons require closed sessions;

Time may be an important element to consider.

With respect to investments there are at
least three time periods involved

(1)  the period of acquisition, which would
     involve research, deliberating,
     negotiating and purchasing,

(2)  the period of retention, and

(3)  the period of disposal, which again
     would involve research, deliberating,
     negotiating and sale.

Justification for closing of files on an
investment, after acquisition and during
the period of retention, may be
difficult to establish.

It would be even more difficult to justify
closing of files after disposal.

Generally speaking, however, where there may
be grounds for maintaining closed files at a
time which is critical in the deliberating
and negotiation stages, those grounds
become weakened by the passage of time.

You state that the board purchases investment
advisory services from a firm which requests
that the information be kept confidential and
that certain information as to loan
applications, appraisals, loan balances,
payments and interest rates are customarily
regarded as confidential in the investment
industry.

In the opinion to the Secretary of the
Department of Natural Resources, dated
August 10, 1971 referred to above, which
is concerned with limitations on the right to
inspect public records and includes a section
on records received under a pledge of
confidentiality, it is stated:

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I would suggest that the following criteria
be considered, however, in deciding whether a
particular pledge of confidentiality comes
within the exception, and will, therefore,
hold up in court.

First,    there must have been a
          clear pledge made.

Second,   the pledge should have
          been made in order to
          obtain the information.

Third,    the pledge must have been
          necessary to obtain
          the information.

Finally,  even if a pledge of confidentiality
          fulfills these criteria, thus
          making the record containing the
          information obtained clearly within
          the exception, the custodian must
          still make an additional
          determination in each instance
          that the harm to the public
          interest that would result from
          permitting inspection outweighs
          the great public interest in full
          inspection of public records. . .

You should consider the above guide lines in
making your initial determination whether
inspection should be withheld, to honor a
pledge of confidentiality which may have
been extended, or to maintain a posture
which would enhance the ability of the
board to profitably compete for investment
opportunities and to maintain a secure
investment portfolio.

Where the custodian denies inspection, giving
specific reasons, the person seeking
inspection can resort to court action
in an attempt to compel inspection.

Where such recourse is made it is for the
court to determine whether the reasons given
are sufficient in the specific case to
require withholding of inspection
in the interests of the public.

RWW:RJV

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