Yesterday federal Judge James Boasberg awarded a number of news organizations $122,347.02 in legal fees and costs as a result of their successful effort to force the Small Business Administration (SBA) to publicly release “both dollar figures and borrower names and addresses for any PPP loan.” The SBA had refused the news organizations’ demand for this information on the ground that the details of participation in the Paycheck Protection Program (PPP) amounted to “confidential commercial information and information the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.” The Court reasoned the new organizations were “entitled” to a fee award given their collective motive to promote public transparency that facilitates a data-driven assessment of a federal relief program.
Some of the same news organizations that are now being rewarded for suing the SBA over a lack of transparency in PPP are fighting Treasury’s proposed release of the same kind of information under the Terrorism Risk Insurance Program (TRIP). The reason is as predictable as it is discouraging: Their owners’ names cannot be found in the list of 5 million PPP borrowers but would be at the top of the list of TRIP participants.
At least five of the news organizations that have forced the SBA to reveal PPP borrowers are part of corporate groups with a captive insurance company eligible to participate in TRIP:
- Dow Jones & Co
- The New York Times
For example, The New York Times Company established Midtown Insurance Company within 6 months after the Terrorism Risk Insurance Act became law. By December 31, 2012, the federal program assumed 85% of the risk of the $1.2 billion terrorism insurance policy Midtown had issued to its corporate parent. Prior to the 2013 separation of its businesses, News Corp. (then the parent of Dow Jones & Co.) transferred 85% of the risk from its $1 billion terrorism policy into that federal program through its captive insurance subsidiary 21CF Insurance Services, Inc.
That’s right. These organizations went to court to expose small businesses that borrowed an average of $100,000 from the PPP while they arranged for themselves nearly $1 billion of relief under another federal program.
When U.S. Treasury recently asked
“whether the Federal Insurance Office (FIO) should make public financial information regarding participating captive insurers, taking into account whether this additional transparency would be beneficial to the terrorism risk insurance market and the administration of TRIP”, the manager hired by at least three of the five responded
We believe it would be completely unfair to place a captive and its affiliated insureds in the position of having to either succumb to a dissemination of what might be confidential and proprietary information or give up TRIP coverage. Accordingly, if Treasury needs information to assess the TRIP, such information should be provided - but information specific to a particular captive insurer should not be made available to the public. Information about the TRIP should only be available on a gross or anonymized basis, which is consistent with TRIA’s original provisions.
In other words, our gallant warriors against an obstinate SBA believe transparency prevails over privacy in small businesses programs. When it comes to federal programs serving well-heeled Fortune 1000 companies (such as themselves), it appears their position is that the public should just butt out.
The news organizations that sued the SBA for transparency while fighting to hide the details of their own participation TRIP may have a legal right to share in the Judge Boasberg’s $122,000 award but certainly do not have a moral one. They should donate their share to news organizations that are committed to demand transparency even when it is embarrassing or inconvenient to the corporate parents they serve.