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Wednesday, August 5, 2015

Michael Howard to meet Serious Fraud Office over Somalia oil deal

Corruption allegations over oil exploration  contract in Somalia .

(Medeshi)- Michael Howard, David Cameron's predecessor as leader of the Conservative Party, is to meet officials from the Serious Fraud Office in connection with a criminal investigation into Soma Oil and Gas, the company for which he acts as non-executive chairman.

The SFO launched its investigation last week. On Monday it emerged the basis for the probe is a United Nations report alleging conflicts of interest related to oil exploration in Somalia. In particular the report is critical of payments worth almost $600,000 to the Somali oil ministry and further amounts to its legal advisers, which were made in the year after it signed an exclusive deal in August 2013.

The Financial Times notes the exploration deal itself, the first to be signed by the country's Western-backed government, which was at the time just one year old, had been criticised over concerns it was reached without an open tender process and despite the UN recommending a moratorium on oil exploration. The paper noted at the time that Lord Howard had "spearheaded" the negotiations.

Soma said in a widely quoted statement that the SFO had confirmed "no suspicion whatsoever attaches to Lord Howard" and that it has "always conducted its activities in a completely lawful and ethical manner".

Reuters states that the UN report is particularly critical of payments totalling $590,000 to the oil ministry for "capacity building arrangements", which were to be used to provide technical assistance including paying salaries for specialists. It alleges at least six officials who drew Somali government salaries were also on the payroll, which would "in some cases have almost trebled their salaries". Around $100,000 was earmarked for construction of a "data room" that was never completed, it adds.

The paper also cites a payment of $495,000 to Petroleum Regimes Advisory, a Canadian law firm which acted as legal adviser to the Somali government when it was negotiating the exploration contract.

Soma has said the UN report "fundamentally misunderstood the nature, purpose and destination of the payments". It denies there was any conflict, saying the contract was agreed with the Somali cabinet and not the oil ministry, that no individual member of the Government was paid directly and that "appropriate due diligence" had been undertaken and "legal safeguards" put in place.
Source : The Week