British oil company investigated for corruption in Somalia over $690,000 in bribes

August 04, 2015 | Africa, Legal, Management

Nairobi, Kenya | – An oil company chaired by a former leader of Britain’s ruling Conservative party is being investigated for alleged corruption in Somalia, claims the company slammed as “defamatory”.

Soma Oil and Gas, a private company chaired by Lord Michael Howard, on Monday denied paying more than half a billion dollars to government officials to protect an oil exploration deal signed in 2013.

Britain’s Serious Fraud Office (SFO) said on Friday it had opened a criminal investigation into Soma following allegations of corruption in Somalia.

The allegations stem from investigations carried out by the United Nations Monitoring Group on Somalia and Eritrea, set up to detail infringements of arms embargoes on the countries.

The investigators say that $690 000 worth of payments were suspicious. They allege that at least $580 000 paid since June 2014 as part of a “capacity building programme” may have been corrupt payments to Somali government officials.

An April 2014 “side letter” from Soma to Somalia’s petroleum minister said the company would pay salaries and equipment costs to support the exploration programme up to a total of $400 000. The agreement was extended in April 2015, since when a further $90 000 has allegedly been paid.

A further $100 000 was paid for a “data room” to store and analyse seismic data but which has not been built.

The allegations were contained in a 28-page report put to the UN Security Council’s sanctions committee on Monday.

London conferences and deals

Soma said in a statement that the UN investigators had “fundamentally misunderstood the nature, purpose and destination of the payments made”.

“Any suggestion that any of the payments… were improper, unlawful or gave rise to a conflict of interest is incorrect and defamatory,” the company said.

“Soma has always conducted its business in a completely lawful and ethical manner and will take all appropriate steps to protect its reputation.”

The Soma deal is intended to revive Somalia’s oil and gas industry which has been on hold during decades of civil war and years of Islamic insurgency.

Howard is expected to be interviewed by the SFO as part of its investigation. Soma said “no suspicion whatsoever attatches to Lord Howard”.

British Prime Minister David Cameron succeeded Howard as Tory leader in 2005.

Cameron has hosted two conferences on Somalia’s future in London. Soma was founded a few weeks before the 2013 conference and signed its exploration deal with the Somali government three months later.

“This agreement reflects the close collaboration between the UK and Somalia,” Howard said at the time.

Somalia’s government said it would cooperate with the SFO investigation.

“Somalia’s oil and gas reserves are a national asset to be used and exploited in the national interest and we are committed to achieving this with complete integrity and transperancy [sic],” it said in a statement.