By Christopher Williams, chief business correspondent
Wednesday, October 12, 2016
Soma aims to pioneer an offshore oil industry in Somalia CREDIT: OIL RIG
Corruption investigators have dropped a probe of allegations that Soma, the oil explorer chaired by the former Tory leader Lord Howard, bribed Somali officials as it sought to open up potentially lucrative new fields off the coast of the war-torn East African country.
Yet a cloud still hangs over Soma, as the Serious Fraud Office (SFO) also revealed it is investigating other, undisclosed, allegations.
The decision to drop the investigation of so-called "capacity building payments" made by the privately held company to the Somali Ministry of Petroleum and Natural Resources emerged in a High Court judgment.
Soma, which says it has spent more than £30m exploring Somali fields, sought a judicial review of the SFO's investigation amid boardroom concerns it could face a cash crisis if potential investors were deterred by the controversy.
The court rejected the application in a hearing in August and today published its findings that investigators were “approaching the matter proportionately, with proper regard to the facts of the case”.
Confirmation that the investigation of the initial allegations has been dropped will nevertheless be seen as a boost for Soma, which was first accused in a leaked report for the UN Security Council by an organisation called the UN Somalia and Eritrea Monitoring Group.
The UN report had claimed that the payments for salaries for technical staff, office equipment and transport was “a likely part of a quid pro quo” in which Soma received preferential treatment and commercial advantages.
The company denied any wrongdoing and a Somali investigation concluded that it acted in good faith.
In a letter to Soma the day before the High Court hearing, the SFO said there was “insufficient evidence of criminality” in relation to capacity-building payments for there to be any realistic prospect of conviction.
The SFO’s other probes of allegations that were described by the court as “serious criminality” are ongoing, however.
In another letter to Soma, investigators said they were unable to provide any details on grounds of “heightened security concerns, both for information and individuals, associated with a criminal investigation into its business activities in the Federal Republic of Somalia”.
The SFO added: “All criminal investigations have some degree of operational sensitivity but it is fair to say that this case more than most. Our conclusion is that it would not be right to answer the questions you pose at this stage.”
The court found no grounds to force the SFO to reveal the subject of its ongoing investigations.
Former Conservative leader Lord Howard is non-executive chairman of Soma
An SFO spokesman said the judgment "reinforces the court’s respect for the independence of investigative authorities".
He added: "The court found that none of Soma’s grounds had any real prospect of success.”
It leaves Soma in line to pay 80pc of the SFO's costs and battling to conserve cash while the investigation continues. The company has slashed costs and its biggest investor, a private fund called Winter Sky, has agreed to fund its operations for several months.
Richard Anderson, Soma’s chief executive, said: “We remain disappointed that third parties apparently continue in their attempts to undermine Soma's competitive advantage as a first mover back into Somalia after over 20 years of unrest.
"It is all too easy for third parties to make assumptions and allegations about commercial successes in difficult environments around the world but the fact of the matter is that Soma has behaved properly at all times. "
The company said it was continuing to work with authorities to explore and confirm if the country’s offshore resources can be commercialized.