UK investigator drops charges against Soma Oil over alleged graft in Somalia

oil_platform_p-51_brazil-2-1 — The SFO said it was dropping graft charges against Soma Oil but still pursuing what the High Court said were ‘serious criminality’. Credit: EBC

UK authorities have dropped charges against the embattled British oil explorer Soma Oil over allegations of corrupt dealings with Federal government of Somalia on the award of oil exploration contracts in 2013.

The Serious Fraud Office which has been investigating the matter told Soma Oil in a letter a day before High Court hearing that there was ‘insufficient evidence of criminality in relation to capacity building payment for there to be any realistic prospect of conviction’.

Investigations against Soma Oil and Gas Holdings started last year following a leaked UN report which alleged the oil explorer chaired by former Tory leader Lord Howard had made inappropriate payments to officials in the Ministry of Petroleum in Somalia in what the report said was a case of quid pro quo.

In the Capacity Building Agreement which aimed at building the capacity of Ministry staff as standard practice in cases where a country may not have capacity to handle oil ventures, the UN Monitoring Group for Somalia and Eritrea said Soma Oil made payments which could have aimed at influencing the award of Seismic Option Agreement and subsequent oil production agreement.

Soma Oil however distanced itself from any acts of corruption noting its transactions with Somalia were within a legal framework and devoid of malpractice.

SFO though is still pursuing investigations which the High Court described as ‘serious criminality.’

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”.

Soma Oil which says has invested £30 million in oil exploration in Somalia filed a judicial review in August after concerns the company was facing the risk of insolvency as investors threated to pull out or stop funding. The High Court however quashed the application and proceeded with the case.

The oil explorer submitted the Exploration Programme data to the government of Somalia in December last year and further followed up with a Notice of Application for Production Sharing Agreements (PSAs).