UK firm faces Somalia payments probe

A British oil company paid hundreds of thousands of dollars which went to senior Somali civil servants, according to a UN report seen by the BBC.

UN investigators say the payments by Soma Oil & Gas amount in some cases to “acts that undermine Somali public institutions through corruption”.

The Serious Fraud Office has launched an investigation into the allegations.

The firm, which is chaired by former Conservative Party leader Michael Howard, denies any wrongdoing.

The report details payments totalling $490,000 (£315,000) from Soma Oil & Gas to the Somali Ministry of Petroleum and Mineral Resources, beginning in June 2014.

The money was part of a “capacity building programme” which was ostensibly intended to cover the salaries of a small number of experts, including geologists and geoscientists.

In reality though, the United Nations investigators say the scheme appears to have been used to “fund systematic payoffs to senior ministerial officials”, some of whom were “instrumental in both securing the company’s initial contract, and negotiating subsequent agreements”.

One recipient of money under the scheme was Dr Farah Abdi Hassan, the director general of the ministry. He received $36,000 (£23,000) over a period of 12 months – about three times his Somali government salary, which investigators say he continued to draw.

The report claims that Mr Hassan suggested in emails that Soma’s contractual agreements with the government – both past and prospective – could be subject to review if financial “assistance” was not forthcoming.

In one email, dated 27 March 2014, he writes: “If the Soma questions the assistance [to] the ministry then so many things goes [sic] to review, while the parliament is asking to ratify the SOA agreement.”

“SOA” refers to the seismic option agreement, the deal signed in August 2013, which grants the company exclusive rights to conduct an offshore seismic survey, and then bid for up to 12 oil and gas blocks.

Another email, written on 17 April 2014 to two of Soma’s directors, appears to suggest that signing off on the capacity building programme – referred to as an “amendment” – could protect the Soma deal from official review.

“Why don’t you sign the amendment and return, because, I’m sure it will protect the agreement.”

Soma Oil and Gas says it is “confident that there is no basis to the allegation”, and that the company is co-operating fully with the Serious Fraud Office.

It told Newsnight that the UN investigators had “fundamentally misunderstood” the nature of the payments.

In a statement it said: “No person involved in the capacity building agreement programme was, or is, in a position to influence the decision to grant any commercial agreements for the benefit of Soma.”

It added: “Soma has always conducted its business in a completely lawful and ethical manner.”

The company said in a statement on Saturday that the SFO had confirmed that “no suspicion whatsoever attaches to Lord Howard”.

The deal, signed between Soma Oil & Gas and the Somali government in 2013, was the first – and so far only – contract to explore for oil since the country descended into civil war in the early 1990s.

The extent of Somalia’s oil and gas reserves are unknown, but some estimates put it at as much as 110 billion barrels – nearly half that of Saudi Arabia.

The United Nations in 2013 called for a moratorium on oil deals, saying that, in the absence of a legal and regulatory framework to share energy resources, such agreements could fuel violence and corruption in a country still struggling with clan tensions and battling an Islamist insurgency.

More on this story on Newsnight at 22:30 BST on Monday 3 August on BBC Two. You can also catch up afterwards on iPlayer (UK only)