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Soma Oil & Gas: SFO Investigation

Volume 764: debated on Monday 14 September 2015


Asked by

To ask Her Majesty’s Government what measures they intend to propose to the United Nations Security Council in the light of the Serious Fraud Office’s criminal investigation into Soma Oil and Gas Holdings, Soma Oil and Gas Exploration, Soma Management and others in relation to allegations of corruption in Somalia.

My Lords, the Serious Fraud Office’s investigation into Soma Oil & Gas is an ongoing, independent investigation. It would not be appropriate to comment at this stage, nor to take any action on the basis of it. We are advising the federal Government of Somalia of the importance of establishing an effective legal and regulatory framework before signing oil or gas contracts, due to the high risks of corruption and conflict associated with the sector.

My Lords, Soma has contracts with the Government of Somalia giving it rights over 60,000 square kilometres of the continental shelf and creaming off up to 90% of the state’s oil revenues. Are the Government concerned that Soma paid civil servants advising on the deal a total of $360,000 and the so-called independent legal adviser another $500,000? When is the relevant Security Council committee due to consider the report on these payments, submitted to it on 3 August by the Somalia and Eritrea monitoring group?

My Lords, on the first question, I perhaps did not make it clear enough in my first Answer that this matter is being investigated by the SFO, and investigated as the result of a leaked confidential document. In light of both those circumstances, it is not the practice of any Government to comment on such matters. On the noble Lord’s second question, I understand that the United Nations will discuss these matters again shortly.

My Lords, does my noble friend agree that we should note that all the companies concerned have strenuously denied any allegations of wrongdoing, and that the Question perhaps denies the central tenet of English justice—which is that a person is innocent until proved guilty?

My Lords, it is not for me to comment on what others have said. The Government will await the outcome of an investigation before commenting.

My Lords, following his recent visit to the Cayman Islands, Grant Shapps, the Minister of State at the Foreign and Commonwealth Office, suggested that the Government may be weakening their position on corporate transparency in the overseas territories. Can the noble Baroness state that the Government will firmly encourage the overseas territories to ensure that central registers of beneficial ownership are produced for the companies based in those territories?

My Lords, I am not exactly an aficionado of cricket but even I can recognise a wide. In the spirit of co-operation, I will say that what we are doing with regard to Somalia, which is not an overseas territory, is to encourage responsible investment. We are strongly urging the Somali Government to ensure that any resulting investment and benefit from it is shared by the whole country. The benefit is clearly needed to reduce poverty there.

My Lords, I welcome the Minister back to her place and wish her a speedy recovery. She is looking extremely well. I accept what she says about not commenting on this specific issue, but will she assure the House that at the end of this process, any lessons to be learned are shared with the Department for International Development?

The noble Lord makes a perfect point. In practice, the person who briefed me today was previously with DfID and has given me the assurance that these matters are discussed. We need to learn the lessons from any such circumstance; clearly, we share that around Whitehall. However, the next time I go on a military helicopter, I will get out of it a little better than I did this last time.

While Somalia is struggling with the prospect of new-found oil wealth, al-Shabaab terrorists are murdering citizens and may massacre AU peacekeepers with impunity and almost at will. What is the Government’s response to the grave concerns over AMISOM and Somalia’s forces’ operational capabilities, with a lack of effective co-ordination and shared command structures and, crucially, a lack of air power? What steps are the Government taking within the UN Security Council to support Somali President Hassan Sheikh Mohamud’s declared ambition to reform financial governance of the national security sector, building a more integrated, accountable and transparent sector, subject to rigorous oversight?

The noble Lord raises the serious matter of how al-Shabaab may be defeated in the area and the role of AMISOM. We support the counter-al-Shabaab effort by funding, advice and support to AMISOM command, the United Nations Assistance Mission in Somalia, UNSOM, and the EU training mission. It is essential that we continue to do all we can with regard to skilling and supporting those military efforts. Somalia can have a successful future, but first it needs to overcome its security problems and encourage proper investment.

My Lords, setting aside the activities of individual oil exploration companies, can the Minister comment on the weight that the Foreign and Commonwealth Office attaches to the call by the United Nations last year for a moratorium to be imposed on any further exploration by any oil companies in Somalia because of the risks which it poses to a fragile state, with competing groups vying for gains to be made from any such exploration?

The noble Lord rightly draws attention to the fragility of states in those circumstances. We have strongly encouraged the federal Government and the emerging federal states to reach agreement on resource control and revenue sharing, and indeed to develop a legal framework which both supports that agreement and reflects best practice, before signing oil and gas deals. When it comes to the crunch, it is up to the sovereign country whether it signs those deals.

My Lords, with regard to the problem of corruption in Somalia and the associated problem of poverty, would not better progress be made towards the alleviation of poverty in Somalia—and, indeed, in other countries in the region, providing the better future for those countries that she and all of us wish for—if there were more rapid development of genetically modified crops? Is a more positive approach to GM crops in the European Union one of the reforms that Her Majesty’s Government are seeking?

My goodness, I think I am going even beyond my initial cricketing analogy. However, the noble Lord comes to a key issue, which is that the role of this country overseas has been to ensure stability and security in other states. The way that we work together and with our European colleagues is important. The Prime Minister’s golden thread is the way to go.