Soma British Oil Firm Accused of ‘Payoffs’ to Somali Officials by U.N. Monitor

soma-oilEvent

  • British company Soma Oil and Gas accused of making large payments to Somalia’s ministry of oil.
  • The payments has created serious conflict of interest viewed as pay offs to senior officials in the ministry.
  • The U.N monitor report indicates that Soma nearly paid $600,000 (£384,940) in an effort to protect and expand energy exploration contract that the company signed with the ministry in 2013.
  • Soma secured an exclusive contract in 2013 to conduct seismic surveys on 12 offshore oil and gas blocks, totaling 60,000 square km.
  • The contract awarded Soma Oil and Gas the right subsequently to pick blocks it wanted to exploit.
  • The U.N report also reveals that Soma Oil and Gas paid $495,000 to a lawyer who was advising the Somali government when negotiating the contract with the company.

Analysis

According to the confidential report compiled by the experts on the U.N. Somalia and Eritrea Monitoring Group Soma company has committed grievous anomalies.

The eight-member panel of investigators compiled the 28-page report monitors compliance with U.N. sanctions.

According to the report, Soma Chief Executive Robert Sheppard told the Monitoring Group that the payments were part of a “Capacity Building Agreement” requested by the Somali government.

This aimed to help the ministry hire local and foreign experts to build up geology and other oil industry expertise, something the country lacks after decades of conflict destroyed its state institutions.

The document submitted to the U.N. Security Council’s Somalia/Eritrea sanctions committee has triggered proper investigation into Soma by Britain’s Serious Fraud Office (SFO).

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Summary

The SFO has confirmed that it opened the inquiry but it has not outlined the allegations against Soma Oil and Gas. The company’s London headquarters were searched last week.

Soma Oil and Gas Company continues to deny any wrongdoing and argues the contract were awarded by Somali’s cabinet and not members of the petroleum ministry and as such are over above board.

The U.N. monitors described the capacity building programme as “likely part of a quid pro quo arrangement”.

This where the ministry would protect the Soma Oil and Gas contract from any negative consequences when a panel chaired by the Somali finance ministry began conducting a review of all its contracts.

These arrangements can undermine Somali public institutions through engaging in corrupt deals.

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