Michael Howard: Former Tory leader faces questions by SFO over oil deal corruption claims
The former leader of the Conservative Party, Lord Howard of Lympne, is to be questioned by the Serious Fraud Office over the coming days in relation to a criminal investigation into an oil explorer where he is chairman.
Last week the SFO searched the offices of Soma Oil & Gas after a whistleblower made allegations about the London-based company, believed to relate to the manner in which it obtained exploration and drilling rights in Somalia. Soma Oil & Gas released a statement saying it had always conducted its activities in a “completely lawful and ethical manner”, and added that the SFO had confirmed that “no suspicion whatsoever attaches to Lord Howard”.
Sources at the SFO said, nevertheless, that they expected Lord Howard to be accompanied by a lawyer at the meeting. “Most people probably would – just for peace of mind,” one said.
Last October, United Nations investigators said a deal struck between the Somali government and Soma in 2013 to conduct seismic surveys in Somalia and its territorial waters had “never been made public, nor was it approved by the federal parliament of Somalia”. The deal allowed Soma to “nominate and obtain” exploration and drilling rights for an area covering up to 60,000 sq km.
The SFO said the decision to launch the corruption investigation into Soma was made after information was analysed by its internal intelligence unit and the go-ahead was given by its director, David Green.
Soma’s chief executive is Robert Sheppard, a former senior executive of BP and Amoco. The main backer of the company, which is thought to have already invested around $40m (£26m) in Somalia, is the Russian oil billionaire Alexander Djaparidze.
One former director of the Soma is Mohamad Ali Ajami, who resigned in December 2013. Mr Ajami is reportedly being investigated by the US Securities and Exchange Commission and the Justice Department for allegedly paying bribes to the Gaddafi-era Libyan Investment Authority to invest $300m of the country’s oil money with the American hedge fund Och-Ziff.
Lord Howard, who led the Conservatives between 2003 and 2005, became chairman of Soma in May 2013. As chair he wrote a letter to the former business minister, Michael Fallon, asking him to meet the newly appointed Somali energy minister in London as a “favour”.
Investigators from the UN’s Somalia-Eritrea Monitoring Group said last year that several oil and gas agreements in recent years were “likely to exacerbate legal tensions and ownership disputes and stunt the transparent development of Somalia’s oil and gas sectors”. In response, the Somali government said it was reviewing the deals.
The next stage of the SFO inquiry could be the dropping of the case or the bringing of formal charges. Another possibility could be a controversial deferred prosecution agreement (DPA), under which a firm can admit wrongdoing for an economic crime, such as fraud or bribery, and accept a fine, while avoiding a drawn-out criminal trial.
DPAs were introduced by the Ministry of Justice last year, but some have criticised them as a way for wealthy corporations to obtain a “get out of jail free” card.