Soma Says U.K. Graft Probe Causing Significant Financial Damage
Soma Oil & Gas Holdings Ltd. said an investigation by the U.K. Serious Fraud Office caused the company “significant financial and reputational damage” and is hampering its business plans, according to a document obtained by Bloomberg and confirmed by the company.
“Until the SFO investigation is closed, it will be challenging for Soma to progress on its business strategy,” the London-based company said in a report dated Sept. 30 that it submitted to the U.K. government. Soma, whose chairman Michael Howard is the former leader of the U.K.’s ruling Conservative Party, reported an $8.9 million loss in the 12 months through December, having spent $41.3 million on exploration off Somalia’s coast.
The SFO on July 31 raided Soma’s London office as part of itsinvestigation into payments to Somali officials under a capacity-building program with the country’s Petroleum Ministry. The investigation “may cause very serious economic and financial damage,” the company said, reiterating its denial of the allegations.
“Additional funding within the next two months” is required, the company said. “Although the group does not have adequate resources to continue for the foreseeable future, existing shareholders will support the business for the next 12 months.”
Soma is the one of the most active oil companies in Somalia, which hasn’t had a functioning central government for the past quarter century because of a civil war and an insurgency by al-Qaeda-backed Islamist militants.
Soma’s board of directors had planned to hold an initial public offering for the company by June this year and lists the “sale of Soma to a third party” as a future milestone, the document shows.