An oil company chaired by Lord Howard of Lympne, the former Conservative leader, faces fresh questions over its dealings in Somalia, amid a bribery investigation.
Soma Oil and Gas, in which Lord Howard is also a shareholder, has been accused of paying off government officials in the impoverished country as it negotiated a licence to explore for and extract oil offshore.
The company, which had its offices raided as part of an investigation by the Serious Fraud Office (SFO) a month ago, has been criticised in an internal Somalian government report for creating a “conflict of interest” with payments to government officials.
The report, obtained by The Wall Street Journal, also attacked Soma for proposing a deal that was so one-sided that it would leave the country with “a fraction” of the oil revenues due to it.
Soma was the first international oil company to return to Somalia to look for oil and gas after a dozen groups abandoned their exploration programmes when fighting broke out in 1991, heralding two decades of turmoil.
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However, its pioneering move has raised concerns that the country lacks the necessary institutions and stability to deal with the discovery of oil. The internal Somali report, written by Abdul Abdurahman, a US-based Somalian lawyer, is the first sign that there were serious misgivings over Soma’s dealings in the Somalian government.
It is also critical of Soma paying the fees of the Somalian government’s lawyer, Jay Park. The report said it was unclear whether Mr Park was advising Soma or the Somalian government.
A spokesman for Soma said the report lacked credibility: “Its author is an immigration lawyer based in the United States with no oil and gas or international commercial law experience. His lack of experience is reflected in the quality of the report which contains clear errors and misleading statements. He has been replaced.” Mr Abdurahman has not returned a request for comment.
A report by a United Nations monitoring group had already accused Soma of having “created a serious conflict of interest, in a number of cases appearing to fund systematic payoffs to senior ministerial officials”.
Lord Howard argued in a letter to the UN security council last week that the monitoring group had “fundamentally misunderstood the nature, purpose and destination of payments” under the capacity building agreement.
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Such agreements are typically used in countries that lack the expertise and experience to oversee a nascent oil industry and to negotiate with international oil companies. However, the UN report alleged that the payments were going to officials who played key roles in negotiating with Soma. It also suggested that some of the salaries may be “ghost payments” for fictitious employees or misdirected to officials.
Soma has said that the SFO has confirmed that “no suspicion whatsoever attaches to Lord Howard”.
However, his name was on a leaked contract spelling out the so-called capacity-building payments. Although the contract was not signed — the payments were settled in a later letter written by Soma’s chief executive — Lord Howard is referred to in the document as Soma’s representative.