The English Court Rejects an Application by UK Company to End SFO Investigation
16 September 2016
On August 17, 2016, the English courts rejected an application by UK oil and gas exploration company Soma Oil & Gas Holdings Limited (“Soma”) to force the Serious Fraud Office (“SFO”) to expedite or discontinue its investigation of the company’s dealings in Somalia. The SFO is investigating Soma for potentially improper payments to Somali government officials in the Ministry of Petroleum in order to secure exploration rights by the Somali government.
In an application made by way of judicial review, a procedure through which the English courts review the exercise of power by public bodies, Soma claims that the ongoing SFO investigation is placing the company at risk of insolvency by preventing business partners from entering into key commercial contracts with it. Soma also cited their cooperation with the SFO to date as part of their claim that the investigation should be expedited or discontinued.
The case highlights the commercial pressures faced by companies that await the outcome of a publicly-known investigation by the SFO and the reluctance of the courts to end an SFO investigation before its conclusion, regardless of the level of cooperation shown by the company under investigation.
The SFO began its investigation into Soma in July 2015 following a leaked report by the United Nations Monitoring Group on Somalia and Eritrea which revealed that Soma had agreed to pay hundreds of thousands of dollars to government officials in Somalia. Soma claimed that these payments were part of a “capacity-building arrangement,” commonly used in the oil industry for countries lacking the infrastructure or industry expertise for such projects. The payments were reportedly intended to cover the salaries of officials, consultants and advisors involved in the exploration deal.
Soma claims that the ongoing investigation of the company by the SFO since July 2015 is preventing it from securing contracts with key business partners for its work in Somalia. A spokesperson for Soma said that “the delays by the SFO to complete its investigation in a timely manner continue to materially impact Soma’s costs and business opportunities.” However, the length of the Soma investigation, which stands at fourteen months at the date of this article, is in fact not unusual in comparison with the SFO’s previous bribery-related investigations which have often lasted years (for instance, the recent Standard Bank case lasted approximately two and a half years).
As part of its application to the court, Soma argued that it has demonstrated high levels of cooperation with the SFO’s investigation to date, including: (i) waiving privilege over specific legal advice, (ii) making directors of the company that are based overseas (and have not been accused of any wrongdoing) available to attend SFO interviews in the United Kingdom, and (iii) providing witness statements from its own interviews with Somali officials implicated in the investigation.
Details of the court’s decision have not yet been published and it is not yet clear whether Soma intends to appeal the court’s decision.