R (Soma Oil and Gas Ltd) v Director of the Serious Fraud Office
| Jurisdiction | England & Wales |
| Judge | Lord Justice Gross,Mrs Justice Andrews |
| Judgment Date | 12 October 2016 |
| Neutral Citation | [2016] EWHC 2471 (Admin) |
| Docket Number | Case No: CO/4022/2016 |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 12 October 2016 |
[2016] EWHC 2471 (Admin)
Lord Justice Gross
Mrs Justice Andrews, DBE
Case No: CO/4022/2016
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
David Perry QC and Katherine Hardcastle (instructed by DLA Piper UK LLP) for the Claimant
Sasha Wass QC and Adam Payter (instructed by Serious Fraud Office) for the Defendant
Hearing dates: 17 August, 2016
Judgment Approved
INTRODUCTION
As Andrews J pertinently observed when the Claimant's ("Soma's") application for judicial review against the Defendant ("the SFO") first came before her on the 10 th August, 2016:
"…this is an extraordinary and, on the face of it, somewhat ambitious claim designed to require the SFO to bring an ongoing investigation to an end or at least to give an informal indication that it does not intend to take action against the Claimant… The Claimant faces a very high hurdle indeed…."
In the event, Andrews J having conducted an inter partes directions hearing on the 12 th August, this Court, acting with expedition to assist the parties, heard the "rolled up hearing" on the 17 th August.
On that occasion and having heard full argument, the Court stated its decision. Notwithstanding the formidable advocacy of Mr Perry QC for Soma, for which the Court was most grateful, the claim had no real prospect of success and permission was therefore refused. The Court nonetheless had some sympathy with the position in which Soma found itself and exhorted the SFO to proceed as expeditiously as possible, keeping the remaining strands of the investigation under review. The Court further expressed the hope that the exceptional letter written by the SFO to Soma's solicitors, dated 16 th August, 2016 ("the 16 th August letter") would provide some comfort or assistance to Soma. The Court indicated that a judgment would be produced; this is the judgment.
The background is not without interest. International business operates in challenging parts of the world, geographically, politically, commercially and in terms of corporate governance. Those are the realities for a good part of the oil and gas industry. The present case concerns commercial activity by Soma in Somalia, a much troubled country in recent decades.
Cognisant of those realities, Parliament has, however, prioritised combating corruption. By the Bribery Act 2010 ("the Bribery Act"), Parliament has legislated, with extra-territorial effect (s.12), making it an offence (under s.6) where a person (P) bribes a foreign public official (F) and P's intention is to influence F in his capacity as a foreign public official and obtain or retain business or an advantage in the conduct of business. S.7 of the Bribery Act provides that a commercial organisation may incur criminal liability if a person who performs services for it commits bribery on its behalf and the commercial organisation cannot prove that it had adopted adequate procedures that were designed to prevent such conduct. Both ss. 6 and 7 supplement the two main general offences of bribery under the Bribery Act, namely, bribery of another person (s.1) and being bribed (s.2).
On the 25 th June, 2015, the SFO commenced an investigation into whether Soma committed bribery and corruption offences in connection with oil exploration activities it conducted in Somali territory from 2013 to date. The SFO's stance, then and until very recently, was that Soma's involvement in making "capacity building" payments ("the capacity building payments") to Somali public officials gave rise to reasonable grounds to suspect Soma of criminal offences under ss. 6 and 7 of the Bribery Act.
The actions of the Federal Government of Somalia ("the FGS") and Soma were considered by the United Nations Somalia and Eritrea Monitoring Group ("the SEMG"). In a confidential – but leaked – report dated 28 th July, 2015, the SEMG characterised the capacity building payments as "a likely part of a quid pro quo arrangement" whereby, in exchange for payments to public officials, Soma had obtained preferential treatment and commercial advantages. Prior to the leaking of the report, it is thought by Soma that the SEMG had notified the Foreign and Commonwealth Office ("the FCO") of its concerns and, in turn, the FCO had notified the SFO – prompting, Soma suggests, the commencement of the SFO investigation.
For its part, Soma vigorously denies the commission of any criminal offence. Soma was incorporated in 2013 for the purpose of investing in the exploration and drilling for oil in the territory of Somalia. Soma's position is that on the 6 th August, 2013, it entered into a Seismic Option Agreement ("the SOA") with the FGS. Under the terms of the SOA, Soma undertook to conduct a seismic exploration programme in the territory of Somalia and provide data generated by the programme to the FGS. In return, Soma was granted the right to use the collected data to identify areas which might yield oil and gas as well as the right to apply for Production Sharing Agreements ("PSAs") over particular areas of territory. There followed, in March/April 2014, an agreement by Soma to provide financial support, entitled "Capacity Building Arrangements" (as already defined, the capacity building payments), to the Somali Ministry of Petroleum and Natural Resources. According to Soma, the capacity support consisted of salary costs for technical staff, the costs of office equipment, transport and other working tools for the Ministry. The FGS, in its discretion, used these capacity building payments to pay allowances to a number of individuals on the payroll of the Ministry. Subsequently, in October 2014, Soma agreed to provide further financial support by way of rebuilding and refurbishing a data room belonging to the Ministry in Mogadishu.
Soma contends that it has directors of considerable expertise and distinction. Its non-executive Chairman is the Rt Hon. Lord Howard of Lympne CH QC. It has, throughout, received reputable professional advice. The capacity building payments were necessary due to the condition of the Ministry at the time. The creation of the data room was a contractual obligation. Soma has invested over US$40 million in the seismic evaluation project and completed it on time. The SOA included provisions for termination in the event of non-compliance with any anti-bribery and corruption laws. An internal investigation within Somalia has since concluded that there was no evidence of wrongdoing and that Soma had acted at all times in good faith. Legal advice over which Soma has waived privilege asserts that Soma has provided a "compelling rebuttal" of any suggestions of impropriety in its dealings with the FGS. In argument before us, Mr Perry submitted that this was a "difficult market"; there were competing commercial and political interests involved and Soma apprehended that "competitive factors" may have motivated the initial referral of the matter to the FCO and, thence, the SFO; as Mr Perry made clear, none of this amounted in any way to a criticism of the SFO.
A number of matters were common ground or not in dispute before us:
i) Soma has cooperated extensively with the investigation, a matter expressly recognised on a number of occasions by the SFO.
ii) In consequence, more information has been shared by the SFO with Soma than is customary in such an investigation.
iii) There were reasonable grounds for the SFO initiating its investigation and for obtaining and executing search warrants; there was no suggestion that the SFO had acted in bad faith.
Over time, Soma perceived that the investigation was dragging on. Such concerns were expressed in correspondence with the SFO, dating back to May 2016. Soma's particular concern related to the 25 th August, 2016, the date when PSAs were due to be concluded ("the PSA date") and its need to raise additional finance to permit it to perform its obligations under the PSAs. The estimated value of the blocks subject to the PSAs ran into billions of US$. A failure to sign the PSAs by the PSA date posed the risk that the blocks could be lost to competitors. Accordingly, the continued investigation cast a shadow over Soma's business and gave rise to a risk of insolvency; posthumous exoneration, as it was put in argument, would provide scant comfort.
The SFO responded carefully to these expressions of concern, as the correspondence indicates – the letters cited are examples. On the 17 th May, 2016, after acknowledging Soma's cooperation with the investigation, the SFO stated that the capacity building payments aspect of the investigation was almost complete. The SFO anticipated being in a position to write further to Soma in that regard within the next two to three weeks. However, the letter continued:
"….the investigation has revealed certain other matters which we have a duty to investigate. I am not in a position at present to set out what these are but I can reveal that there are some overseas enquiries which we are pursuing. Depending on the outcome of these we may seek a further interview with your clients, or some of them, but we cannot give any indication of the likelihood or timing of these given that, as you will appreciate, the timing of any response is outside our control. I can assure you that everything is being done to complete these enquiries as quickly as possible."
Pausing here, it can be seen that the initial focus of the SFO was on the capacity building payments; subsequently, from it would appear about December 2015, other matters arose ("the other strands") which the SFO has sought to investigate. During the hearing we were told by Ms Wass QC, for the SFO, that the other strands...
To continue reading
Request your trial
-
The Director of the Serious Fraud Office v Eurasian Natural Resources Corporation Ltd
...as being high risk in terms of incidence of public sector bribery and corruption. As Gross LJ observed in R (Soma Oil and Gas Ltd) v Director of the Serious Fraud Office [2016] EWHC 2471 (Admin) [2017] Crim LR 65, at [4] – [5]: " International business operates in challenging parts of the w......
-
R v S
...WLR 2091L v Director of Public Prosecutions [2013] EWHC 1752 (Admin); 177 JP 502, DCR (Soma Oil and Gas Ltd) v Serious Fraud Office [2016] EWHC 2471 (Admin); [2017] Lloyd’s Rep FC 18, DCS (Restraint order), In re [2004] EWCA Crim 2374; [2005] 1 WLR 1338; [2005] 1 Cr App R 17, CASerious Frau......
-
The Director of the Serious Fraud Office v Eurasian Natural Resources Corporation Ltd
...sector bribery and corruption (see Gross LJ at paragraphs 4–5 in R (Soma Oil and Gas Ltd) v. Director of the Serious Fraud Office [2016] EWHC 2471 (Admin)). 6 The SFO was constituted under section 1(1) of the Criminal Justice Act 1987 (“ CJA 1987”). Its functions include the investigation ......
-
R (Unaenergy Group Holding Pte Ltd and Others) v Director of the Serious Fraud Office
... ... Challenges by way of judicial review to investigators in the conduct of an investigation have and should have a "very high hurdle to overcome" and will be entertained only in exceptional circumstances: R (on the application of Soma Oil and Gas Ltd) v Director of the SFO [2016] EWHC 2471 , esp. at [21] and following. The Claimants' submission, if well-founded, would lead to increased scope for challenging the conduct by the SFO, acting in good faith, of an investigation into serious criminality. Such challenges to ... ...
-
Attempt to stop SFO investigation fails
...Queen on the application of Soma Oil & Gas Ltd v Director of the Serious Fraud Office [2016] EWHC 2471 (Admin), 12 October 2016 An on-going bribery investigation can severely affect a company's reputation, business and ability to raise finance. This case is the first time a company has trie......