On December 14 2016 the Serious Fraud Office (SFO) announced that it would cease its investigation of the Soma Oil & Gas Group. The investigation, which began in July 2015, related to allegations of corruption in Somalia. The SFO stated that while there were reasonable grounds to open the investigation:
"a detailed review of the available evidence led…to the conclusion that the alleged conduct, even if proven and taken at its highest, would not meet the evidential test required to mount a prosecution".
The closing of the investigation comes two months after the High Court refused Soma's judicial review application against the SFO's continuation of the investigation on the grounds of:
- disproportionality under Article 8 of the European Convention on Human Rights; and
- failure to make adequate disclosure.
Soma contended that if the investigation were not concluded in short order, it would face losses running into billions of US dollars. While the judgment praised Soma's extensive cooperation with the SFO (which included the waiving of privilege), it stated that Soma had failed to meet the high threshold required to prove that the SFO had acted irrationally or disproportionately, and that ordering the SFO to give additional disclosure may prejudice its ongoing investigation. The High Court held that only in an "exceptional" case would such an application have succeeded.
Before the judicial review proceedings, the SFO took the exceptional step of issuing Soma with a comfort letter which set out, as far as possible, additional information on the nature and timings of the continuing investigation that Soma could disclose to its investors, allowing it to avoid the substantial losses that it feared. Given Soma's extensive cooperation with the investigation and the particular facts of the case, the issuing of such a letter is unlikely to be indicative of future SFO practice.
For further information on this topic please contact Kathleen Harris, Sean Curran, Stuart Baker or Oliver Cooke at Arnold & Porter Kaye Scholer LLP by telephone (+44 20 7786 6100) or email ([email protected], [email protected], [email protected] or [email protected]). The Arnold & Porter Kaye Scholer LLP website can be accessed at www.apks.com.