Minerals Minister Accused of Receiving Kick Backs In The Six Figure Number

Hargeysa, Somaliland, March 22, 2008 (SL Times) – The Somaliland minister of Water and Minerals Qassim Sheikh Yusuf has been accused of receiving at least hundreds of thousands of US dollars in kick-backs from foreign companies and middlemen seeking concessions for exploration of oil resources and minerals in Somaliland.

According to an article published by the Somali language daily Haatuf on March 16, 2008, both the Somaliland minister and the ruler of Somalia’s Puntland regional state Adde Muse, have in the past 4 years been involved in deals that granted exploration and production sharing rights to dubious oil and minerals companies.

Mr. Qassim Yusuf is known to have signed a dozen of exploration and production sharing agreements with foreigners on the assumption that they represented genuine oil companies. However these foreign signatories often turned out to be brokers seeking to make quick and handsome profits from reselling their concessions to interested market speculators and occasionally to real oil companies.

According to the Somaliland law an agreement concluded with a foreign company by the government becomes valid and legally binding only after it has been approved by the parliament. However none of the exploration and production agreements that the Somaliland ministry of Water and Minerals signed with the purported oil companies has so far been submitted to parliament.

Although it is illegal to start implementing the terms of these type of agreements unless ratified by Parliament first, the minister of Water and Mineral resources has allowed some of the companies to deploy surveying teams on Somaliland territory.

One of the companies whose presence in the region has been the subject of much controversy is the Australia-based Range Resources Ltd which in 2005 acquired exclusive exploration rights to oil and minerals in Puntland in exchange of $2.5 million in cash and 17 monthly payments of $200,000 to Adde Mussa.

Then on October 2006 the Puntland leader agreed that Range grant an 80% interest in the Nugal and Dharoor blocks to a new company called Canmex Minerals. The deal was contingent on Canmex paying a signature bonus of $5 million to Range. Canmex was also to commit itself to a financial investment of $50 million in exploration and expenditure over the next 4 years. Later in the year Canmex changed its name to Africa Oil.

In a recent financial statement to its shareholder in Australia, Range Resources has claimed that it paid out close to $16.7 million to Puntland authorities for mineral and hydrocarbon rights. But according to source close to Adde Mussa, the money was never paid into Puntland’s treasury.

Senior financial officials contacted by the Somaliland Times have also confirmed that no such a transaction appears to have been recorded.

According to sources in Garowe who preferred to stay anonymous due to the sensivity of the subject, Adde Mussa and one of his cousins who lives in Canada, have split the money with a number of Range executives and then deposited their share in foreign banks.

Range tried to expand its Puntland operation into Somaliland’s eastern Sanag region. But the Warsangeli inhabitants of eastern Sanag fought off Adde Mussa’s Majerteen militia at least four times in 2006. About 40 people were reportedly killed in the skirmishes that took place.

Interestingly enough Range officers visited Somaliland in 2006 and 2007 to hold negotiations with the Somaliland minister of Water & Minerals, Qassim Shekh Yusuf. Fearing a backlash if the public came to know about the visits, the discussions were held secretly. Range wanted to persuade Mr. Qassim to allow Lundin Petroleum of Sweden to begin oil exploration operations in Somaliland. Both Lundin Petroleum and Africa Oil were among the Lundin Group of companies.

By early February 2008, Lundin Petroleum was negotiating an oil exploration deal with the Somaliland ministry of Water & Minerals.

Qassim whose palms were already greased with over $200,000 by Range has agreed in principle to sign a deal with Lundin Petroleum in the near future.

In response to a question posed to him by a Haatuf reporter back in February 2008, the Director General of the Ministry of Water & Minerals Ahmed Suldan denied that Lundin Petroleum was associated with Range through Africa Oil which operates in Puntland.

Pressed for a further comment on the subject, Mr. Suldan disclosed that Lundin had assured the ministry in writing of having no relations with Africa Oil or Range.

In early 2006 Mr. Qassim granted an oil exploration and drilling concession to an Indian businessman called Sood.

A production sharing agreement signed with Sood gave the latter rights to drill for oil in a highly promising block which previously belonged to Cheveron. Mr. Sood who until then ran his own construction firm – Motherland Homes – has had no experience in oil drilling.

Sood disclosed at the time that he gave one million dollars to Qassim as a signature bonus. But there was no evidence in ministry files that a signature bonus has actually been paid or what were the reasons why it wasn’t paid out.

The minister of Water & Minerals usually consults closely with president Dahir Riyale during any negotiations regarding oil and mineral concessions.

No deal goes through without the recommendation of Qassim and the consent of Mr. Riyale. Details of agreements are often kept secret from other cabinet ministers.

Minister Qassim is expected to go next month on a trip to Houston, Texas, USA. The trip is being sponsored by TGS, a Norwegian company that was granted without a bid a several million dollar contract for surveying minerals and off-shore oil in Somaliland.

According to the ministry, TGS surveying began earlier this year in the western parts of the country. However there was little information available to the public with regard to the operation.

There is also a growing concern among local oil experts over the patronizing role played by TGS in setting the country’s oil and minerals policies.

Source: Somaliland Times