Nicola Sturgeon has refused to say if she knew about corruption allegations surrounding the owner of one of the Chinese companies that she signed a £10 billion investment agreement with.
Pressure mounted on the SNP leader yesterday as more questions were raised about the Scottish Government’s contact with a construction group which is mired in a bribery scandal in its homeland.
Controversy has surrounded a “memorandum of understanding” (MoU) signed by Ms Sturgeon and representatives of SinoFortone and the construction giant China Railway No. 3 Engineering Group (CR3).
CR3 is controlled by parent company China Railway Group (CRG), a firm implicated in “gross corruption” that has seen it accused of paying bribes to government officials in China to secure public contracts.
Last night the Scottish Government claimed it was “not necessary” to carry out a full due diligence process into the companies because the MoU did not commit Scotland to a formal contract with the potential investors. On the campaign trail in Orkney, Ms Sturgeon was asked directly if she knew about the corruption allegations when she signed the MoU.
The SNP leader dodged the question, answering: “There is no agreement to invest. There is no actual investment agreed. This is about exploring opportunities and if there are any specific proposals for investment due diligence will be done.”
The scandal has been noticed in other countries. In Guyana the government has come under fire from human rights activists as a result of CRG’s involvement in the Amaila Falls hydropower project.
Norway’s oil fund has pulled out its £26 million stake in CRG after its ethics council concluded there was “a risk that the company is involved in gross corruption”. The Norwegian ethics council produced a report in October 2014 which said it was likely that China’s railway minister was bribed to secure contracts for CRG.
According to the report, one official received £4m in bribes from companies including CRG to win contracts. China’s railway minister Liu Zhijun received a death sentence, later reduced to life imprisonment, for taking £5.4m in bribes after awarding contracts to CRG.
The MoU was signed on 21 March, but was not officially announced by the Scottish Government. Details of the deal, which could see billions invested in clean energy, affordable housing and transport in Scotland, did not come to light until it was publicised by the Chinese press. In the Chinese coverage, the SNP donor and Stagecoach entrepreneur Sir Brian Souter was quoted welcoming the MoU.
Labour’s Jackie Baillie, said: “The more we find out about the SNP’s secret deal, the more questions it raises. The allegations of corruption show that this deal stinks.
“At best, the SNP government did not undertake any due diligence on the companies involved in this deal, and at worst they are content to sign up to deals with organisations that are likely involved in ‘gross corruption’. We also still have no answers about Brian Souter’s involvement.
“Dismissing tough questions on this is unacceptable.”
Scottish Liberal Democrat leader Willie Rennie has written to Ms Sturgeon about the corruption allegations.
In his letter, Mr Rennie asked: “Did you know before you signed the MoU that the parent company of the China Railway No. 3 Engineering Group has been blacklisted by the Norwegian government because of the risk of ‘gross corruption’?
“We all want to see new investment coming to Scotland to create jobs and boost growth. But I hope you would agree that it is also important that proper due diligence is completed before entering into agreements to ensure that the companies we are working with are not involved in dubious or illegal practices.”
Last night a Scottish Government spokesman said: “Prior to the signing of the MoU, Scottish Government officials assessed the credibility of the potential investors in terms of their existing UK activity, such as Sinofortone’s MoU with London Group PLC on tourism projects.
“As the MoU does not involve any legal, contractual or funding obligation or commitment, full due diligence was not necessary.”