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Row over MoU deepens

Sturgeon resists questions over China bribery firm

Nicola SturgeonNicola Sturgeon is refusing to buckle under pressure to explain why her government did not carry out investigations before signing a deal with a Chinese company now embroiled in a corruption scandal.

The SNP leader agreed a Memorandum of Understanding with two companies last month which could lead to up to £10 billion of investment into Scotland.

But no details were released until last weekend and it has now emerged that China Railway Group, the parent of China Railway No 3 Engineering Group (CR3), was accused of paying bribes to Chinese government officials to secure public contracts.

Ms Sturgeon last night refused to say if she knew about the bribery charge before she signed the deal with CR3 and Sinofortone at Bute House on 21 March.

The Scottish Government, which is now restricted to what it can say because of election “purdah”, said it was “not necessary” to carry out due diligence into the companies because because there was no formal contract.

However, while campaigning in Orkney, Ms Sturgeon avoided questions on the issue, saying only: “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.”

Details of the bribery allegation surround Norway’s oil fund which withdrew a £26 million stake in CRG on the ground that there was “a risk that the company is involved in gross corruption”.

China’s railway minister Liu Zhijun received a death sentence, later commuted to a life imprisonment, for his part in taking £5.4m in bribes after awarding contracts to CRG.

This latest twist to the MoU scandal come after details of the signing were published in the Chinese press but were kept quiet by the Scottish government still unanswered questions about the nature of the agreement.

Jackie Baillie, speaking for Labour said: “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’.”

In a letter to Ms Sturgeon, Scottish Liberal Democrat leader Willie Rennie asked: “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.”

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.”

Daily Business revealed that Chinese investments into Britain normally come with a condition that materials are supplied by China. As this MoU involves infrastructure, there is a strong likelihood that it would involve the supply of Chinese steel.

> Comment: Nicola Sturgeon has questions to answer

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