Nicola Sturgeon has said she was “not aware” of allegations of corruption against the parent company of a Chinese firm she has signed an investment agreement with.
The First Minister signed a “memorandum of understanding” (MOU) with SinoFortone and China Railway No 3 Engineering Group (CR3) which could be worth up to £10 billion.
It has emerged China Railway Group Limited (CRG), the owner of CR3, has been hit by corruption allegations in its homeland which resulted in Norway’s oil fund blacklisting the firm.
Questions were raised over the level of scrutiny of the firms carried out by the Scottish Government before the MOU was signed.
Speaking on the election campaign trail in Edinburgh, Ms Sturgeon said: “What happened is we signed a memorandum of understanding to explore options for investment.
“If we get to the stage where there are any proposals for investment, then full due diligence will be done at that stage. That’s how these things normally happen.
“There are no actual proposals on the table at this stage, and if that changes then those proposals will go through the normal process.”
Pressed on whether she knew of the allegations against CRG at the time the MOU was signed, she said: “We don’t do full due diligence until we get to the stage of actual proposals.”
Asked again, she said: “I’m telling you we don’t do full due diligence so, you know, I am not aware of that.
“But if we get to the stage where there are any actual proposals on the table, then we do full due diligence at that stage.”
The Scottish Government was already under fire from its political opponents for not publicising the MOU at the time it was signed.
Instead, news of the agreement had been published on the SinoFortone website on March 21.
It has emerged the council of ethics for Norway’s sovereign wealth fund recommended in 2014 that an investment in China Railway Group Limited (CRG) be dropped due “to an unacceptable risk of
the company being responsible for gross corruption”.
At the end of 2013, the fund owned shares in the company worth 306 million Norwegian Krone – the equivalent of almost £26 million.
A council of ethics report said: “CRG and one of its subsidiaries have apparently bribed civil servants to secure contracts to build railways and housing projects.
“This is reflected in two Chinese legal rulings relating to the recipients of the bribes.”
It continued: “Based on the information available, the council finds it highly likely that CRG has been involved in gross corruption and that the company does not meet national or
international standards regarding compliance and anti-corruption.”
Liberal Democrat leader Willie Rennie accused Ms Sturgeon of having “signed a so-called agreement of understanding with people that she doesn’t know anything about”.
He said: “This is a ridiculous way to do business. The First Minister needs to explain the protocol for signing such memorandums and whether she complied with that protocol when she signed this one.
“The Norwegian oil fund showed how it should have been done. Even the simplest checks would have revealed cause for concern but the First Minister did not ask basic questions before putting pen to paper.
“She seems prepared to sign up to any agreement at any time, no matter the consequences for corruption and human rights.”