NICOLA Sturgeon has admitted that she was "not aware" that a Chinese company was linked to corruption before she opened the door to a multi-billion pound partnership with the firm.
The First Minister has signed a controversial Memorandum of Understanding with China Railway No. 3 Engineering Group Co., Ltd, (CR3), which is a wholly owned subsidiary of a company implicated in major bribery scandals.
The agreement with the Scottish Government, which was signed on March 21 but the details of which only emerged in China, pledges that the parties will be "mutually supportive" and "develop a relationship" that could lead to £10bn of investment in major infrastructure projects north of the border.
China Railway Group Limited (CRG), the parent company of CR3, has been blacklisted by Norway's oil fund after its ethics council concluded that there is an "unacceptable risk that the company is involved in gross corruption" and an "unacceptable future risk of corruption". The fund ditched a £26m stake in CRG as a result.
Asked this morning about whether she had been aware of the corruption links before signing the agreement, Ms Sturgeon said: "What happens is we signed a memorandum of understanding to explore options for investment. If we get to the stage that 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. If that changes then those proposals will go through the normal process."
Pressed while on the campaign trail in Leith over whether this meant that she had not been aware of the evidence of corruption, she replied: "I’m telling you we don’t do full due diligence so, you know, I’m not aware of that but if we get to the stage there is any actual proposals on the table we do full due diligence at that stage."
A 2014 report from the Norwegian ethics council, which is in the public domain, states that CRG had a track record of bribing public officials to secure lucrative rail and housing contracts. The two areas have been highlighted in the agreement with the Scottish Government as possible areas of cooperation.
The deal was signed by CR3 and another firm, Sinofortone. The agreement states: "The parties will be mutually supportive of each other in working towards this purpose and seek to develop a relationship that could lead to a program of investment into Scottish priority projects and infrastructure to the value of £10bn."
Willie Rennie, the leader of the Scottish Liberal Democrats, said: "She signed a so-called agreement of understanding with people that she doesn't know anything about. 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."
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