Nicola Sturgeon denies knowledge of allegations in row over Chinese firm

Great Wall Of China Graffiti

Nicola Sturgeon has said she did not know about allegations of corruption against the parent company of a Chinese firm involved in a possible £10bn investment deal with the Scottish government.

The first minister signed a formal “memorandum of understanding” (MOU) to explore investment in transport infrastructure, clean energy and housing projects with two Chinese companies, the SinoFortone group and the China Railway No 3 Engineering Group, last month.

Concerns were initially raised when details of the deal – which was concluded on 21 March – were reported first in the Chinese media, with no official announcement made by the Scottish government.

It has since emerged that the parent company of one of the organisations involved, the China Railway Group Limited, has been blacklisted by Norway’s oil investment fund, which pulled its £26m stake after its ethics council concluded there was “a risk that the company is involved in gross corruption”.

Questions have also been raised over the level of scrutiny carried out prior to the MOU being signed.

On Tuesday, the Scottish government said 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.

Speaking on the election campaign trail in Edinburgh, 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.”

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 Liberal Democrat leader, Willie Rennie, who had been pressing Sturgeon to clarify whether she had prior knowledge of the allegations, described this as “a ridiculous way to do business”.

He said: “The Norwegian oil fund showed how it should have been done. Even the simplest checks would have revealed cause for concern but the FM did not ask basic questions before putting pen to paper.”

Powered by Guardian.co.ukThis article was written by Libby Brooks Scotland correspondent, for theguardian.com on Wednesday 6th April 2016 18.30 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010