Iraqi telecoms firm loses appeal against $1.5bn corruption award

Reuters/Azad Lashkari

• Court of Arbitration upholds decision
• Win for Kuwait’s Agility Public Warehousing
• Dispute dates back to 2009 deal

A $1.5 billion decision against an Iraqi telecom operator and a prominent Iraqi businessman has been upheld by the International Court of Arbitration, part of the  International Chamber of Commerce (ICC).

The arbitrators found that Korek Telecom and its chairman and top shareholder, Sirwan Saber Barzani, had “participated in a corrupt scheme” to defraud the Kuwaiti logistic company Agility Public Warehousing and the French telecoms company Orange, according to a statement from White & Case, a London-based law firm representing the claimants. 

Agility said in a posting on Dubai Financial Market that Korek Telecom had been ordered to pay Iraq Telecom, a joint venture between Orange and Agility, $1.17 billion in damages, plus a further $3.5 million in interest, fees and costs

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In March 2023, an arbitration panel awarded $1.5 billion to Iraq Telecom and an affiliate through which Orange and Agility Public Warehousing had invested in Korek Telecom, based in Erbil, capital of Iraqi Kurdistan.

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The decision has been subject to appeals, but the latest bourse filing from Agility reveals a “final arbitral award” handed down by the ICC international court of arbitration. This includes $1.17 billion in damages, plus a further $3.5 million in interest, fees and costs to the Orange-Agility joint ventures.

The dispute has its roots in a deal in ​​2009, when Korek, founded by Barzani in 2000, needed more money and expertise to enable it to expand outside Kurdistan, and Agility and Orange agreed to pay $810 million for an indirect 44 percent stake in Korek.

In 2014 Iraq’s telecoms regulator revoked the partnership between Korek and Orange and Agility, ordering the French and Kuwaiti companies to return their shares to Korek’s co-founders, including Barzani.

Agility and Orange claimed Barzani and his associates persuaded the regulator to annul their stake in Korek “through cash payments, gift bribes, and real estate transactions for the benefit of high-ranking officials”, an International Chamber of Commerce tribunal decided last year.

Barzani and Korek appealed against that decision, which has now been upheld.