Kuwaiti logistics company Agility said Tuesday it has been awarded more than $1 billion in a dispute with Iraqi Kurdish telecommunications firm Korek.
Agility said the Paris-based Court of International Arbitration issued its findings on Monday in the case of Agility subsidiary Iraq Telecom and affiliate International Holdings Limited against Korek Telecom and its founder, Sirwan Barzani. Agility alleged that the two engaged in fraud and corruption expropriated its $810 million investment in Korek. The court found Korek liable and awarded Agility $1.65 billion in damages, the company said in a statement.
“We hope that this result will bring a solution and closure to the issue and that the respondents will now respect their obligations in a manner consistent with businesses operating in countries that respect the rule of law,” said Agility vice chairman Tarek Sultan.
A Korek spokesperson said the company continues to deny the allegations.
“Mr. Barzani and Korek firmly deny the allegations against them and are considering all options, including whether to seek to set aside the award,” the spokesperson said in a statement for Reuters.
Background: Korek Telecom is one of two leading telecommunications companies in the autonomous Kurdistan Region of Iraq – the other being Asiacell. It was founded by Barzani, a military commander and member of the family of the same name that dominates Iraqi Kurdish politics. Agility is a publicly traded Kuwaiti logistics firm.
Agility first invested in Kopek in 2007. At the time after the US invasion, Iraq was considered a prime market for telecommunications investment. In 2011, Korek teamed up with French telecommunications giant Orange to take a 44% stake in Korek for $810 million through a joint venture called Iraq Telecom. The parties also agreed on a call option that would allow Agility and Orange to take control of Korek four years later, according to a 2018 report from the Financial Times.
The trouble began when Korek received letters from Iraq’s Federal Communications and Media Commission in 2013 and 2014 telling them to return to the pre-Iraqi Telecom ownership arrangement due to Korek’s alleged failure to meet several regulatory requirements. Agility and Orange said this amounted to an attempt to expropriate their commitment in Korek and legal proceedings were initiated. Korek denied this was the case, according to the outlet.
Why it’s important: The saga is not the first related to allegations of corruption and Korek. In 2014, Swedish telecommunications firm Ericcson approved a $50,000 cash request from Barzani. The money was to go towards a charity helping Iraqis displaced by the Islamic State (IS). Erickson later revealed questionable details. An executive wrote that the donation was made to “get mileage out of Korek,” the Washington Post reported in July of last year.
A spokesperson from Korek told the outlet that Barzani had resigned from managing the company in 2014 due to an IS attack on the Kurdish Region.
The International Consortium of Investigative Journalists reported the incident early last year, citing documents leaked by Ericcson.
More information: Agility also filed a case with the World Bank’s International Center for Settlement of Investment Disputes in 2017 related to the Korek saga. Agility argued that Iraq violated a protocol with Kuwait by denying them the ability to challenge the annulment of their Korek investment in 2014. The World Bank body dismissed the case in 2021 and ordered Agility to pay it more than $5 million Iraq to cover legal fees, Reuters reported at the time.
