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Orange, Agility file discovery motion against Korek over corruption claims

Alleges that Sirwan Barzani involved in self-dealing
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2018-11-09

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SULAIMANI—The Financial Times reported earlier this week (November 5) on an ongoing legal battle involving French telecom company Orange, Kuwaiti investment house Agility Public Warehousing, and Kurdish company Korek that alleges that tycoon Sirwan Barzani and others engaged in self-dealing and were involved in a corrupt influence scheme.

According to the newspaper, a discovery application, known as a Section 1782 motion, was filed in US court in order to obtain financial records from Korek’s banks in order to “substantiate alleged ‘self-dealing, material misappropriation and mismanagement’ by locally-based shareholders in Korek led by Barzani.”

Orange and Agility had invested millions of dollars into Korek from 2007 to 2013 and had been due to assume control of the company through a mechanism known as a call option.

The Iraqi telecommunications regulator body, CMC was set to approve the takeover, but pulled the plug in 2013, saying essentially that the ownership structure that involved Orange and Agility was no longer valid.

The two foreign companies accuse Korek and its local investors and owners of orchestrating the move in an effort to expropriate the money that Orange and Agility had invested and to prevent their takeover of Korek.

The Financial Times reported that of particular interest of the 1782 application is a $150 million loan taken out by Korek in 2011 from a Lebanese bank that the two companies did not know about. They believe that Barzani and the other local investors funnelled that money into their own bank accounts and into assets that were used to corruptly influence regulators.

One example highlighted by the Financial Times was a house in the Wembley neighborhood of London that was owned by Pierre Youssef, who was described by the paper as a “longtime business partner and nominee” of Korek’s senior independent director, Raymond Rahmeh.

However, the house was actually lived in by Ali Naser Al-Khwildi, chief executive of the CMC, the Iraqi regulatory body that rejected the takeover of Korek by Orange and Agility, from 2014 to 2018.

Korek officials strongly deny the charges.

“Sirwan Barzani has acted in the interests of Korek Telecom, the stakeholders and the Kurdistan people,” the Finanical Times quoted Korek’s spokesperson as saying.

(NRT Digital Media)