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Kuwait’s Agility awarded $1.65 billion in dispute with Iraq's Korek

The Kuwaiti logistics firm accused Korek, which is owned by Kurdish military commander Sirwan Barzani, of using corruption to expropriate its stake.
A picture shows the headquarters of the Public Warehousing Co. (PWC), also known Agility, in Kuwait City on December 29, 2009. The leading Kuwaiti firm indicted for fraud in connection with multi-billion dollar contracts with the American army said on December 28 that it is in talks with US authorities for an out-of-court settlement. AFP PHOTO/YASSER AL-ZAYYAT (Photo credit should read YASSER AL-ZAYYAT/AFP via Getty Images)

The Kuwaiti logistics company Agility said on Tuesday it was awarded more than $1 billion in a dispute with the Iraqi Kurdish telecom firm Korek. 

Agility said the Paris-based International Court of Arbitration released its findings on Monday in the case by Agility subsidiary Iraq Telecom and affiliate International Holdings Limited against Korek Telecom and its founder, Sirwan Barzani. Agility had alleged the two engaged in fraud and corruption to expropriate its $810 million investment in Korek. The court found Korek liable and awarded $1.65 billion in damages to Agility, the company said in a statement. 

"We hope that this outcome brings resolution and closure to the issue and that the respondents will now honor their obligations in a manner commensurate with that of 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 to Reuters. 

Background: Korek Telecom is one of two of the main 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 eponymous family that dominates Iraqi Kurdish politics. Agility is a publicly traded Kuwaiti logistics firm. 

Agility first invested in Kopek in 2007. At the time following the US invasion, Iraq was considered a prime market for telecommunications investment. In 2011, Korek teamed up with French telecom giant Orange to take a 44% stake in Korek for $810 million via 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 Financial Times. 

The trouble began when Korek received letters from federal Iraq’s National Communications and Media Commission in 2013 and 2014 telling them to revert to the pre-Iraq Telecom ownership arrangement due to Korek’s alleged failure to meet several regulatory requirements. Agility and Orange said this constituted an attempt to expropriate their stake in Korek and began legal proceedings. Korek denied this was the case, according to the outlet. 

Why it matters: The saga is not the first involving corruption allegations and Korek. In 2014, Swedish telecom firm Ericcson approved a $50,000 cash request from Barzani. The money was to go toward a charity helping Iraqis displaced by the Islamic State (IS). Ericcson subsequently uncovered suspicious details. An executive wrote the donation was made to “get mileage from Korek,” The Washington Post reported in July of last year. 

A Korek spokesperson told the outlet that Barzani had stepped back from managing the company in 2014 due to IS’ attack on the Kurdish Region

The International Consortium of Investigative Journalists also reported the incident early last year, citing leaked documents from Ericcson. 

Know more: 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 2014 annulment of their Korek investment. The World Bank body dismissed the case in 2021 and ordered Agility to pay Iraq more than $5 million to cover legal fees, Reuters reported at the time. 

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