Iraq's Communications and Media Commission transferred the 44% stake in Korek owned jointly by Orange and Kuwaiti logistics company Agility to three investors
An Iraqi industry regulator has stripped France’s Orange of its stake in wireless operator Korek and handed it to a group of local investors, according to an official document seen by Bloomberg.
An administrative order from Iraq’s Communications and Media Commission transferred the 44% stake in Korek owned jointly by Orange and Kuwaiti logistics company Agility Public Warehousing Co. to three investors including Korek’s managing director, Sirwan Barzani.
A Kurdish regional ministry executed the administrative order, according to the document dated March.
The decision marks the latest twist in Orange’s troubled foray into Iraq, which became a magnet for foreign investment in the years following the U.S.-led invasion that toppled Saddam Hussein.
The venture was one of several moves by European phone carriers into riskier business environments to seek out growth as markets closer to home matured.
Orange and Agility bought the Korek stake in 2011 and invested $810 million in the business. Then in 2014 the regulator declared the original contract invalid, saying the companies had failed to honor their commitments on spending and network building.
The decision set off legal disputes that have dragged on for years.
Barzani now holds 75% of Korek, with the two other investors holding the rest, according to the regulator’s order.
“The shareholding owned by Orange and Agility has been unlawfully expropriated and Orange will continue to take all steps to seek full compensation for this act,” said a spokesman for France’s dominant phone company. In a statement, Agility said it had “multiple legal proceedings” underway in Dubai, New York and before the World Bank’s International Centre for Settlement of Investment Disputes to try to recover its holding.
A spokesman for the telecom regulator declined to comment. The director General of registration in the Kurdish region said “the change on the Korek telecom shares was done according to an administrative order from Baghdad.”
Barzani, one of Iraq’s most powerful businessmen and a nephew of the Kurdish region’s former president Massoud Barzani, defended the regulator’s decision, saying it had been upheld by Iraqi courts.
“As a result of the implementation of the Iraqi telecom regulator’s decision, I have been left to deal with Korek’s debt burden,” he said in a statement.