Iraq's 'Phantom' Electricity Deal Not So Ghostly?

Meanwhile the allegations about Capgent were investigated by a business columnist, David Baines, of Canadian daily, the Vancouver Sun. Although the company's website has no phone number and its physical address is that of its lawyer's Vancouver office, Baines managed to interview Muhannad Samara, the managing director of the company, who is an Iraqi with Canadian citizenship based in Jordan.

Baines queried the company’s founding as well as Samara’s credentials – he is an immigration consultant supervising a power plant construction company and the company is indeed more like a consultancy, only existing on paper. Samara said that Capgent worked with partners in the Middle East but declined to give any details about the primary shareholders in the company or which Iraqi contractors were being enlisted to work on the power plants for, he said, “security reasons”.

And he said that he was puzzled by the allegations of fraud as Capgent would be “responsible for financing the proposed power projects, and the Iraq government is not required to make any payments to the company until they are up and running”. Additionally Samara said Capgent had yet to hear from the Iraqi government that the contract had been cancelled; the Vancouver Sun story was published August 10.

Eventually Baines - the newspaper’s prize winning business columnist, described as “uncovering white collar crime, stock fraud … for 23 years” - concluded that he could understand why both the Iraqi man in Vancouver who had raised the alarm and the Iraqi government were suspicious of Capgent and had reacted so strongly. “On the other hand,” Baines wrote, “Samara made himself available to me and responded to my questions in a very straightforward manner.

According to information received from the Iraqi ambassador in Canada, who was asked to investigate the contracts: “the two companies do not meet the financial and technical capabilities to qualify as manufacturers for this type of project and thus they are unable to fulfil their contractual obligations.”

Iraq’s electricity problems started over two decades ago in the 1990s when after the country invaded Kuwait and were in turn, attacked by US-led forces, much of the electrical infrastructure was damaged. As the Washington Post reported in 1991, targeted bombing of substations and other power generating infrastructure was a deliberate tactic to “ create post war leverage over Iraq. Planners now say their intent was to destroy or damage valuable facilities that Baghdad could not repair without foreign assistance”.

While electricity supply had never been optimal in Iraq, after the Gulf War it was even worse. As planned by US military strategists, economic sanctions made repairing the Iraqi grid difficult, if not impossible. During Saddam Hussein’s rule, Baghdad often got priority in terms of the hours of electricity the city had. But since 2003, almost everyone has suffered equally from shortages, unplanned power cuts and drop outs. Many homes only get two to four hours of electricity a day.