By John Lee.
[Amended 7th Oct 2021 to include comment from Korek Telecom.]
UAE-based Agility has announced an arbitration decision by the Lebanese Arbitration Center of the Chamber of Commerce, Industry and Agriculture of Beirut and Mount Lebanon, in the lawsuit filed by its subsidiary Iraq Telecom against the Intercontinental Bank of Lebanon (IBL) and Korek Telecom (Iraq). and International Holding Company Limited in the UAE.
According to Agility's statement to the stock exchange:
"Iraq Telecom Limited (United Arab Emirates) ("IT Ltd"), Agility's subsidiary, acted as claimant in the dispute is in relation to alleged fraud orchestrated by certain Korek Telecom stakeholders with the knowledge and cooperation of IBL Bank in connection with a subordination agreement relating to a USD 150 million loan extended by IBL Bank to Korek Telecom. The claim mainly sought the announcement as null and void the subordination agreement."
"The award grants in full IT Ltd.'s claim to render as null and void the subordination agreement relating to the USD 150 million loan extended by IBL Bank to Korek Telecom. The Tribunal agreed with IT Ltd. that all of the respondents (Korek Telecom, IH Ltd and IBL Bank), had engaged in a deliberate and intentional deception of IT Ltd.
"The deception was done with the purpose of inducing IT Ltd. to enter into the subordination agreement without knowledge of the fact that IBL Bank was acting not as a true lender, but merely as a front for Mr. Sirwan Barzani. The counterclaims of the respondents were rejected in their entirety. In addition to the avoidance of the subordination agreement IT Ltd. was awarded legal costs in the amount of US 2.5 million.
"As a result of this award, IT Ltd. will now seek to enforce its debt claim in the principal amount of USD 285 million, as well as accrued interest, against IH, as debtor, and Korek Telecom, as guarantor. Furthermore, IT Ltd. will reserve its right to claim for damages against all respondents, including IBL Bank, on the basis of their participation in the deception of IT Ltd."
The company says the judgement has, "no financial impact at the moment."
A spokesperson for Korek Telecom said:
"IT brought this arbitration seeking damages of more than USD 600 million and they have failed to obtain any award of damages or even a declaration that it is entitled to damages. IT has spent more than USD 4 million pursuing a pointless arbitration.
"The Tribunal made technical findings that Korek and IBL were required to disclose private banking arrangements as part of a duty of candour. Korek vigorously rejects any allegation that it set out to deceive Orange and Agility. As those parties were well aware, the IBL loan was essential to fund the company's national operating license and without it, Korek would have been unable to operate.
"As a telecoms firm operating in Iraq, Korek had to contend with serious instability and unrest. These challenges were exacerbated when Orange and Agility took control of the company's management. Both knew the cost to the company of failing to pay the operating license. This is why Orange and Agility both tried and failed to secure alternative sources of funding.
"Korek is actively considering its options to set aside the Award, although the outcome is largely moot, given that IT has failed in its claim for compensation."
(Sources: Agility, Korek Telecom)