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Drugs, Militias form Explosive Mix on Iraq-Iran Border

By Shelly Kittleson for Al Monitor. Any opinions expressed here are those of the author(s) and do not necessarily reflect the views of Iraq Business News.

Drugs, militias form explosive mix on Iraq-Iran border

Officers and judges who dare to go up against those controlling the drug trade along Iraq’s southeastern border with Iran continue to be targeted as attempts are made to crack down on corruption.

Click here to read the full article.

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Another Unaoil Bribery Conviction Overturned

By John Lee.

The UK’s Court of Appeal has reportedly overturned the conviction of Paul Bond, who was jailed last year in relation to the Unaoil bribery scandal in Iraq.

Mr Bond (69), a former senior sales manager at SBM Offshore (SBM), had been sentenced to three and a half years in prison on two counts of conspiracy to give corrupt payments to Iraqi public officials to secure lucrative oil contracts in post-occupation Iraq.

According to Bond’s legal team, key evidence was withheld from the defence during the trial.

In December, Ziad Akle, Unaoil’s territory manager for Iraq, has had his conviction for bribery quashed.

(Sources: Evening Standard, Reuters)

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How Corruption Erodes Healthcare in Iraq

By Mac Skelton and Abdulameer Mohsin Hussein, for the Konrad-Adenauer-Stiftung.

Medicine Under Fire – How Corruption Erodes Healthcare in Iraq

The April and July 2021 hospital fires in Nasiriya and Baghdad left hundreds dead, adding insult to injury for a medical system that had already buckled under the weight of the COVID-19 pandemic. Why did these deadly fires transpire?

In the media, journalists highlighted a lengthy series of contributing factors leading to the tragedy, including flimsy and highly flammable construction materials, the explosion of mismanaged oxygen tanks, electrical shorts, and a lack of fire safety equipment.

Underlying these defects, ordinary Iraqis pointed to a deeper cause: pervasive corruption in the healthcare sector. Corruption, they alleged, explained why it was that an oil-rich country had not built and maintained safe and secure health facilities.

This preliminary paper looks to the tragic phenomenon of mass-casualty hospital fires in Iraq’s COVID-19 wards to kickstart a larger policy-oriented conversation on the political drivers, key mechanisms, and human costs of corruption in the healthcare sector.

Broadly speaking, the research contends that political parties in control of the healthcare system compromise the safety and efficacy of both public and private hospitals by systematically evading quality controls and maximizing profits from medical supply chains at all costs.

Click here to download the full report.

(Source: Konrad-Adenauer-Stiftung)

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Unaoil Bribery Conviction Quashed

By John Lee.

Ziad Akle, Unaoil‘s territory manager for Iraq, has had his conviction for bribery quashed by the UK’s Court of Appeal today (Friday).

He had been sentenced to five years’ imprisonment in July 2020 having been found guilty of paying over $500,000 in bribes to secure a $55-million contract to supply offshore mooring buoys in Iraq.

The court found that the refusal by Serious Fraud Office (SFO) to provide key documents to the defence was “a serious failure by the SFO to comply with their duty,” adding that “that failure was particularly regrettable given that some of the documents had a clear potential to embarrass the SFO in their prosecution of this case.“

Paul Bond, a former senior sales manager at SBM Offshore (SBM), which was a client of Unaoil, had his request for leave to appeal against his sentence denied.

The full judgement can be read here.

 More here, here and here.

(Source: England and Wales Court of Appeal – Criminal Division)

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UK SFO reclaims £100,000 from Unaoil Executive

Following a successful investigation and conviction of four individuals for corruption at Unaoil, the UK’s Serious Fraud Office (SFO) has recovered criminal gains of almost £100,000 from a former senior executive.

The full amount must now be paid into the public purse within 28 days.

Earlier this year, the SFO was praised by HM Crown Prosecution Service Inspectorate (HMCPSI) for its work to recover the proceeds of crime, with cases “handled proactively and efficiently by dedicated and skilled staff.”

This latest recovery means the SFO’s confiscation of illicit gains since 2017 stands at well over £1.2 billion. Other notable successes include the £1.2 million secured from the luxury West London property of corrupt Brazilian agent Julio Faerman and the £2 million recouped from the sale of two properties and a cache of jewellery linked to suspected Birmingham fraudster Nisar Afzal.

Commenting on today’s court order, Emma Luxton, Head of Proceeds of Crime and International Assistance at the SFO, said: “The SFO relentlessly pursues those who line their own pockets with illicit gains and we have a proud record of recovering funds for victims and for the UK taxpayer.”

Stephen Whiteley, a former territory manager for Unaoil, was found guilty in July 2020 of paying over $500,000 in bribes to win a $55 million contract for Unaoil to supply oil infrastructure in Iraq. The SFO secured the convictions against Whiteley and three other senior oil executives in an investigation which uncovered schemes to pay a total of $17 million in bribes to win $1.7 billion in contracts for Unaoil in Iraq.

In October 2021, the SFO announced that Petrofac Limited had been ordered to pay £77 million after it admitted failing to prevent senior executives at Petrofac from systematically paying £32 million in bribes to win over £2.6 billion in oil and gas contracts in the Middle East. It was the third set of convictions in the case after David Lufkin, former Head of Sales at Petrofac, pleaded guilty to 11 counts of bribery in 2019 and 3 counts of bribery in 2021. The SFO’s Petrofac investigation originated from its investigation into Unaoil.

The SFO’s Proceeds of Crime Division continues to investigate the criminal gains of the convicted Unaoil executives.

(Source: UK SFO)

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Petrofac expects “Significant Upside Potential” on return to Iraq

By John Lee.

Oil services company Petrofac has said it is “anticipating significant upside potential upon return to markets in Saudi Arabia, Iraq and the UAE“.

In 2019, customers in Iraq and Saudi Arabia suspended Petrofac from bidding on new contracts, while allowing it to execute pre-existing contracts, followed by a UAE customer in 2020. This resulted from investigations into corruption involving the company.

Earlier this month, Petrofac was ordered to pay GBP 77 million [$105 million] after the UK’s Serious Fraud Office (SFO) secured further convictions in its investigation into bribery and corruption.

The company today raised £199.6 million in the bond markets, part of which will be used to pay the fine.

Iraq, Saudi Arabia and the UAE accounted for 27 percent of total revenue in the period 2015-2019, prior to the first suspension, and revenue from these countries decreased to 12 percent in 2020.

(Source: Petrofac)

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Petrofac Fined $105m; Shares Rally Futher

By John Lee.

Shares in Petrofac were trading up more than 7 percent on Monday, as the company was ordered to pay GBP 77 million [$105 million] after the UK’s Serious Fraud Office (SFO) secured further convictions in its investigation into bribery and corruption at the Jersey-registered energy services company.

On Friday, Petrofac Limited pleaded guilty to seven separate counts of failing to prevent bribery between 2011 and 2017.

Petrofac Limited admitted that it failed to prevent former senior executives of the Petrofac Group from paying GBP 32 million (USD 44 million) in bribes, to help the Petrofac Group win over GBP 2.6 billion (USD 3.5 billion) of contracts in the oil and gas industry in Iraq, Saudi Arabia and the United Arab Emirates.

The Court heard how, over a period of six years, senior executives within the Petrofac Group engaged in elaborate schemes to corrupt the awarding of contracts, using agents to systematically bribe officials to win lucrative contracts by unfair and dishonest means.

A key feature of the case was the complex and deliberately opaque methods used by these senior executives to pay agents across borders, disguising payments through sub-contractors, creating fake contracts for fictitious services and, in some cases, passing bribes through more than one agent and one country, to disguise their actions.

Lisa Osofsky, Director, Serious Fraud Office, said:

“By pleading guilty, Petrofac Limited has accepted that senior executives within the Petrofac Group acted deliberately and without conscience in the pursuit of greed. The company’s failure to prevent this conduct distorted competitive market conditions and tainted the oil and gas industry.

“Today’s result should serve as a warning; the SFO will use all the powers at its disposal to root out and prosecute companies and individuals, whose criminal activity detrimentally affects the reputation and integrity of the United Kingdom.

“The SFO welcomes Petrofac Limited taking responsibility for its conduct.“

This is the third set of convictions secured by the SFO in its four-year investigation into cross-border corruption at the Petrofac Group. David Lufkin, former Head of Sales at Petrofac pleaded guilty to 11 counts of bribery in 2019 and 3 counts of bribery in 2021.

Lufkin was today sentenced to a two-year custodial sentence, which was suspended for 18 months. In addition to pleading guilty, David Lufkin co-operated with SFO investigators and assisted with the investigation.

The SFO continues to investigate this case.

Petrofac Chairman René Médori said:

“This draws a line under a regrettable period of our history. We have taken responsibility, reformed and learned from these past mistakes, as acknowledged by the SFO and the Court. Most importantly, the extensive work that we have done since the SFO investigation began means that the Petrofac of today has a comprehensive compliance and governance regime that meets or exceeds international best practice.

“The past behaviour uncovered by the SFO would not be possible today, and we look to the future a better and more focused company, well positioned to capitalise on the opportunities we see before us.“

(Sources: SFO, Petrofac)

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Petrofac Shares Jump following Iraq Bribery Plea Agreement

By John Lee.

Petrofac shares closed the day up more than 26 percent on Friday, after the company announced that it has reached a plea agreement with the UK Serious Fraud Office (SFO) in relation to bribery in Iraq, Saudi Arabia and the UAE.

The Company indicated guilty pleas to seven counts of failing to prevent former Petrofac group employees from offering or making payments to agents in relation to projects awarded between 2012 and 2015 in Iraq, Kingdom of Saudi Arabia and the UAE, contrary to Section 7 of the UK Bribery Act 2010. These offers or payments were made between 2011 and 2017.

It added that all employees involved in the charges have left the business.

A sentencing hearing is scheduled to take place at Southwark Crown Court commencing on Monday 27 September 2021. The Company will make a further announcement following sentencing or any adjournment.

In a statement to the markets, Group Chief Executive Sami Iskander said:

“With my new management team we are rebuilding the company into a new Petrofac that’s relevant for the future, across both traditional and new energies, built on a foundation of the highest ethical standards.”

(Sources: Petrofac, SFO)

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IBBC Webinar: Causes and Cures for Iraqi Corruption

Corruption Worse Than ISIS: Causes and Cures for Iraqi Corruption

The Iraq Britain Business Council (IBBC) is delighted to invite you to the public launch of Professor Frank Gunther’s new paper on corruption in Iraq on Monday 26th of April from 1pm – 2pm BST.

Following the presentation of the paper there will be comments from Dr Renad Masour, Chatham House, and Maya Gebeily, AFP. The ensuing discussion will be moderated by Shwan Aziz Ahmed from the IBBC Advisory Council.

Read the paper here

Register Here

Speakers:

Frank R. Gunter is a Professor of Economics, a Senior Fellow at the Foreign Policy Research Institute, and a retired U.S. Marine Colonel. After receiving his Doctorate in Political Economy from Johns Hopkins University in 1985, Frank joined the faculty of Lehigh University where he teaches Principles of Economics, Economic Development, and the Political Economy of Iraq. He has won four major and multiple minor awards for teaching excellence. Based on his two years in Iraq as an economic advisor to the US Government, Frank wrote The Political Economy of Iraq: Restoring Balance in a Post-Conflict Society (Edward Elgar Publishing, 2013). This book was published in both English and Arabic and was selected as an “Outstanding Academic Title” by Choice magazine. His most recent work, “Immunizing Iraq Against al Qaeda 3.0” (Orbis, 2018, Vol. 62, No. 3, pp. 389-408), discusses the possible economic causes of political instability in Iraq. Frank is married with three children and his family shares their Pennsylvania home with over 4,000 books.

Ms Maya Gebeily is a reporter with Agence-France Presse based in Baghdad, where she covers Iraqi politics, security, economics, and societal developments. Before this posting, Maya spent three years at AFP’s Beirut bureau covering the Syrian conflict. She covered Lebanon and Syria at local Lebanese news website NOW News, and have reported as a freelancer out of Beirut, Istanbul, and the Kurdish region of Iraq in recent years.

Dr Renad Mansour is a senior research fellow and project director of the Iraq Initiative at Chatham House. He is also a senior research fellow at the American University of Iraq, Sulaimani, and a research fellow at the Cambridge Security Initiative based at Cambridge University. Renad was previously a lecturer at the London School of Economics and Political Science (LSE), where he taught the international relations of the Middle East and, from 2013, he held positions as lecturer of international studies and supervisor at the Faculty of Politics, also at Cambridge.

Moderator:

Abdul Aziz (Shwan) A. Ahmed, is the immediate past Chief of Staff to Deputy Prime Minister Dr Fuad Hussain and before him Deputy Prime Minister Dr Rowsch Nouri Shaways. As Chief of Staff he oversaw an office of 70 including 5 Director Generals,  covering the portfolios of Politics, Economics, International Partnerships, Media & Public Relations and Finance & Administration. In this position he has been at the heart of the Iraqi Government for the past 10 years actively participating in the work of several administrations. From 1997 to 2009 Shwan had a distinguished career at UNDP in several countries with his last posting being the Head of UNDP office in Puntland/Somalia from 2006 to 2009. He managed his own engineering business in Iraq from 1993 to 1997 and worked for the Ministry of Industry from 1987 to 1993. He graduated from the University of Technology in Baghdad in as Systems and Control Engineering in 1983. Shwan is happily married with three adult children. He is of Baghdadi Kurdish and Finish origin and is fully fluent in Arabic, Kurdish and English.

Media Partner:

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