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Kurdistan’s powerful #Barzani family accused of using London real estate to corrupt Iraq regulators

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While 2019 marked the ten-year anniversary of the withdrawal of most British troops from Iraq, court filings in the United States have shed new light on how the UK, specifically London’s notoriously opaque real estate market, continues to play a role in the governance issues roiling Iraq to this day, writes Louis Auge.

A request for discovery filed last month in the US District Court in the state of Pennsylvania, targeting the law firm Dechert LLP, has laid out in detail an alleged scheme to use pricey London homes to bribe Iraqi telecommunications regulators and effectively rob some of the country’s most prominent foreign investors of hundreds of millions of dollars.

Allegedly engineered by Raymond Rahmeh, one of Lebanon’s most influential businessmen, for the benefit of Sirwan Barzani, a scion of Iraqi Kurdistan’s most powerful family, the case demonstrates how £2.3 million in real estate was reportedly enough to help expropriate over $800 million invested in Iraq by France’s largest telecom firm and a major Kuwaiti logistics company.

While the case is playing out in jurisdictions from Dubai to Pennsylvania, its most serious implications are in Iraq itself, where popular frustration with entrenched corruption has thrown the future of the political order the UK helped create into doubt.

Joint misadventure

The proceedings in question revolve around the ownership of Iraqi telecoms carrier Korek, launched in 2000 as a regional carrier with operations limited to Iraqi Kurdistan. In 2007, Korek obtained a nationwide mobile telecoms license from Iraq’s Communications and Media Commission (CMC). That license, however, carried with it a $1.25 billion price tag, as well as a provision requiring CMC approval for any ownership changes involving 10% or more of the company’s shares.

To pay this licensing fee, Korek turned to outside investors, namely Kuwaiti logistics firm Agility Public Warehousing and its partner, French telecoms giant Orange. Together, and with the CMC’s approval, Agility and Orange invested over $800 million in Korek via a joint venture, Iraq Telecom, in 2011.

In turn, Iraq Telecom received a 44% stake in Korek, with a “call option” that would allow the venture to obtain a majority stake of 51% in the company in 2014. Just as the joint venture sought to exercise that call option, however, the court filings detail how the CMC’s attitude towards the foreign investors ‘suddenly and inexplicably’ turned sour.

In June 2014, the regulator informed Korek it no longer considered the company Iraqi, ordering it to pay over $43 million in extra regulatory fees on account of its ‘foreign ownership.’ Less than one month later, the CMC declared that Iraq Telecom’s investment in the Kurdish operator was ‘void, null and invalid’ and ordered that all shares be returned to the company’s original shareholders, chief among them Kurdish businessman and Peshmerga commander Sirwan Barzani.

Critically, while the shares were returned to Barzani and fellow shareholders Jawshin Hassan Jawshin Barazany and Jiqsy Hamo Mustafa, the $800 million-plus invested by Agility and Orange were not. The foreign investors have taken the dispute to international arbitration, with cases before the Dubai International Financial Centre (DIFC) and the International Chamber of Commerce (ICC).

From Barn Hill to Banstead

Subsequent investigations have allegedly revealed the explanation for this inexplicable turn of events. According to the ex parte application for discovery filed in Pennsylvania, two business associates of Raymond Rahmeh, the supposedly independent member of Korek’s supervisory committee who in fact has a close business relationship with Sirwan Barzani, purchased two homes in London that were then used by the very CMC members helping to decide Korek’s fate.

The first of those two homes, located at Barn Hill in Wembley, was reportedly purchased wholly in cash by Raymond Rahmeh associate Pierre Youssef for £830,000 in September 2014. The second home, on Higher Drive in Banstead, was also purchased wholly in cash by Mansour Succar, another associate of Raymond Rahmeh, for £1.5m in December 2016.

Neither Mr. Youssef nor Mr. Succar lived in these homes. Instead, the property in Wembley seems to have been occupied for nearly three years by Dr. Ali Nasser al-Khwildi, the current director general of the CMC, and his family. The Banstead property was occupied by former CMC director general Dr. Safa Aldin Rabee and his family until this past September, when a complaint filed by Iraq Telecom revealed their connection to the address.

These property acquisitions also explain Dechert and Pennsylvania’s connection to the alleged bribery. The filings indicate Dechert, which is headquartered in Philadelphia and has previously worked with both Sirwan Barzani and Raymond Rahmeh on matters related to Korek, represented both Mr. Youssef and Mr. Succar in these transactions and used the same client reference number for both sales, demonstrating that the same individual or organization was behind them.

According to the court documents, the use of these properties by CMC leaders constitutes a corrupt ‘quid pro quo’ in which the regulators were rewarded for expropriating Orange and Agility with London real estate. The request for discovery seeks to produce additional evidence to that end.

Policy implications in Britain and Baghdad

The alleged bribery scheme, partially uncovered by the Financial Times last year, casts a harsh spotlight on the British government’s efforts to stop the use of the UK as an avenue for corruption. In addition to the 2010 Bribery Act, the 2017 Criminal Finances Act provides for unexplained wealth orders (UWOs) designed to combat corrupt real estate transactions. These tools, however, remain new and largely tested, with the National Crime Agency’s UWOs targeting a foreign official’s homes this past May representing only thesecond time that they have been used.

In Iraq itself, meanwhile, the idea of regulators being corrupted by powerful business figures will hardly come as a surprise to the demonstrators who have turned out in force since October to demand the destitution of the country’s post-invasion political order. Corruption is a key driving factor behind the protest movement, which forced Iraqi premier Adel Abdel-Mehdi to tender his resignation at the start of December. Given the Iraqi state’s failure to address corruption at home, legal actions such as those targeting Korek’s shareholders could help bring at least some measure of transparency to one of the world’s most corrupt countries.

Armenia

Armenia-Azerbaijan clashes kill at least 23, undermine regional stability

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On Sunday (27 September), fighting erupted along the Line of Contact in the Nagorno Karabakh conflict zone, regrettably causing military and civilian casualties. At least 23 military members and several civilians were killed in the heaviest clashes between Armenia and Azerbaijan since 2016, reigniting concern about stability in the South Caucasus, a corridor for pipelines carrying oil and gas to world markets, write Nvard Hovhannisyan and Nailia Bagirova.

The clashes between the two former Soviet republics, which fought a war in the 1990s, were the latest flare-up of a long-running conflict over Nagorno-Karabakh, a breakaway region that is inside Azerbaijan but is run by ethnic Armenians. Nagorno-Karabakh said 16 of its servicemen had been killed and more than 100 wounded after Azerbaijan launched an air and artillery attack early on Sunday.

Armenia and Nagorno-Karabakh declared martial law and mobilised the male population. Azerbaijan, which also declared martial law, said its forces responded to Armenian shelling and that five members of one family had been killed by Armenian shelling.

It also said its forces had seized control of up to seven villages. Nagorno-Karabakh initially denied that but later acknowledged losing “some positions” and said it had suffered a number of civilian casualties, without giving details. The clashes prompted a flurry of diplomacy to reduce the new tensions in a decades-old conflict between majority Christian Armenia and mainly Muslim Azerbaijan, with Russia calling for an immediate ceasefire and another regional power, Turkey, saying it would support Azerbaijan. President Donald Trump said on Sunday the United States would seek to end the violence.

“We’re looking at it very strongly,” he told a news briefing. “We have a lot of good relationships in that area. We’ll see if we can stop it.” The US State Department condemned the violence in a statement, calling for an immediate halt to hostilities and any rhetoric or other actions that could worsen matters.

US Democratic presidential nominee and former Vice President Joe Biden said in a statement that hostilities could escalate into a wider conflict and urged the Trump administration to push for more observers along the ceasefire line and for Russia “to stop cynically providing arms to both sides.”

Pipelines shipping Caspian oil and natural gas from Azerbaijan to the world pass close to Nagorno-Karabakh. Armenia also warned about security risks in the South Caucasus in July after Azerbaijan threatened to attack Armenia’s nuclear power plant as possible retaliation. Nagorno-Karabakh broke away from Azerbaijan in a conflict that broke out as the Soviet Union collapsed in 1991.

Although a ceasefire was agreed in 1994, after thousands of people were killed and many more displaced, Azerbaijan and Armenia frequently accuse each other of attacks around Nagorno-Karabakh and along the separate Azeri-Armenian frontier. Slideshow ( 5 images ) In Sunday’s clashes, Armenian right activists said an ethnic Armenian woman and child had also been killed.

Armenia said Azeri forces had attacked civilian targets including Nagorno-Karabakh’s capital, Stepanakert, and promised a “proportionate response”. Slideshow ( 5 images ) “We stay strong next to our army to protect our motherland from Azeri invasion,” Armenian Prime Minister Nikol Pashinyan wrote on Twitter. Azerbaijan denied an Armenian defence ministry statement that said Azeri helicopters and tanks had been destroyed, and accused Armenian forces of launching “deliberate and targeted” attacks along the front line. “We defend our territory, our cause is right!” Azerbaijan’s president, Ilham Aliyev, said in an address to the nation.

Turkey said it was talking to members of the Minsk group, which mediates between Armenia and Azerbaijan. Russia, France and the United States are co-presidents. Russian President Vladimir Putin spoke by phone to Pashinyan but no details of the conversation were available, and Turkish President Tayyip Erdogan spoke to Aliyev. Erdogan, promising support for traditional ally Azerbaijan, said Armenia was “the biggest threat to peace in the region” and called on “the entire world to stand with Azerbaijan in their battle against invasion and cruelty.”

Pashinyan hit back, urged the international community to ensure Turkey does not get involved in the conflict. The European Union and the Organization for Security and Cooperation in Europe (OSCE) urged both sides to stop military actions and return to negotiations, as did Pope Francis. At least 200 people were killed in a flare-up of the conflict between Armenia and Azerbaijan in April 2016. At least 16 people were killed in clashes in July.

High Representative/Vice President Josep Borrell said: "The European Union calls for an immediate cessation of hostilities, de-escalation and for strict observance of the ceasefire. The return to negotiations of the Nagorno Karabakh conflict settlement under the auspices of the OSCE Minsk Group Co-Chairs, without preconditions, is needed urgently."

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Customs Union: New Action Plan to further support EU customs in their vital role of protecting EU revenues, prosperity and security

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The European Commission has today (28 September) launched a new Customs Union Action Plan setting out a series of measures to make EU customs smarter, more innovative and more efficient over the next four years. The announced measures will strengthen the Customs Union as a cornerstone of the Single Market. They also confirm its major role in protecting EU revenues and the security, health and prosperity of EU citizens and businesses.

In her political guidelines, Commission President Ursula von der Leyen announced that the Customs Union needed to be taken to the next level, in particular, by ensuring an integrated European approach to customs risk management, which supports effective controls by EU Member States. Today's Action Plan does just that.

Economy Commissioner Paolo Gentiloni said: "The EU Customs Union was one of the first concrete achievements of European integration and for more than five decades it has helped to protect Europeans and keep trade flowing across our borders – which are only as strong as their weakest link. Today, new challenges mean that we need to make our customs rules smarter and ensure they work better for member states, citizens and legitimate businesses. This calls for improved use of data, better tools and equipment, and more co-operation within the EU and with customs authorities of partner countries. It also requires better foresight, so that EU customs can face the future with confidence. Today, we set out how we will take our Customs Union to the next level.”

Today's Action Plan includes a number of initiatives in areas such as risk management, managing ecommerce, the promotion of compliance and customs authorities acting as one: Risk management: the Action Plan focuses in particular on ensuring greater availability and use of data and data analysis for customs purposes. It calls for intelligent, risk-based supervision of supply chains and for establishing a new analytics hub within the Commission for collecting, analyzing and sharing customs data that can inform critical decisions, help customs authorities identify weak points at the EU's external borders and manage future crises. Managing e-commerce: in this regard, and in order to tackle the new challenges of ecommerce, obligations on payment service providers and online sales platforms will be strengthened to help fight customs duty and tax fraud in e-commerce.

Promotion of compliance: the upcoming ‘Single Window' initiative will make it easier for legitimate businesses to complete their border formalities in one single portal. It will allow for more collaborative processing, sharing and exchange of information and better risk assessment for customs authorities. Customs authorities acting as one: the Action Plan details the roll-out of modern and reliable customs equipment under the next EU budget.

A new reflection group formed of member states and business representatives will be set up to help prepare for future crises and challenges such as unanticipated global developments and future business models. The EU Customs Union The EU Customs Union – which in 2018 celebrated its 50th anniversary – forms a single territory for customs purposes, where a common set of rules are applied. Within the EU Customs Union, EU member states' customs authorities are responsible for performing a wide and increasing range of controls. Therefore, EU customs have an important role to play in supporting the EU's economy and future growth.

Customs need to facilitate increasing amounts of legitimate trade as quickly and seamlessly as possible. At the same time, authorities are continuously engaged in fighting growing levels of fraud and smuggling of illicit or unsafe goods. Customs are also playing a vital role in our recovery
from an unprecedented health crisis. Since the start of the coronavirus pandemic, EU customs authorities and officials have been at the heart of essential tasks such as facilitating imports of protective equipment, while weeding out counterfeit products like fake masks and counterfeit medicines at the EU's external borders.

It has become apparent in recent years that member states' customs authorities are struggling with the challenges of performing their various roles. Major challenges such as the current public health emergency, the consequences of the UK's departure from the EU's Single Market and Customs Union, and the rise of digitalization and e-commerce will continue and may even increase.

To make their full contribution to the wellbeing of all EU citizens and trade facilitation, our customs authorities must be equipped with cutting-edge technical equipment and analytical capacities that allow customs to better predict risky imports and exports. Enhanced customs cooperation with major international trade partners such as China will support our efforts to facilitate trade and, at the same time, ensure effective controls.

Background

The EU's Customs Union has developed into a cornerstone of our Single Market, keeping EU borders safe, protecting our citizens from prohibited and dangerous goods such as weapons, drugs and environmentally harmful products, while facilitating EU trade with the rest of the world. It also provides revenues for the EU budget. But recently it has become clear that smarter ways of working are needed to allow customs authorities to manage their long and growing list of responsibilities.

The Action Plan benefited from an innovative foresight project on 'The Future of Customs in the EU 2040' that worked to create a shared and strategic understanding among key stakeholders of ways to deal with current and future challenges for customs and to generate a vision for how EU customs should look in 2040.

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coronavirus

'Digitalization and COVID-19: The Perfect Storm' - EAPM Presidency Conference on the horizon: Register now!

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Greetings all!  As our presidency conference is fast approaching on 12 October (agenda here, register here), I wanted to share with you our academic publication entitled 'Digitalization and COVID-19: The Perfect Storm' which was published in the last days.  This will be discussed at our upcoming Presidency conference, writes European Alliance for Personalised Medicine (EAPM) Executive Director Denis Horgan.

The article addresses the premise of healthcare as a ship in the harbour which is safe, but that is not what ships are built for, as observed by the 19th century philosopher William Shedd.

In other words, technology of high potential is of little value if the potential is not exploited. As the shape of 2020 is increasingly defined by the coronavirus pandemic, digitalization is like a ship loaded with technology that has a huge capacity for transforming mankind’s combat against infectious disease.

But it is still moored safely in harbour. Instead of sailing bravely into battle, it remains at the dockside, cowering from the storm beyond the breakwaters. Engineers and fitters constantly fine-tune it, and its officers and deckhands perfect their operating procedures, but that promise is unfulfilled, restrained by the hesitancy and indecision of officialdom.

Out there, the seas of the pandemic are turbulent and uncharted, and it is impossible to know in advance everything of the other dangers that may lurk beyond those cloudy horizons. However, the more noble course is for orders to be given to complete the preparations, to cast off and set sail, and to join other vessels crewed by valiant healthcare workers and tireless researchers, already deeply engaged in a rescue mission for the whole of the human race.

It is the destiny of digitalization to navigate those oceans alongside other members of that task force, and the hour of destiny has arrived.

This article focuses on the potential enablers and recommendation to maximize learnings during the era of COVID-19 taking into account the different learnings from COVID 19 and puts it in the framework of capacity and potential which the EU as well as the Member States have collectively.

The article positioned  these elements with a nod to the upcoming policy frameworks such as the Beating cancer plan and the Cancer Mission, the European Health Data Space, the expanded health programme, the review of research incentives and – most recently – the declaration of Commission President Ursula von der Leyen in favour of European Health Union.  Here is the link to the articles.

So, what are among the topics on the table for Oct 12th for our Presidency Conference?

The current COVID-19 crisis has thrown many European, and indeed global, healthcare issues into sharp relief.

It has also raised important questions, not necessarily new ones, but ones that have shifted more into focus during the pandemic.

One such question is whether the EU should have a bigger role in public health – and particularly in the provision of health technology. This, of course, would impinge upon the closely guarded Member State competence in healthcare so, if this were to happen, how would that be?

Another question is how can the now very evident gaps be bridged to in order to better protect Europe’s health ahead of another crisis? What are the priorities? The broader question, as mentioned above, is whether it’s time to give the EU a bigger role in Europe’s health protection.

Meanwhile, at the heart of personalised medicine, is the hugely expanding use of health data. This is a sensitive topic. There’s certainly a need for the health-science community to talk more openly about using personal health data in research to enhance human health and eradicate diseases such as cancer and the public has to be at the centre of any and all discussion.

Many national and international initiatives rely on comprehensive data analytics to drive evidence-based solutions to improve health outcomes which our article entitled 'Digitalization and COVID-19: The Perfect Storm' addresses in some details from the different cardinal directions of the compass.

Such initiatives means, of course, that personal health data is an extremely valuable commodity for research and should only ever be used in a responsible, ethical and secure way that is in the interest of society.

Transparency on why and how we use data is vital if Europe is to maintain the social licence for data-driven research. Trust is paramount.

On top of this, Europe’s digital infrastructure needs strengthening in general, and in order to deal with the impact of Covid-19 in particular. And then there are future public health crises to be considered…

Better integration of Artificial Intelligence into the public health response should be a priority; Analysis of big data relating to citizens' movement, disease transmission patterns and health monitoring could be used to aid prevention measures.

In response to travel bans, closures, and recommendations on social distancing to limit the spread of the virus, there has been a necessary shift to digital tools where applicable to keep the world turning - not least what parts of the economy have been salvageable.

The above are just an example of the huge topics, among many up for discussion on the day. So be sure to join us on 12 October.

Once again, Here is the link to the academic piece entitled 'Digitalization and COVID-19: The Perfect Storm' as well as the links to the agenda by clicking here, to register here for our presidency conference.

For more information, please contact: 

Dr. Denis Horgan, PhD, LLM, MSc, BCL
EAPM Executive Director,
Chief Editor, Public Health Genomics
EAPM, Avenue de l'Armee/Legerlaan 10,
1040 Brussels, Belgium
T: + 386 30 607 281
Website

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