Posted on July 26, 2016 by Ahmed Kurda in 1 Top News, Corruption, Exclusive, Oil & Gas
Bafel Talabani, the son of ex-Iraqi president and PUK leader Jalal Talabani. Photo: PUK youth’s FB
[size=11]Ahmed Kurda | Special To Ekurd.net
Kurdsunited Investigative Team[/size]
In previous articles, we at Kurdsunited have been very critical of the way in which the sons of President Barzani seek to exploit Iraqi Kurdistan Region’s oil and gas resources.
But a recent case in the English high court (Case No 2013 Folio 308 Monde Petroleum SA vs Western Zagros Limited) in PDF, has revealed that among Kurdistan’s ruling elite, it’s not just the sons of Barzani who are using their position to exploit Kurdistan’s oil and gas for their personal gain.
The eldest son of the former president Jalal Talabani and the son of Kosrat Ali Rasul, the former vice president of the Kurdistan Region, have also been exposed for using their family names and political connections to try to line their pockets.
The English high court case recently ruled on a multi-million dollar fraud claim concerning an oil exploration deal that Western Zagros was trying to negotiate with the KRG in Sulaimani in 2006 and 2007– a dispute that involved mysterious consultancy payments to Bafel Talabani and Darbaz Ali Rasul.
In our view, the judgement by the English high court exposes Bafel Talabani and Darbaz Kosrat Rasul Ali as examples of public officials who clearly don’t think twice about engaging in unethical and corrupt activities related to their business adventures.
First, the details of the English High Court case. In the judgement on June 28, 2016, Judge Richard Salter ruled that Monde Petroleum, a company registered in the British Virgin Islands, had been induced through misrepresentation to agree to the termination of its consulting deal with the Canadian-owned oil company WesternZagros Limited (WZL), which was trying to secure exploration rights in areas of the Kurdistan Region under the control of the PUK.
The owner of Monde was Yassir Al-Fekaiki, whose father was a leading figure in the Iraqi National Congress opposing Saddam Hussein. Al-Fekaiki alleged that he had been cheated out of an interest in the oil project in 2007 as a result of false statements made by Bafel Talabani.
At the centre of the dispute was a consulting agreement signed in early 2006 under which Monde was to help WZL conclude a production-sharing contract with the KRG. Monde was to receive monthly fees, success fees upon completion of certain milestones, and an option to acquire a 3 per cent interest in their government contract if certain conditions were met.
From the court case ruling, it seems Bafel and Al-Fekaiki were actually in a business arrangement whereby 25 percent of the fees would go to Al-Fekaiki and 75 percent to Bafel (with Darbaz set to profit as well).
But after the Kurdistan Regional Government passed its unified oil and gas law and ratified WZL’s production sharing contract in 2007, WZL told Monde it was terminating the consulting agreement. Ashti Hawrami, the KRG’s then new minister of natural resources, objected to Monde benefiting from such a contract. The two companies signed a termination agreement releasing each other from all liabilities.
Alleged Misrepresentation by Bafel Talabani
In 2013, however, Monde brought its High Court action against WZL, alleging that it had been induced to sign the termination agreement through misrepresentation and economic duress.
Al-Fekaiki alleged that his former business partner Bafel Talabani, acting on WZL’s behalf, had told him that WZL intended to enter into a new agreement with a local company controlled by the Talabani family and the PUK and that Al-Fekaiki would indirectly profit from these new arrangements. Al-Fekaiki also alleged that Bafel warned him that WZL would withhold payment of US$700,000 in outstanding invoices if Al-Fekaiki refused to sign.
Monde’s lawsuit led to a six-day hearing in April this year. The judge said it was “more probable than not” that Bafel Talabani had been trying to negotiate a new arrangement with WZL that would be “profitable for himself” and that WZL had asked him to “clear the decks” by getting Al-Fekaiki to sign the termination agreement.
In addition, the judge was satisfied that Bafel had made misrepresentations to Al-Fekaiki.
Bafel Talabani was not a party to the court proceedings and neither side sought to call him as a witness, though the judge observed they could have done so easily. Sources in the PUK leadership say that Bafel, who is known for his thuggish behavior, warned both defendant and claimant in the case so as not to summon him to testify. As a result, the judge said he had to make conclusions about Bafel’s relationship with Monde and WZL from the witness statements and documentary evidence, including many internal e-mails.
Al-Fekaiki in his witness statement said that it was “common practice” for oil companies in Kurdistan to make payments to “local partners” connected with the Talabani and Barzani families. Al-Fekaiki said such payments were “nothing more than kickbacks for local politicians” though these are often “re-cast” in contractual documents because of “bribery laws in the West”.
What happened to the $700,000 consultancy fee?
The judge noted evidence that Al-Fekaiki had credited Bafel Talabani with 75 per cent of a US$700,000 payment due from WZL to Monde. The judge said that Al-Fekaiki’s explanation for the credit made “no obvious logical or commercial sense” and that in reality there was an agreement between him and Bafel Talabani to divide the proceeds of the consulting deal.
However, the judge said there was no evidence that WZL executives knew that Al-Fekaiki had agreed to pass Bafel sums being paid under the consulting agreement.
It seems that Al-Fekaiki and Bafel later fell out over the WZL deal as well as their other joint
Darbaz Kosrat, the son of former vice president of Iraq’s Kurdistan Region and PUK leader Kosrat Rasul Ali. Photo: Darbaz’s FB
Like Father Like Son
Also mentioned in the judge’s decision is Darbaz Rasul, the son of Kosrat Rasul.
One email from Bafel Talabani urges Al-Fekaiki to increase its fees to WZL so that he and Darbaz can benefit.
On 29 January 2007, Bafel wrote to Al-Fekaiki:
“Try to get more for Monde. Me and D [ie Darbaz] have a plan to get more.”
Al-Fekaiki’s response was to say:
“Please give me indications on what is required so I prepare the right approach and utilise the best efforts.”
In his witness statement, Al-Fekaiki suggested that “there was an agreement… by which Monde’s share in the EPSA (the exploration and production sharing agreement) was passed to Bafel or some entity that [was] connected to the Talabani family.”
Judge Salter said Bafel Talabani was a public official and “appears to have had influence over the award of public contracts to WZL” and that sums paid by WZL to Monde were being shared with him.
No Evidence WZL Knew Arrangement was A Sham
The judge said that as experienced businessmen, WZL’s executives “are likely to have suspected that anything done for them by [Talabani] would not be done on an entirely altruistic basis” but were at all times careful to ensure that “the structure and documentation” of WZL’s arrangements did not infringe anti-corruption laws.
However, the judge concluded that the consulting agreement between Monde and WZL was not on its face an illegal contract. He said any illegality would arise from private arrangements between Al-Fekaiki and Talabani, but that it was not “neither necessary nor appropriate” to the case in hand to explore the illegality question further.
Ably Assisted By…
The high court judgement also reveals how both Bafel and Darbaz were helped along the way by senior PUK officials in Baghdad, including Moatassim Hassan, the deputy oil minister in the federal oil ministry in Baghdad, who was put in his position to serve Kosrat Rasul’s business empire. It was, according to the judgement, Moatassim Hassan who suggested Monde to WZL as consultants to secure their exploration contract.
According to the court case, Bafel and Darbaz were also assisted by Omar Fattah, the former KRG deputy prime minister.
And last but not least, we believe that Nawshirwan Mustafa must also bear large responsibility for this sorry affair because at the time of the events at the centre of the court case (2006/2007) he was in charge of the PUK while Mam Jalal was in Baghdad as President of Iraq.
Why It Matters: The Plot to Divide Kurdistan
We at Kurdsunited believe all this matters greatly, and not just because this is finally proof (in a reputable court) about the way in which the sons of the ruling elite in Kurdistan (connected to both PUK and KDP) recklessly mix their business and their politics, with no attention paid to obvious conflicts of interest.
Even more important is that some senior members of the PUK are now actively considering separating Kurdistan Region into two parts, and seizing and utilizing the oil and gas in the area under their control for their own benefit.
Apart from being a serious threat to the future unity of Kurdistan and a betrayal of ordinary Kurds, this plot to divide Kurdistan is also bound to fail. This is due to the cluelessness of the plotters, which include Izzat Sabir, a prominent PUK MP in the Kurdish parliament, who has been asking around London for oil and gas specialists to advise the PUK on how to manage oil and gas assets separately from the KRG.
The English High court case reveals not just the corrupt way in which the sons of the ruling elite of the PUK go about their business, but also the incompetency, inexperience and greed of a network of senior PUK leaders.
Natural Resources Not Safe in the Hands of Talabanis or Barzanis, or Baghdad
To state it plainly, Kurdistan’s natural resources will not be safe in their hands, nor in the hands of Barzani’s sons, nor in the hands of Baghdad.
Another aspect of the English court case which we note with surprise, is that natural resources minister Ashti Hawrami, who we have been very critical of in the past, for once actually comes out well in this case.
The judgement describes how Hawrami sought to clean up the old contract that WZL signed before his time and remove hidden illegal activities and partners.
Hawrami has often claimed he has done the same with many other contracts in the Kurdistan Region. So it is not surprising that the ruling elite in PUK have sought to target him, and are now even joined by some in the KDP, especially Barzani’s sons.
Darbaz’ Relations With Crescent Petroleum Need Explaining
Finally, Darbaz Rasul (who is just as thuggish as Bafel and is representative of his father’s business empire at the same time as he is a KRG minister) was spotted recently in a London cafe along with his father having a meeting with Hamid Jaffar and his son Majid, who runs Crescent Petroleum.
We think the relationship between the two families should be investigated. Crescent and Dana Gas are currently trying to gain money from the KRG via an arbitration case in London.
We wonder how much help they are receiving from kak Kosrat’s son, and how much Kak Kosrat will receive if Crescent and Dana Gas are successful in their billion-dollar law suit against the KRG.
At this time of economic crisis, we at Kurdsunited think it is high time for all Kurdish politicians and their families to reveal their hidden business interests, and to be forced to hand the management of the KRG’s business and economic affairs to competent and clean professional technocrats.
Ahmed Kurda is the founder of the Kurdsunited Investigation Team, a group of well-connected and patriotic young Kurds based in Sulimani, Amedi, Amsterdam and the UK. We do not align ourselves with any party in Kurdistan. Only the truth matters.