(Photo: Oryx Petroleum Facebook)
The 2003 Iraq War was sharply polarizing. Even Canada, long among the world’s most pro-American countries, saw a 12 percent plunge in favorable attitudes toward the United States between 2000 and 2005 according to the Pew Research Center. In Great Britain, France, and Germany, the decline was more than twice as much. Cynicism about the Iraq War did not stop companies from seeking to cash in on opportunities brought about by the toppling of Iraqi President Saddam Hussein. Both the Iraqi government in Baghdad and the autonomous Kurdistan Regional Government (KRG) in Erbil opened their doors to foreign energy companies. In Baghdad, although an independent parliament and established bureaucratic structure provide oversight, they sometimes make prospecting and investing onerous. Iraqi Kurdistan is different: two families – the Barzanis and the Talabanis – have maintained a political and economic stranglehold since 1991. To win contracts in order to explore (or, exploit) the region’s energy resources means partnering with a Barzani senior enough to bypass bureaucratic hassles and legal obstacles.
Because the Barzanis are the law, this also makes investment risky. KRG leaders spend far more money than they receive. This was partially due to political disputes about the distribution of money from Baghdad, but part of it is also mismanagement and a pollyannaish notion that oil prices would remain high. When the price of oil fell from its 2008 peak, Iraqi Kurdistan faced significant financial troubles. Salaries went unpaid, and because the Barzanis controlled the courts, they simply voided their contractual obligations. This in turn led to a slew of rulings against the KRG by the partners, companies, and investors it sought to swindle. After a London arbitration court ruled against the KRG, Dana Gas and its partners filed a claim in federal court in Washington, D.C., seeking recognition of the decision in order to enable the potential seizure of the KRG and Barzani assets in the United States. Likewise, UAE-based Crescent Petroleum Company, a minority stake-holder in Dana, sought $11 billion in a London arbitration court for overdue payments. The Norwegian firm DNO was forced to pay $92 million to one-time middleman, Peter Galbraith, after they colluded with KRG authorities to cut him out of their deal.
Of course, some corruption took other forms. In 2014, Canadian company Oryx Petroleum began operations in Iraqi Kurdistan. As part of their corporate social responsibility program, Oryx provided a $40 million donation to build the Kurdistan Children’s Hospital in Erbil through the Kurdistan Children’s Hospital Foundation whose trustees include Rang Nori Shawis, brother of the former Deputy Prime Minister of Iraq, Rozh Nori Shawis and a close associate of Kurdish President Nechirvan Barzani. In its 2014 annual report, Oryx promised, “The Kurdistan Children’s Hospital, located on the outskirts of Erbil, in the Kurdistan Region, is a new pediatric healthcare facility that will have no peer in Iraq. The facility will service a large number of children and mothers that are currently unable to access suitable medical treatment or surgery inside Iraq.” Alas, it never came to be. Today, what was built as a charitable hospital for Iraqi Kurdistan’s most needy operates as Santelife, a private for-profit hospital with apparent links to Nechirvan Barzani’s eldest son Idris. At the moment, it treats adults with COVID-19 for up to $2,000 a night.
Deloitte’s audit of the foundation found problems, including the potential disappearance of $54.4 million. Public Health Protection Network of Kurdistan has prepared to sue the foundation for fraud and abuse of public funds for private gains. Kurdish activists now seek a return of the hospital to public ownership and service.
At best, a Canadian company’s promises of contributing meaningfully to a society in which they choose to do business are empty. At worst, however, Iraqi Kurdistan’s ruling families have enacted a new scam: one in which they solicit bribes from foreign companies investing in the region in the form of charities and land development, which they then confiscate or channel into their own portfolios. The question for Oryx then becomes what actions they will take to ensure the intent of their corporate social responsibility programs are upheld. And, for the Canadian government more broadly: why is it that a Canadian company has apparently fallen prey to this arrangement while investments by other nations’ companies side-step such bait-and-switch schemes?
Goran Zangana
Michael Rubin
