Anchored in a remote desert location -- 20 miles southeast of Karbala — the structure pledging economic rejuvenation and uplift, is finally taking shape, but not everyone is thrilled.
These promises, typically peddled to sedate Iraq’s population with false hopes, have turned out to be little more than urban myths Iraqis refuse to be fooled by.
The sound of applauding crowds celebrating southern Iraq’s construction boom, has been drowned out by rampant corruption — industrial in scale — uniting political and religious parties.
On completion the airport is expected to rival Baghdad international at three times the size, absorbing an annual holding capacity of 2.5 million -- almost double Karbala’s population. The 4.5 km runway will be twice the average length -- essential -- as Karbala mayor, Akeel al-Turaihi claims, for accommodating the millions of pilgrims flocking to Iraq’s shrine cities yearly.
A contract worth $500 million was awarded to British firm Copperchase Ltd (CC) for handling every aspect of construction, from airport installation, infrastructure to maintenance. The company’s presence in Iraq has flowered in recent years. While projects have multiplied, few have been completed, such as the Al Ghadeer skyscraper city, in partnership with sister firm, 4th Dimension.
The bidding process for the airport tender, and the names of other competitors, are details which remain undisclosed. Stranger still, the deal was overseen by the local religious Shia institution - al-Ataba al-Husseiniya. The Iraqi Investment Bureau gave the rights of the land on which the airport is being built to their financial arm, Khayrat Al-Sabtayn.
The behind closed doors bid has been met with accusations of bid-rigging and potential fraud, as expressed by Jawad Hashim -- former planning minister from 1968 to 1977. In a letter addressed to Iraqi prime minister, Haidar al-Abadi, in February this year Hashim speaks of a strong scent of corruption surrounding the mid-euphrates deal.
“After looking at company records, documents, activities, and management, several discrepancies have come to my attention” the handwritten letter read.
Hashim wrote that CC was “first hatched in 1990 as a telephone company and has nothing whatsoever with construction”, adding that the deal evoked strong reminders of the fraudulent Canadian and bankrupt German firm we [Iraq] awarded electricity contracts to”.
If the Cramlington-based company’s history is anything to go by, one is led to believe the firm is worth millions. It’s activities, double-dealings and borrowings do not correlate with its big-business status however.
In March 2015, CC secured a 6 million dollar Karbala refinery project contract to erect a security fence. Sealing the deal required the company to borrow a £200, 000 loan from Tees Valley Catalyst Fund to secure the performance bond they needed. CC director, Paul Boydell, expressed optimism, viewing the loan as “the springboard” CC relies upon “to win even larger contracts”.
An important detail sidelined in press coverage of the Karbala refinery project is why the original tender -- Hyundai Engineering and Construction -- abandoned the project.
Korea Times at the time wrote that hyundai walked away “due to the Iraqi government’s late construction payment”, a delay which not only halted the project but also set off alarm bells “about its solvency”.
An undercover investigation recently uploaded on youtube delved a little beneath the surface to uncover the firm's true identity. In search of clues, an unidentified Iraqi reporter embarks upon a journey across the UK, visiting the company’s two registered offices — in Poole and Northumberland. The latter seems to be a small service centre, accommodating no more than 5 employees, handling aviation electronics, and the former in Poole, handles avionic supplies for airport systems.
“There is not even the slightest hint of proof suggesting that CC is a construction firm, as it claims. Look around, see for yourself” the anonymous Iraqi reporter said.
Wanting to hear CC’s side of the story, FRB tried to interview the firms representatives, about the details of their plans for the Imam Hussein International airport, and area of expertise. Is it a construction firm or simply a small business that supplies avionic parts and machinery to airports, is a question the reporter poses. FRB was given the direct line of director of business development, Anthony Myres. Calls were made, but were neither returned or answered.
One of CC’s four directors, Nahid Saleh Jassim, is currently actively serving as director of 6 out of 7 companies, Copperchase included. His appointment as CC director on Apr. 28 2016 uncovers that he is very new to the role. Another of his appointments is for United Nations Oil Service Limited, co-directed along side Anthony Myres, who is active in 5 separate companies, not excluding CC.
There also appear to be four companies registered under almost the same name, and to the same Cramlington address:
- Copperchase Limited
- Copperchase Air Traffic Systems Limited
- Copperchase middle East Projects Limited
- Copperchase airports Limited
Other offices its website mentions include one in Baghdad’s Jadariyya district, and another in Sharjah. The Jadiriyya office is in fact the headquarter of CC’s sister firm, 4th Dimension. The unresolved question therefore is which of these Copperchase’s has the government of Iraq awarded the Karbala International contract to.
Obscuring evidence of corruption
Sweeping changes since 2003 have left Iraq’s economic realm disfigured in nature and form. The absence of enforced norms and standards allows for an environment of decentralised decision making, under which corruption festers.
Transforming Iraq’s national economy into one of the most unregulated worldwide, has made the country’s borders vulnerable to the trafficking of goods and people. Citing economic liberation as its motive, America’s Coalition Provisional Authority (CPA) removed import tariffs in a move signaling a free invitation to foreign companies to capitalise on market opportunities.
Copperchase is one of hundreds of such firms — it is Iraq’s favoured player on the emergent southern market — maximising business potential as its website boasts. Since its establishment in 1990, the firm has accelerated its overseas projects, operative also in South Korea and the United Arab Emirates. Yet it’s expansion in Iraq’s south is explainable by examining CC’s alliance with Karbala’s Husseiniya’s.
Since the removal of the Iraqi government in 2003, men of organised religion have grown unstoppably autonomous -- well-versed in the art of corporate governance — they today conduct financial transactions that rival the central state.
The airport deal itself was sanctioned by the Imam Hussein Shrine Foundation (IHSF) whose involvement, they claim, is merely supervisory, although funds have also been provided by Khayrat Al Sibtayn, IHSF’s finance arm.
In an interview with Kata’ib Hezbollah media wing -- member of Hashd A’ Shaabi coalition — Aletijah press, Zuhair Abu Dakkah of Karbala’s Governing Council (KGC) conceded that “deal was signed between Karbala and the transport ministry in Baghdad”.
Photographs of the signing of a ‘Memorandum of Understanding’ (MOU) between IHSF’s general secretariat and CC director Nahid Saleh on Jan. 17, exposes the overriding influence of the religious authority in a deal British firm, CC, is allegedly in charge of. Confusingly, a year earlier another MOU was signed between IHSF, the Chinese government and a cluster of unnamed Chinese firms.
“This in Iraq is what we call card shuffling — which should mean a redistribution of responsibilities -- but actually means concealing one's agenda. The idea as to throw as many players into the salad bowl, to the point that blunders become untraceable, obscuring the evidence of corruptive practice in other words” said a Karbala based contractor in an interview with FRB.
In this way it is almost impossible to ascertain where funds are being allocated, and how and on what they are spent.
Ulterior motives behind stop-start construction
Before plans for Karbala International were publicised, French company, ADP Ingénierie was contracted to build a near identical civilian airport. The difference between the two lay in the price tag and location.
ADP drafted up designs to for the redevelopment of an Iraqi air force base in northern Karbala, abandoned after the 1990/1 Gulf War. They planned to build a new terminal structure on an existing runway — designs which former transport minister Amer Abd al-Jabbar had approved. After he left office the project was deferred to his successor Hadi Al Ameri, commander of the Badr Corps. Under Ameri the project was dissolved for reasons Abd al-Jabbar explains in an interview with Baghdadiya television.
“In my time I gained the signature of approval of 14 ministries [...] Three days after I left, the oil ministry demanded from the transport ministry to change the construction site, because of refinery works. This was an excuse, and the transport ministry did not have to comply but they did”.
The timing of the new project has ignited controversy about the motives this time around. Quoted by The New Arab, vice chairman of the Iraqi National Investment, Salar Mohammed Ameen, said the investment “came at a time when world oil prices dropped sharply”.
Karbala International and other similar projects, can be seen as a quick fix solution to cash shortages in the south, which also explains the vested interests of religious institutions in Iraq’s construction industry.
Though the incentives might be lacking, investment opportunities in Iraq are abundant. Iraq’s National Investment Law (NIL) --قانون الاستثمار -- passed 10 years ago mirrored efforts led by the state to rope in foreign investors deterred by security concerns.
NIL has rolled out the red carpet to development firms whose schemes in Iraq have mushroomed over the years. The foreign capital they are expected to bring is the excuse used to justify the law’s passing. They were greeted not by politicians but by Turbaned clerics aligned to former premier Nouri al-Maliki.
“This was the official justification under Maliki’s government” said an Iraqi MP that cannot be named “but in reality NIL was driven by the urgency felt by Baghdad to generate hard cash. Southern provinces became short of cash after political parties took what they could and made off with millions of stolen dinars. Covering these crimes up, took the form of opening the South up for investors to build new megastructures for corrupt politicians to boast off - shielding themselves from criticism. This was the start of corruption” he said.
Lacking “clear and definitive implementing mechanisms”, the law offered no lasting resolution to Iraq’s cash shortfall, generating as the US state department states, “confusion and delays in the approval of investment”.
The sketchy terms surrounding the Karbala airport deal is no exception. Although CC was awarded the contract, lines of authority are splintered.
On paper, CC is simultaneously performing the role of developer, architect, implementer and constructor. On the ground however, construction appears firmly in the hands of sister firm 4th Dimension, whose labourers are sourced by the local Marja’iyya - as project investor. Its leading cleric, Sheikh Abdul Mehdi al-Karbalai, has been at the forefront of construction operations and every photo op since Karbalai received the necessary permit license for work to commence.
Pandora’s box of corruption and fraud
For as long as contract enforcement remains open to interpretation, foul play will persist in the form of overbilling, phony contracts and incomplete projects. Lawmakers dispute whether contractual fraud would exist on such a colossal scale if it was not for legal vagueness and lack of oversight mechanisms.
In an interview with Al-Monitor, head of the senior engineers at the Iraqi Ministry of Municipalities and Public Works, Kahtan al-Sultani, cited ‘poor quality’ labour by companies whose expertise fall short of the standards required, as the main cause of development failures.
Impressive schemes have fallen flat time and again such as the enchanting ‘Bismayah residential project’. The promises surrounding the 10 billion dollar deal have changed perpetually since work began in 2013.
Head developer, Namir Akabi, allegedly contracted UAE firm al-Hamad that was later replaced by Korean firm Hanwha, whose chairman, Kim Seung-youn was sentenced to 4 years in prison for embezzlement in 2012. He was fined millions for selling company assets and stocks at lower cost than their real value to family members.
The development was marketed as Iraq’s biggest city project, replete with schools, clinics, malls and other public facilities.
“Picture this: as you drive south down Baghdad-Kut Highway, you look to your left to find your vision overwhelmed by Iraq’s historic City gradually but surely unveiling its architectural grandeur” are words greeting users to Hanwha’s website.
Out of the 100 thousand housing units promised to local inhabitants only 2 thousand have been built. The estimated cost of Bismayah -- as integrity committee member Juma Diwan exposed -- “is an inflated figure that far exceeds the true cost of the project”. The same change is currently being levelled at CC.
Lack of oversight coupled with shifting lines of authority, expose promises about the potential of economic growth as urban legends fed to Iraq’s hungry population.
Contracts are frequently upended or enforcement costs are reduced to boost gains for politicians and contractors alike, under the cover of force majeure. Other shortcuts to reaping quick profits involve modifying the terms of supposedly fixed contracts in violation of Iraq’s investment law. Another trick is to purchase inferior materials for building and to employ unskilled labourers.
“We’ve seen an upward trend in low cost labourers brought in as Iraqis prove increasingly difficult to work with. Contractors find it easier to import labourers, increasingly those from Bangladesh, as working with local forces can bring you into direct trouble with local tribes who mobilise their own for recruitment. If contractors refuse they are threatened with force or impeded from working”, said a foreign contractor who spoke to FRB on the condition of anonymity.
An expert FRB spoke to, estimated the cost of the airport structure under construction at no more than 12 million dollars.
The other concern — as Jawad Hashim flagged up — is that the firm itself has no real prior experience of building airports, and is entitled to exemption from audit.
“This is a small firm, and for that reason can work around taxes … have our past mistakes taught us nothing, how awarding contracts to front firm's opens the back door to chaos and destruction” Hashim warned in a letter to Abadi.
All eyes will be peeled over the next 17 months, by which point the initial construction phase is due to be completed. The question on many lips is whether or not Karbala International will go down in history as Iraq’s biggest corruption scandal, and if not, can it uplift the economy and end joblessness.