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Iraqi contract may benefit controversial businessman

One of the bigger Iraq reconstruction contracts awarded so far — to build a wireless phone network in Baghdad — may end up benefiting a controversial billionaire who allegedly did business with former Iraqi President Saddam Hussein.
/ Source: NBC News

Under pressure to rebuild the war-torn country, Iraq’s Coalition Provisional Authority has been quickly issuing fat business contracts. Now NBC News has learned that one man who allegedly did business with Saddam Hussein may benefit from one of the richest new reconstruction contracts.

In Baghdad these days, Iraqis have to line up to pay to use some of the few working phones in the city, or to rent satellite phones on the curb. For years, the line’s been dead for most Iraqis, and since the war began, things haven’t gotten much better.

So for months there was fierce competition among international corporations to win the U.S. government’s approval to operate mobile phone networks in Iraq.

Last month, Paul Bremer’s Coalition Provisional Authority and the Iraqi Ministry of Communications announced three winners.

Cell phone service for central Iraq, including Baghdad, was awarded to a consortium headed by Orascom Telecom, a huge company based in Egypt.

Alaa Al Khawaja, a prominent businessman and a board member of Orascom, also became a partner in the consortium. He tells NBC News it should be a tremendously lucrative venture. “I wish,” he said, “that it will be great profits for us.”

One of the investors in Orascom Telecom, is a controversial Iraqi-born billionaire, Nadhmi Auchi, who allegedly made money doing business with Saddam.

An Auchi spokesman tells NBC News the billionaire’s company owns 6.5 million shares in Orascom, which amounts to about 6 percent of the company.

That investment upsets Jonathan Spalter, an American businessman who lost in the bidding: “If these allegations are true,” he says, referring to the investment and to accusations against Auchi, “it certainly raises real questions, about whether the Coalition Provisional Authority did enough background research.”

A coalition spokesman said he could not talk about the deliberations that led to the award, but U.S. officials who issued the contract must not have checked with U.S. intelligence. A senior U.S. official tells NBC that Nadhmi Auchi “plays all sides of the fence in Iraq ... and was in business dealings with the former regime, including Saddam.”

In France, earlier this week, Auchi was convicted in a kickback scandal, as part of the massive case involving the giant Elf oil company corruption case. He received a 15-month suspended sentence.

His spokesman says Auchi is innocent and will appeal. The spokesman tells NBC that some of Auchi’s firms did do business with Iraq until 1990 — as did many Western companies — and are still owed money.

Paul Light, of the Washington-based Brookings Institution, says this may raise questions. “The problem in this particular contract may be that it was done very well but it has an unintended consequence where somebody has benefited who we would not wish to benefit.” U.S. officials involved in awarding these contracts won’t say if anyone knew Auchi’s company was an investor in Orascom.

However, a spokesman says officials are not concerned about minor shareholders in a publicly held company.

Lisa Myers is NBC News’s chief investigative correspondent, based in Washington, DC.

Aram Roston is an NBC investigative producer, also based in Washington, DC.