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Orange stripped of stake in Iraq’s Korek Telecom

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An administrative order from Iraq’s Communications and Media Commission has stripped France’s Orange SA of its stake in wireless operator Korek and handed it to a group of local investors.

The order transferred the 44% stake in Korek owned jointly by Orange and Kuwaiti logistics company Agility Public Warehousing Co. to three investors including Korek’s managing director, Sirwan Barzani.

The decision marks the latest twist in Orange’s troubled foray into Iraq, which became a magnet for foreign investment in the years following the U.S.-led invasion that toppled Saddam Hussein.

The venture was one of several moves by European phone carriers into riskier business environments to seek out growth as markets closer to home matured, according to Bloomberg.

Orange and Agility bought the Korek stake in 2011 and invested $810 million in the business. Then in 2014 the regulator declared the original contract invalid, saying the companies had failed to honor their commitments on spending and network building.

The decision set off legal disputes that have dragged on for years.

Barzani now holds 75% of Korek, with the two other investors holding the rest, according to the regulator’s order.

Barzani, one of Iraq’s most powerful businessmen and a nephew of the Kurdish region’s former president Massoud Barzani, defended the regulator’s decision, saying it had been upheld by Iraqi courts.

“As a result of the implementation of the Iraqi telecom regulator’s decision, I have been left to deal with Korek’s debt burden,” he said in a statement.

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