“Red flags” have been raised over Nadhim Zahawi’s family links to a controversial Kurdish power broker for oil contracts, i has been told.
The Tory chairman, who was born in Baghdad, spent several years declaring income for work carried out in the region, while he was a sitting MP.
i has uncovered further details of his connections to Sirwan Barzani, a cousin of the Kurdish president, who has previously faced accusations in US courts of “misappropriation”, which he denied.
The links raise further questions for Mr Zahawi over his personal fortune, after it was revealed that he paid a £5m settlement to HMRC over historic taxes.
In the chaos of post-war Iraq, Mr Zahawi’s personal connections are said to have helped secure lucrative contracts across a range of industries, from steel to oil, especially in the Kurdistan region of the country.
Mr Zahawi, who served as the chairman of the All-Party parliamentary Group (APPG) for Kurdistan, made several trips to the autonomous region between 2011 and 2015, funded by its government.
During that time, he was also carrying out consultancy work for his father’s company, Iraq Projects and Business Development (IPBD). There is no suggestion that any of Mr Zahawi’s work in the region was in breach of the Ministerial Code or parliamentary rules.
i has now uncovered further evidence of connections between IPBD and Sirwan Barzani, who in 2018 was accused by a telecoms firm of “misappropriation” in a US court. He denied the accusation. The firm was awarded a $285m settlement, although the ruling is reportedly still being challenged.
One expert said the link between the Zahawi family and Mr Barzani raises “red flags”. In total, the i identified at least $70m in business linking IPBD, the Kurdish Government and Sirwan Barzani.
These include a $50m steel project and a further $20m in property development in the region.
A handout photograph released by the UK Parliament shows Britain’s Prime Minister Rishi Sunak speaking during the weekly session of Prime Minister’s Questions (PMQs) at the House of Commons, in London, on January 25, 2023. Rishi Sunak has asked independent ethics advisor Sir Laurie Magnus to look into Mr Zahawi’s tax affairs (Photo: Jessica Taylor/UK Parliament/AFP via Getty)
i previously revealed how Mr Zahawi arranged a parliamentary internship for Sirwan Barzani’s son. Sirwan, a cousin of the Kurdish president, Nechirvan Barzani, has also described Mr Zahawi as a “dear friend.”
Sirwan has been accused in US court documents of “self-dealing” and “misappropriation” at his Iraqi telecoms company, but he denies these “baseless” claims.
Zack Kopplin of the US-based NGO Government Accountability Project said: “Sirwan Barzani has been accused, in court, by former business partners, of bribing regulators in order to steal their investments.
“The fact that a father of a member of parliament, like Zahawi, has business ties with Sirwan Barzani raises red flags.”
Mr Kopplin added: “It’s hard to put an exact number on the Barzani family’s assets because they are concealed through anonymous shell companies and trusts.”
Explained: Business links between the Zahawi family and Barzani family
According to Kurdish financial records and public documents, IPBD Limited, Mr Zahawi’s fathers’ firm – which the minister advised between 2011 and 2018 – holds multiple shared business interests with Sirwan Barzani.
There is no suggestion that Mr Zahawi or his father were aware of the allegations against Mr Barzani’s businesses. Nadhim Zahawi terminated his consultancy arrangement with IPBD prior to the allegations being made against Mr Barzani, upon being appointed as a minister a month before the court case began.
On his Westminster register of interests, Mr Zahawi describes IPBD as focusing on steel manufacture and property development – two areas where IPBD has direct business links to Sirwan Barzani.
In 2013, IPBD ran a joint venture with Sirwan Barzani called Jabal Sara. According to promotional material from 2013, it “has completed hotel and showroom projects and is currently developing a purpose-built office block and retail complex in Erbil,” the capital of the Kurdistan region. It is not known if the JV is still operational.
Jabal Sara is part owned by Sirwan Barzani according to Kurdish financial documents. Jabal Sara also owns a stake in IPBD business GK Steel.
According to Kurdish Government documents, a steel bars project run by GK Steel is worth $50m. The same documents detail a $20m Jabal Sara project, displaying significant financial links between Zahawi senior and Barzanis.
Mr Zahawi’s links to the oil-rich region, where the Barzani family are seen as crucial power brokers, run deep. He was also appointed chief strategy officer at Gulf Keystone, a former financial backer of the APPG, in 2015.
An industry source told the FT how Mr Zahawi was known for being able to help make introductions between oil executives and Kurdish officials
At the time, Gulf Keystone was locked in negotiations with the Kurdish Regional Government over disputed oil payments worth $250m. An industry source told The Times that Mr Zahawi was key to unlocking it, telling the paper: “When you saw him and the oil minister together, they were like brothers.
“With a company like that, in a sector like that, political relationships with the government or quasi-government are absolutely critical.”
Mr Zahawi earned £1.3m from Gulf Keystone between 2015 and 2018. He also worked for oil exploration firm Afren in the region, between 2012 and 2015.
Alan Mohtadi, who heads T&S Consulting Energy and Security, told the paper this week: “With rumours of 45bn barrels of reserves, everybody wanted a piece of the cake, and companies were fighting hard.”
Upon his appointment to Gulf Keystone, the company noted Mr Zahawi had “maintained contact with the Kurdish region of Iraq throughout his extensive career”, and Chief Executive Jon Ferrier said Mr Zahawi’s connections with the Government would aid the firm.
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Labour Deputy Leader Angela Rayner told The Times: “The accusations swirling about Nadhim Zahawi’s conduct in government raise new questions not only over whether his ministerial interests were above board and properly declared at all times, but whether steps were taken to avoid an actual conflict of interest.”
Mr Zahawi was also subject to an investigation by the National Crime Agency (NCA) in 2020, although it led to no action and there is no suggestion of wrongdoing. There is no suggestion the investigation was linked to Kurdistan.
Sirwan Barzani, Leycochem, IPBD, Hareth and Nadhim Zahawi did not respond to requests for comment.
Explained: How Sirwan Barzani has faced court challenges over his business dealings
Sirwan Barzani has faced a number of court challenges over his business dealings in the Middle East.
A US lawsuit from Iraq Telecom, a subsidiary of Agility, accused Mr Barzani of “self-dealing, material misappropriation and mismanagement” in 2018.
Other claims include that Mr Barzani’s Korek telecom bribed Iraqi regulators with London homes, according to a previous report from The Telegraph.
According to a report from the time in the FT, the accusations centre on the circumstances surrounding a $150m loan. Following a decision at the Lebanese Arbitration Centre, Agility won and sought to enforce a $285m settlement, although reports from July last year suggest Korek is still attempting to challenge the claim.
Another business listed as being part of IPBD also has very close links to allegations of murky business practices in Kurdistan. Leycochem, which is listed as part of IPBD’s structure on its website, won two contracts with companies accused in UK courts of corruption linked to the Barzani family.
According to promotional material, chemical and concrete company Leycochem worked with Kurdish firms Kar Group and Zozik Group on refinery work around 2014.
A year earlier, a London court heard how the Kurdistan Regional Government, at the time led by Masrour Barzani, had insisted on work being given to Kar and Zozik for any work from an external company to be allowed.
Energy firm Dana Gas was awarded a $1bn settlement in connection with the case.
Source: i news