Iraqi Central Bank Ordered To Pay $13 Million In Row Over Unpaid Bills For New HQ

The Central Bank of Iraq has been ordered to pay some $13 million to an international engineering firm, in a dispute over the construction of its new headquarters in Baghdad.

The International Chamber of Commerce (ICC)’s International Court of Arbitration ruled in favour of Abu Dhabi-based Cardno ME (CME) in February, but the decision has only just been made public as a result of the latter’s efforts to have the award recognized and enforced in France.

The dispute stems from a contract CME signed in May 2016 to build a new 37-storey tower on the banks of the Tigris River in central Baghdad. The building was designed by Zaha Hadid Architects, the practise set up by renowned British-Iraqi architect Hadid, who had died in March that year.

CME and the Central Bank fell out in late 2020 after the Iraqi authorities stopped paying the engineering firm’s invoices. In March 2021, CME told the Central Bank it planned to demobilize its staff after seven months of invoices had gone unpaid.

Soon after that, two CME employees – Robert Pether and Khalid Radwan – were arrested and subsequently imprisoned. Pether is an Australian citizen resident in Ireland while his colleague Radwan is an Egyptian national.

Wrongful imprisonment

The two men were arrested while visiting then Central Bank governor Mustafa Ghalib Mukheef in April 2021 in an attempt to resolve the dispute over the unpaid invoices. They are currently serving five-year terms in Al-Muthanna jail in Baghdad, having been convicted of defrauding the Central Bank.

A report (pdf) by the UN Working Group on Arbitrary Detention, issued in March last year, said the men were being arbitrarily detained and called on the Iraqi government to release them immediately.

CME claims the recent ruling by the arbitration court in Paris shows it fulfilled its side of the contract and that no fraud could have taken place, meaning Pether and Radwan have been wrongfully imprisoned.

Pether’s wife Desree welcomed the court decision, but said it had yet to lead to any change for her husband or his colleague.

“It absolutely should strengthen the case for releasing two innocent men. However, it has been news to the Central Bank obviously since February and still Robert and Khaled are unlawfully imprisoned,” she said. “So even with a ruling in an international tribunal in favour of CME, the malicious prosecution against two innocent employees continues.”

Breach of contract

In the order handed down by arbitrator Bassam Mirza on 26 February, the ICC court ruled the Central Bank was in breach of its contract with CME. It ordered the Central Bank to pay CME some $5.8 million in outstanding invoices, along with $4.3 million in compensation to cover the remaining period of the contract.

The Central Bank was also ordered to cover $1.2 million in legal and other costs incurred by CME and to release a $1.7 million performance bond provided by CME. In total, these various elements add up to just over $13 million.

Mukheef was replaced as Central Bank governor in January, with Ali Al-Allaq taking over. Allaq had previously held the position from 2014 to 2020.

The Central Bank had not responded to a request for comment on the arbitration court ruling at the time of going to press.

CME has called for a retrial of its two employees, with a company spokesperson saying “We retain full confidence in the Iraqi judicial system which was a victim of fabricated evidence and malicious scheming… Once the fabricated evidence is rightfully retracted, a retrial would quickly exonerate our employees and lead to them being reunited with their families.”