WASHINGTON-The Department of Defense last week said it has begun investigating allegations of wrongdoing in connection with the award of three mobile-phone licenses in Iraq in October to a group of Arab consortia that plan to deploy GSM wireless networks in the war-torn country.
“It is the subject of a DoD inspector general preliminary inquiry,” said Lt. Col. Kenneth McClellan, a Pentagon spokesman.
Egypt’s Orascom Telecom was picked to operate a cell phone system in central Iraq. Asia-Cell, a Kurdish Iraqi company won rights to serve northern Iraq, while Atheer, a firm associated with Mobile Telecommunications Co. of Kuwait, snagged the license for the southern region. The U.S.-led Coalition Provisional Authority, headed by L. Paul Bremer, led the review of 35 applications and the selection process.
The three consortia were poised to get the official go-ahead to turn on mobile-phone systems any day now. It is unclear whether the probe will set back a licensing process that has been mired in controversy and delay from the start. The CPA did not immediately respond to a request for comment.
The contest for mobile-phone licenses represented the first private-sector competition not directly involving a government contract, and U.S. officials held out hope it might serve as a model for other rebuilding efforts in Iraq. But once mobile-phone applications were submitted to the CPA, the process became shrouded in secrecy, despite pronouncements by Bush administration officials that they wanted to bring transparency and democratic reform to a country that had suffered for years under a brutal regime that restricted wireless and wireline access to ousted President Saddam Hussein and his henchmen.
Even Motorola Inc., the top U.S. mobile-phone maker and the primary equipment supplier to Orascom, was kept in the dark until the CPA and Iraqi communications ministry announced the license winners in early October.
“We have no knowledge of an investigation, preliminary or otherwise,” said Norm Sandler, director of global strategic issues for Motorola.
Early press reports implicate Haider al-Abadi, Iraq’s minister of communications, and Orascom in a controversy said to have been sparked by a losing bidder’s allegations of bribery.
The regional licenses, which can be converted into nationwide permits, are valid for two years. Some concern has been expressed over what happens to the licenses when the CPA turns over the government to the Iraqis. But the CPA has downplayed those fears.
“I would assume that the new Iraqi government will honor the licenses that are being executed by CPA now and/or whatever entity brings that business arrangement into Iraq. I have to believe the new government wants all of those contracts to be completed-not just in communications but all sectors,” David Sudnick, senior adviser to Bremer, told RCR Wireless News at a bidder conference here recently.
