Court keeps freeze on Zain Iraq’s USD187 million

An Iraqi court has rejected a request by Zain Iraq to lift a freeze on USD187 million it holds in cash at local bank accounts, the telecom operator's parent firm Zain said, according to Reuters.

Zain Iraq, which has successfully appealed against nearly USD5 billion of fines and claims in the past 12 months, will seek to overturn the latest court decision, Zain's statement to Kuwait's bourse said.

Zain Iraq's bank balances were frozen as the authorities sought to levy capital gains tax on its USD1.2 billion acquisition of Iraqna in 2007. This was later merged with Zain's Iraqi unit Atheer and re-branded Zain Iraq.

Unusually, the government has tried to levy capital gains on Zain Iraq as the asset buyer, rather than on the seller, Egypt's Orascom Telecom. Zain has brought a separate case to an Iraqi court claiming capital gains should only apply to the seller. In March 2015, an Iraqi court threw out a USD4.5 billion claim against Zain over its acquisition of Iraqna. The claimant was not identified, although industry sources said it was rival operator Korek, which had also been interested in buying Iraqna.

Zain Iraq also successfully appealed against $262 million of fines and fees imposed after the telecom regulator found the operator had sold mobile phone sim cards without its permission and another USD85 million claim relating to mobile frequencies.

Zain owns 76 percent of Zain Iraq, according to the parent firm's third-quarter earnings presentation.