Only Known Iraq Billionaire Hires Women After HusseinAlex Cuadros
Faruk Mustafa Rasool first saw a mobile phone in 1998 while he was lying in a London hospital bed recovering from quadruple heart bypass surgery. Ignoring his doctors’ advice to rest, he started figuring out how to bring the device to his native Iraq.
Faruk was soon smuggling phones and transmitters over the Turkish border into his hometown of Sulaymaniyah, in Iraq’s semi-autonomous Kurdish region, according to his friend Shwan Taha. He built one of the country’s first wireless networks, something that once could have gotten him thrown in prison. Saddam Hussein banned mobile phones to isolate and better control the citizens of his totalitarian state.
“Mr. Faruk is the type of person you can put in any situation and he will excel,” said Taha, the founder of Baghdad-based investment bank Rabee Securities who has known Faruk since the late 1990s. “He takes a lot of risk.”
Faruk’s decision to risk Hussein’s wrath has made the 72-year-old Iraq’s only known billionaire. Asiacell Communications PJSC, the business Faruk founded, is the second-largest mobile-phone carrier in the country. He owns 28 percent of the company, a stake valued at $1.4 billion, and sold about $720 million in shares in a Baghdad initial public offering in February. It was the largest in the country’s history.
Through his Faruk Group Holding, he also has interests in cement, insurance, construction, information technology services, steel products, real estate and a car dealership. He has a net worth of at least $2.7 billion, according to the Bloomberg Billionaires Index, and has never appeared on an international wealth ranking. He declined to comment for this story.
Entrepreneurship such as Faruk’s is rare in Iraq because of the tradition of bureaucracy and corruption left by Hussein’s regime, said Kanan Makiya, a professor at Brandeis University who wrote “Republic of Fear,” a book about Iraq under the late dictator. The best way to get rich in Iraq today, he said, is by skimming cash from the oil revenues that make up 95 percent of the government budget.
“We are so behind in Iraq,” Makiya said in a telephone interview from London. “The professionalism has been lost, the expertise, the ability to work with the outside world. The claustrophobic atmosphere of 30 years of Saddam remains.”
Makiya and Faruk met through the board of trustees of the American University of Iraq, Sulaimani. The school was founded in 2006 with the help of some original advocates of the second Iraq War, such as Makiya. Faruk has given more than $3 million to the university, and his son Zring got his MBA there.
“It’s guys like Faruk who are critical to ensuring that there’s a true American presence in Kurdistan,” said Dov Zakheim, who served as undersecretary of defense under president George W. Bush and is a trustee at the school. “He represents a kind of secular, traditional but modern Muslim. He wants the American connection, he values the American system of education.”
In a region where women’s rights are often limited, Faruk’s companies are unusually inclusive, according to Taha.
“You walk into his companies and you see the amount of women working there, and it’s a breath of fresh air,” he said.
The billionaire owes some of his rise to security provided by Iraqi Kurdistan’s militias, known as peshmerga, or “those who face death” in Kurdish. They remained intact when Hussein’s army was dissolved following the 2003 invasion, and now oversee checkpoints crisscrossing the region and entry points to cities. Outside of disputed territories such as Kirkuk and Mosul, suicide bombings are rare in Iraqi Kurdistan, and almost unheard of in Sulaymaniyah.
Faruk’s hometown, known as Suli to expatriates, is expanding as oil revenues increasingly flow in from the central government. With a population of 1.5 million, the noise of jackhammers can be heard amid the scaffolding that lines dusty streets.
Along with the Kurdish city of Erbil, Suli has become the preferred base for foreign companies doing business in Iraq. Members of the Kurdish diaspora who fled to Europe and the U.S. under Hussein are now returning. In the past six years, Kurdistan has received $24 billion in private investment, according to an e-mail from Ziad Badr, Iraq country manager for the World Bank’s International Finance Corp.
Faruk’s role in expanding Suli is visible in its skyline. According to his holding company, he invested $160 million to build the 39-story Grand Millennium Hotel, whose dark-blue sail-like structure juts above the city’s low beige buildings and the surrounding desert. It’s scheduled to open later this year.
Among his other real estate investments in Suli are a smaller $15 million hotel, a $50 million apartment complex and 52.5 percent of a residential compound his holding company values at $26.5 million. He also has minority interests in two cement plants run by Paris-based Lafarge SA.
The son of an imam, Faruk graduated from the University of Baghdad with a degree in economics and accounting in 1964. He spent a few years working at a local bank, quitting in 1968 to join the Kurdish guerrillas fighting for independence in the north of the country. He ultimately joined the Communist party, according to his friend Taha. Hussein’s Ba’ath party was already in power.
“In the old days, we didn’t believe in money as motivation,” Faruk was quoted as saying in a 2007 Wall Street Journal article.
In 1975, after growing tired of politics, he started a cinderblock factory with a friend. Unlike the Iraq-born banking and real estate tycoon Nadhmi Auchi, who fled the country in 1980 after clashing with Hussein’s powerful half-brother Barzan Ibrahim al-Tikriti, Faruk stayed and weathered the repression of Hussein’s regime.
He opened a poultry processing plant in 1986, just as Hussein was beginning the violent Al-Anfal campaign against the Kurds, deploying mustard gas and sarin, as well as conventional weapons, to kill tens of thousands of civilians. Faruk continued to expand following the 1991 Gulf War, even after Hussein again moved against the Kurds, putting down a short-lived uprising inspired by the American invasion.
As the U.S. imposed no-fly zones that helped protect Kurdistan from Ba’athist forces, Faruk bought a $15,000 satellite device from Inmarsat Plc in 1995 to create an international call center in Suli. He founded the company that became Asiacell four years later.
In October 2003, seven months after the second U.S. invasion, Faruk teamed up with Kuwait’s National Mobile Telecommunications Co. and won a license to run a GSM wireless network in northern Iraq.
The service was spotty. Iraqis needed separate mobile devices to make calls in different regions of the country.
Aws Hassoo Eshaq, a resident of Erbil who is one of Asiacell’s 10 million customers today, says he didn’t mind. He got his first mobile phone through Asiacell shortly after graduating from high school in 2006 and enrolling at the University of Mosul.
“Cellphones were the only way to stay in touch with my family since Mosul became too dangerous” for them to visit, Eshaq said in an e-mail.
The service improved four years later, when Asiacell, backed by private-equity fund Merchantbridge & Co. and the Qatari government, won a $1.25 billion contract to offer mobile-phone services throughout Iraq for 15 years. Qatar’s Ooredoo QSC, after taking over Merchantbridge’s stake in 2012, became Asiacell’s controlling shareholder in the February IPO. Faruk remains as chairman.
Merchantbridge was also close to architects of the Iraq wars. Founder and Chief Executive Officer Basil Al-Rahim helped start the Iraq Foundation in 1991 to advocate for democracy and regime change in Iraq. His sister and foundation co-founder Rend Al-Rahim Francke was named Iraqi ambassador to the U.S. in late 2003. Basil Al-Rahim died in a plane crash in 2011.
Despite such links, Makiya and Taha both say Faruk isn’t moved by ideology. He’s a businessman.
“It’s a time of inflection,” said Taha. “When things drastically change like they have in Iraq, smart people can take advantage of that opportunity.”