Exclusive: Lord Lamont may be called as witness in lawsuit over Iraq investments

The case revolves around the activities of Merchantbridge’s late founder, Basil Al Rahim, who was killed in an Iraq plane crash along with two JPMorgan bankers

Lord Lamont was an adviser to the private equity firm Merchantbridge that went into Iraq to do business deals after the US invasion (GETTY IMAGES)

The former Conservative chancellor Lord Lamont looks set to be dragged into a High Court legal action over an investment company he advised that went into Iraq to do deals after the US invasion.

Lord Lamont, along with other grandees including the property developer Lord Palumbo, Baroness Symons and the former Barclays chairman Andrew Buxton, were all advisers to the London private equity firm Merchantbridge, and may all be requested to stand as witnesses to a High Court action over an Iraqi deal.

The case revolves around the activities of Merchantbridge’s late founder, Basil Al Rahim, who was killed in an Iraq plane crash along with two JPMorgan bankers three years ago.

Lord Lamont became involved with the company through another Merchantbridge founder, Colin Craig, who was also killed, but in a 2005 car crash in Morocco. They set up the business in London in 2002 to invest in the Middle East, particularly Iraq, and did a number of deals in the country after the 2003 war.

Now, a childhood friend of Mr Al Rahim, Samir Arab, who was a director of the company, claims Mr Al Rahim massively short-changed him over the value of his shares in one of Merchantbridge’s big investments, a telecoms company called Asiacell.

Mr Arab claims that, before he died, Mr Al Rahim had falsely claimed that Merchantbridge companies owned only 2.5 per cent of the company when in fact, Mr Arab says, they owned 19 per cent. This was, he claims in his lawsuit, “so as to facilitate an attempted fraud on Merchantbridge and Mr Arab.”

The suit claims Mr Al Rahim diverted the rest of the 19 per cent stake to himself.

That meant the value of Merchantbridge’s holding of Asiacell, which Mr Arab was told was $34m, was actually $261.5m.

As a result, Mr Arab’s claim states, he lost out to the tune of $31m on his share of the deal. He is suing Mr Al Rahim’s wife and daughter, who represent his estate, and the Merchantbridge companies on whose behalf Mr Al Rahim was, he contends, negotiating with him during the falsehoods.

Sources close to the case say they may call Lord Lamont and the firm’s other advisers as witnesses in the case.

Asked for a response to the allegations, Mona Vaswani at law firm Allen & Overy, acting for Mr Al Rahim’s estate, said: “We reject them and will be defending the claims.”

Lord Lamont declined to comment while Lord Palumbo and Baroness Symons did not respond to requests for comment while Mr Buxton could not be reached.

Mr Al Rahim was a well-known Iraqi dealmaker with formidable contacts in the country and across the Middle East. He was part of the team that set up the international business of the giant US private equity firm Carlyle Group – which went on to become notorious for its close links to US Republican politicians and defence contracts.

One report has claimed it was he who brought the Saudi bin Laden family – not including Osama, who by then had been ostracised by his kin – to become investors in Carlyle.