Hyundai to sue over Iraq debts

CONGLOMERATE Hyundai is to sue the Iraqi embassy in London to recover £660m it claims its building arm is owed for work in Iraq prior to the first Gulf War.

The move will be made possible when diplomatic relations between Britain and Iraq are put in place.

If the action succeeds, the South Korean company would be entitled to have priority in the seizure of Iraqi assets in the UK and US.

The claims relate to debts for work carried out by Hyundai Engineering & Construction before 1991, when UN-imposed economic sanctions after the first Gulf War led to the freezing of all Iraqrelated credit and debts.

At that time, Hyundai held $779m (£468m) in outstanding construction bills generated from 16 pre-Gulf War construction projects. The debts include $325m in unpaid interest.

Hyundai said its receivable income from Iraq had risen to about $1.1bn since then.

There was no immediate comment from the Iraqi embassy.

The British legal action follows a recent New York court ruling in favour of HEC's claim to $70m of outstanding revenue from Iraq, HEC senior executive vice president Kim Ho-yung said.

'Hyundai will start a new lawsuit in London by the end of this year, after Britain and Iraq establish diplomatic relations, allowing Hyundai to name the Iraq embassy in London as a defendant,' he said.

The company is trying to create a so-called 'Washington Club', an international body of private creditors owed money for work previously done in Iraq.

This group, comprising about 20 corporate creditors from eight countries, is expected to be set up by the end of the year.

Kim said HEC would meet on 13 October with eight South Korean corporate creditors for Iraq, including Samsung Engineering and Construction, LG International and Hanjin Heavy Industries & Construction. 'We are 100% confident that Hyundai will eventually redeem all of its outstanding income from Iraq. The first visible outcome will be seen by the end of the first quarter of 2004,' he added.

Hyundai has recently beefed up its presence in Iraq with a special task force and hopes to gain from US-sponsored reconstruction contracts in the country. It is focusing on basic infrastructure work such as electricity and roads as well as repair projects at damaged oil facilities.

Prior to the first Gulf War, Hyundai had Iraq contracts worth $4.1bn.

'We have already advanced talks on one or two possible projects,' an official said.