British-Kurdish MP Nadhim Zahawi hits back in oil company pay row

Nadhim Zahawi

LONDON: In an exclusive interview with Arab News, UK Conservative politician Nadhim Zahawi has hit back at criticism about his salary as part-time strategy officer at oil producer Gulf Keystone Petroleum.
Zahawi, whose heritage is Kurdish, took flak from City of London investor Justin Urquhart Stewart, cofounder of Seven Investment Management, who complained about his monthly salary of £29,643 ($39,314), disclosed in the latest British parliamentary register of MPs’ interests.
Urquhart Stewart told The National newspaper that most shareholders were “absolutely furious” about Zahawi’s pay level — equivalent to £356,000 a year — given the 99 percent collapse in the share price in five years.
But Zahawi said: “The share price was diluted following last year’s debt-for-equity swap with bondholders — but the financial reconstruction was absolutely necessary to secure the company’s future.”
His pay was signed off by Gulf Keystone’s remuneration committee and was “commensurate” with salaries paid to CEO Jon Ferrier and Chief Financial Officer Sami Zouari, he added. What many people had forgotten, said Zahawi, was that following the deal with debt-holders a year ago, the company had turned its fortunes around with debt reducing from $625 million to $100 million. There is now over $140 million of cash on the balance sheet.
Zahawi said: “I joined (the company) only after the majority of the old management had departed; most of the loss of value in the equity was under the previous management team. When I came aboard, Keystone was very close to going under because of the sheer weight of the debt.”
There was a need to credit the current team with turning round the business, he added. “Albeit the share price is where it is, but the debt was an existential threat.”
Gulf Keystone Petroleum is the operator of Kurdistan’s Shaikan field, with current production capacity of 40,000 barrels per day.
Kurdistan explorers and producers have been under the cosh after the slump in the oil price in 2014. Soft prices coincided with geopolitical difficulties in the region which delayed payments for exports due from the Kurdistan Regional Government (KRG).
But Zahawi said relations with the KRG are much improved and regular payments were coming through. He hoped the current standoff between the Kurds and Baghdad would be “resolved decently. They are both committed to resolving (the dispute) within the framework of the Iraqi constitution.”
Political tensions between Baghdad and the KRG were raised recently when Iraqi federal forces regained disputed territories including the city of Kirkuk, the oil fields around it and much of the wider region.
Current political instability was weighing on Keystone’s and other companies’ share prices, said London-based analysts.
Zahawi’s appointment to the company more than two years ago was influenced by his contacts in Kurdistan and expertise as a chemical engineer and oil industry specialist, according to a company announcement.
Keystone said at the time of his appointment in June 2015: “Zahawi is of Kurdish origin, and moved from Iraq to the UK in his childhood. He has maintained contact with the KRG throughout his extensive career.”
CEO Ferrier wrote: “With his Kurdish heritage and as a successful businessman, Nadhim brings a range of additional and critical skills to the company. I firmly believe that the breadth and depth of his regional knowledge will prove invaluable, and will help further strengthen our relationships within the Regional Government amongst other key stakeholders in the Kurdistan Region and internationally.”