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$45M award affirmed in Iraqi cell phone suit

A telecommunications company owes its former joint venture partner more than $45 million for fraudulently inducing it to invest in a cell phone network in Iraq, a Maryland appellate court has held.

The Court of Special Appeals affirmed the award to Aramtel Ltd. and its director, Jay Salkini, on the counterclaim they filed when sued by Dynacorp Ltd. and its owner, Faisal Fadul of Virginia.

The appeals court found that Fadul and Dynacorp made false promises about transferring a required license for the project, which led Aramtel to invest $500,000 and loan $30 million to the joint venture, Moutiny Ltd.

While affirming Howard County Circuit Judge Timothy J. McCrone on that point, Wednesday’s appellate decision vacated the 2011 judgment in favor of Aramtel on seven alternate theories of recovery.

The vacated counts were shareholder derivative actions, in which Aramtel was suing on behalf of Moutiny. While the appellate court rejected Dynacorp’s challenges based on standing, jurisdiction and evidentiary sufficiency, it noted that McCrone had made a “clear finding” that Moutiny’s damages were speculative and uncertain.

“The circuit court erred in entering judgment in appellees’ favor as to the derivative claims without finding damages, a required element for all of the causes of action alleged,” Judge Shirley Watts wrote for the appeals court.

However, vacating the judgment on the derivative claims did not affect the amount of the award, the court noted.

According to court documents, Salkini, a Columbia resident, partnered with Fadul in April 2006. Fadul was named managing member of Moutiny, which was to serve as a holding company for the required wireless loop license until the network was up and running.

Iraqi regulators temporarily suspended all wireless loop licenses in August 2006, and Fadul quit the project in May 2007. Aramtel then learned that the license had been reinstated and Fadul had transferred it to another company.

The 101-page opinion is Dynacorp Ltd., et al. v. Aramtel Ltd., et al., CSA No. No. 1077, September Term, 2011.