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Last year, Cleary Gottlieb Steen & Hamilton raked in $4.3 million for helping Iraq balance its books. And though its paycheck this year stands to be significantly less, the past five years have been good ones for the small band of lawyers handling much of the country’s $120 billion in debt. Cleary Gottlieb partner Lee C. Buchheit and four other attorneys have brought in about $20 million in fees and disbursements since they took on the task of dealing with the wide variety of claims against Iraq for debt Saddam Hussein amassed during his reign. Although Buchheit said some of the $20 million Cleary Gottlieb received so far has gone to pay arbitrators and other parties the firm brought in to help settle the claims, it’s clearly been a lucrative assignment. The $4.3 million the firm brought in from July 2008 to January 2009 represented the largest portion of the $20 million total it has received since 2004 when it took the job, according to documents the firm filed with the U.S. Department of Justice. As counsel for the Iraq Ministry of Finance, it is required to file documents showing fees and disbursements received from foreign clients every six months. For the six-month period that ended July 30, Cleary Gottlieb received $980,895. The job is winding down, Buchheit said, with about 96 percent of the $20 billion in commercial debt resolved. “It’s been a gargantuan exercise,” Buchheit said. It appears so. Saddam Hussein’s empire, oil rich in the early 1980s, began piling up debt during the Iran-Iraq War, an amount that was only made bigger following the country’s invasion of Kuwait and the Gulf War in 1990. By the time the United States ousted him in 2003, Iraq owed about $120 billion, which included debts to a group of major Western countries, called the Paris Club, equaling $42.5 billion. It also owed another group of countries some $67.4 billion and commercial creditors about $20 billion. Buchheit said the firm resolved the claims at a record pace. “Never has so much debt been eliminated in such a short period of time.” That may be, said Brookings Institution fellow Lex Rieffel, but it is difficult to measure the success of Iraq’s restructuring process against those of other countries, such as Argentina. “There is no simple way to compare one with the other because the bodies of debt are not homogeneous,” said Rieffel, an expert on sovereign debt restructuring. The variety of creditors — which, according to Buchheit, included a poultry supplier claiming losses for frozen chicken parts blocked from delivery on first day of the Gulf War — represented a sharp departure from other sovereign debt restructuring Buchheit had handled, including assignments for Russia and Argentina. Included as creditors were 19 countries in the Paris Club, 16 countries in the non-Paris group, and 567 commercial creditors. Buchheit might not get much argument from creditors about his assertions that the firm worked swiftly to close claims. The amount commercial creditors received — about 20 cents on the dollar — essentially was hashed out en masse by a deal struck between the Paris Club members and Iraq. Buchheit helped broker that deal. Under the arrangement, no other creditors could get a higher percentage of recovery than the governments in the Paris Club received. Cleary Gottlieb won the bid to represent the Iraq Ministry of Finance because of Buchheit’s experience with other countries in sovereign debt transactions. Buchheit took heat during the process for a negotiating style that some described as rigid. But he said there was too much on the line to be touchy-feely. “It was intense,” he said. “The very nature of the project was intense.”

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