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Al-Ahram Weekly 21 - 28 January 1999 Issue No. 413 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 21 - 28 January 1999 Issue No. 413
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Focus Economy Opinion Culture Features Living Travel Sports People Time Out Chronicles Cartoons Letters Parliamentary crisis
over US grantBy Gamal Essam El-Din
Criticism of United States grant agreements in the People's Assembly reached a crescendo last week. MPs charged that the $650 million US grant -- given as part of the Commodity Import Programme (CIP) to provide credit facilities for the import of US machinery and equipment -- was used by the US Agency for International Development (USAID) to further the interests of a select few businessmen with close ties to the US, especially members of the American Chamber of Commerce in Cairo (AmCham).Several MPs, most of them belonging to the ruling National Democratic Party (NDP), said the CIP grant was used by USAID not only to promote the export interests of its corporations, but also to flood the Egyptian market with low-quality luxury goods.
Zakaria Azmi, a leading NDP parliamentarian and chief of the presidential staff, caused a major uproar when he accused a number of parliamentary deputies in both the People's Assembly and the Shura Council of using their contacts to garner large amounts of the CIP grant to develop their businesses.
In 1995, the US gave Egypt $200 million under the terms of the CIP grant. In November 1997, the assembly approved the first amendment of the grant, raising it by an additional $200 million. In January of last year, the assembly approved a second amendment, and the grant was raised by a further $200 million.
In last year's debates, however, the grant came under parliamentary fire on the grounds that the funds had been misdirected and distributed unfairly favouring some banks and private businessmen. At that time, MPs demanded that Assembly Speaker Fathi Sorour entrust the Central Auditing Agency (CAA) with investigating what happened to the grant. They conditioned their approval of another amendment to raise the grant by $50,000,000 upon the findings of the CAA.
Acting on the assembly's request, the CAA provided the assembly's Economic Affairs Committee last month with a detailed list of the major beneficiaries of the grant. According to Taha Selim, CAA's representative, the funds were earmarked to as many as 395 companies, 98 per cent of which were private businesses. He added that 55 per cent of these companies are involved in industrial activities, 16 per cent in trade, 16 per cent in the agricultural and service sectors and 9 per cent in the tourism, construction, transport and health sectors. Selim also said that the average sum granted to each company ranged from $10,000 to $5 million. Selim explained that around $215 million of the total grant value was earmarked to import capital goods, while $173.6 million was allocated to importing raw materials and production inputs.
According to the CAA report, however, as much as $172.9 million was given to 21 private businesses which account for only 5.3 per cent of the total number of the grant's intended recipients and are known to be agents of some major US companies. Each of these 21 businesses, the report stated, received a sum ranging from $4.3 million to $11.5 million. Two companies, the Egyptian Company for Manufacturing Tin Cans and Power Egypt Company, received $20.9 million and $19.5 million respectively.
The fact that a limited number of private sector businesses gained easy access to much of the grant's funds was what caused the uproar in the assembly. Azmi stressed that the grant's funds should have been allocated to a larger and more diversified number of private businesses.
Foremost on the CAA list of the prominent businessmen who were the primary beneficiaries of the grant -- all of them members of the AmCham -- were Mohamed Mansour (Mantrac), Onsi Sawiris (Orascom), Mohamed Nossair (Alkan Establishment), Ibrahim Kamel (Kato Aromatic), Abdel-Moneim Seoudi (General Motors), Redallah Helmi (Taki), Hossam Badrawi (Nile Badrawi Hospital) and Nabih Berzi (Tasty Foods).
Three parliamentary deputies also received some of that grant money. They are Shura Council deputies Mohamed Farid Khamis (Oriental Weavers and Misr America Company), Sadek El-Sewedi (El-Sewedi Electric Cables), and assembly member Talaat Mustafa (Alexandria Constructions Company).
There was also parliamentary complaints that two joint-stock banks, the general managers of which are leading members of the assembly, took large amounts of the grant. The banks are Misr Exterior Bank, the general manager of which is chairman of the assembly's Economic Committee, Abdallah Tayel, and Misr Romania Bank, the general manager of which is deputy chairman of that same committee, Abdel-Rahman Baraka.
During the committee's debates, however, Baraka said that the USAID has a right to provide Egypt with grants aimed at promoting US exports. "What is important now is that bank clients should be given money from the grant in a transparent way and in light of their eligibility and feasibility studies, without any regard to who they are or whether they are MPs or not," Baraka said. Joining forces with him, Tayel explained that banks allocate the grant's funds in collaboration with the USAID and the International Cooperation Ministry. "Besides, these types of grants are primarily aimed at supporting productive projects in Egypt that require US imports," Tayel said.
