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Al-Ahram Weekly 2 - 8 September 1999 Issue No. 445 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 2 - 8 September 1999 Issue No. 445
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Focus Culture Features Profile Travel Living Sports People Time Out Chronicles Cartoons Letters New trial for 'loan deputies'
By Gamal Essam El-DinPolitical and business circles were taken by surprise last week when investigating magistrate Mohsen Sobhi, following six weeks of intensive interrogations, ordered that 25 suspects -- out of a total of 32 -- be put on trial before another bench of the Supreme State Security Court on charges of profiteering and facilitating the illegal acquisition of public funds.
In the original trial, which continued for over two years, the 32 suspects faced charges of misappropriation of public funds. But the trial was interrupted, after prosecutors pressed additional charges, and Sobhi was commissioned to open a new investigation. The suspects, including four MPs, now face several years in prison with hard labour and may be forced to return more than LE1 billion. The new trial is expected to open in two weeks.
In political terms, parliamentary and political party observers were taken aback by the results of the new investigation, especially those detailing the financial and administrative malpractices allegedly committed by MP and ex-minister Tawfik Abdou Ismail. In fact, the results have brought many to the conclusion that Ismail and the other three "loan deputies" will most probably lose their posts in parliament eventually. In business circles, some argued that the "loan deputies" case might be responsible for the liquidity crisis which recently hit several Egyptian banks.
According to a report detailing the results of the investigation, Ismail, in his capacity as former chairman of the Commercial Bank of Daqahliya (CBD), was accused of leading a group of five executive members of CBD's board in facilitating the illegal acquisition of as much as LE465.3 million for around 22 companies and eight businessmen -- most of them involved in real estate investments. The report said that two of CBD's board members, Mahmoud Ghoneim and Ahmed El-Adli, confessed that all the administrative and financial irregularities at CBD were carried out at the instructions of Ismail himself.
Ismail was also charged with profiteering from his previous post as CBD's board chairman. In this respect, the report said Ismail gave Yassin Aglan, chairman of the Misr Food Company, sums of LE299 million and $17 million in loans and credit facilities, without listing them in the bank's books, against the payment of commissions. The report quoted Ismail as saying that he was not aware that these credit facilities must be registered in the bank's books. The report said that Aglan used the $17 million to secure astronomical profits by dumping huge quantities of imported sugar on the market. Worse, the report added, Ismail bought a large plot of land in the luxurious district of Heliopolis, using CBD's money, from three businessmen, although the land was not their property. According to the report, Ismail justified his action by arguing that the Heliopolis Housing and Development Company, which is the true owner of the plot of real estate, had promised to sell the land to the three businessmen.
The report divided the 25 suspects into two categories: bankers and businessmen. The bankers, primarily belonging to CBD and the Nile Bank, were charged with profiteering and facilitating the illegal acquisition of more than LE1 billion by 30 real estate investment companies and 11 businessmen.
While the financial irregularities at the CBD were led by Tawfik Abdou Ismail, those in the Nile Bank were committed by the El-Ayyouti family. Eissa El-Ayyouti, board chairman of the Nile Bank, his daughter Aleyya, the bank's deputy chairman and his nephew Mohieddin Mansour, assistant to the bank's chairman, were charged with facilitating the illegal acquisition of LE346.3 million in loans and credit facilities for 11 real estate investment companies and three businessmen -- two of them MPs. The report singled Aleyya out as topping the list of offenders. Aleyya, 51, who fled to France in June, was accused of using her position to provide three businessmen with loans and credit facilities amounting to LE214 million without notifying the bank's board of directors and against false collateral. Aleyya was also charged with profiteering for receiving an LE20 million commission from businessman Yassin Aglan against providing him with credit facilities and loans.
In another surprise, the investigating magistrate decided to exclude Mona El-Ayyouti, Aleyya's sister, from the list of the accused and include her instead as a witness for the prosecution. Sobhi also decided to exclude six others from the list of the accused and add five names to the list of witnesses for the prosecution. The witness list now includes three inspectors at the Central Bank of Egypt (CBE), Hussein Hamad, a CBD board member, and Aleyya's two sisters, Mona and Ola. This is to add to a previous list that included Diaaeddin Abd-Rabbou, a CBE official, and Fahmi Abdel-Latif, deputy chairman of the Administrative Control Authority (ACA).
According to the report, Mona, Ola and their father, Eissa, admitted that Aleyya illegally gave Aglan large amounts of loans and credit facilities against the payment of LE20 million in commissions. Moreover, the report quoted CBD's Hamad as saying that he warned Ismail repeatedly against the grave consequences of the many financial irregularities committed by the Cairo Branch of CBD. Hamad was quoted as saying that, in one year, CBD had provided as many as 29 businessmen with LE91.4 million in loans without collateral. According to Hamad, CBD's Cairo branch was turned into "a supermarket in which selling and buying was taking place without any type of control or supervision."
The report charged businessmen -- a total of 15 -- with cooperating with 10 bankers in CBD, the Nile Bank, and Al-Mohandess Bank to illegally acquire loans and credit facilities amounting to more than LE1 billion. Topping this list of businessmen are two MPs -- Mahmoud Azzam and Khaled Mahmoud. The two, according to the report, admitted that the loans and credit facilities provided to them were given with the approval of Tawfik Ismail and Eissa El-Ayyouti, chairmen of CBD and the Nile Bank respectively.
Sobhi gave fresh orders that police forces arrest the four suspects, Aleyya El-Ayyouti, Ibrahim Aglan, Hossam El-Manawi and Ashraf Labib, who continue to be at large. Sobhi also ordered that 15 suspects, including MPs Ismail, Azzam and Mahmoud, be kept in custody for an additional 15-day period.
These dramatic developments in the "loan deputies" case has led two MPs -- Ayman Nour and El-Badri Farghali -- to direct questions to Economy Minister Youssef Boutros Ghali about the impact of the case on cash liquidity in domestic banks.
