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Al-Ahram Weekly 24 - 30 August 2000 Issue No. 496 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 24 - 30 August 2000 Issue No. 496
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Features Travel Living Sports Profile People Time Out Chronicles Cartoons Letters Business blues
By Gamal Essam El-Din
Business tycoon Rami Lakah left Egypt on 14 August for the Jordanian capital of Amman, where he concluded a business deal between his aviation company, Midwest, and Royal Jordanian Airlines Alia. After finalising the transaction, he flew to Paris, reports Gamal Essam El-Din.
Rami Lakah 
By the time Lakah reached the French capital, rumours were circulating back home that he had fled the country to dodge an estimated LE1.2 billion in unpaid bank loans. As Lakah is neither a small-scale investor nor an ordinary businessman, his reported escape was big news in the Arabic-language press for more than a week.
This was the second time in two months that Lakah was alleged to have fled the country. At the beginning of July, word on the street was that the 37-year-old businessman had escaped to London. Although he returned to Cairo shortly afterwards, rumours maintained that his return was the result of intensive pressure by the government.
Lakah published advertisements in newspapers last weekend, denying rumours of his escape. In an interview from Paris with the weekly newspaper Akhbar El-Yom, he said that these recurring rumours were entirely unfounded and that "malicious intentions and personal interests" were behind them. He vowed to return soon to confront those "who engineer the malicious campaigns against me for personal and shameful reasons."
In the same interview, Lakah conceded that he had become bogged down in financial problems with Egyptian banks. Rumours hold that before his departure for Paris, Lakah wrote letters to top government officials seeking their intervention to help him reach a settlement with the Banque du Caire, to which most of his debts are owed.
Lakah was quoted as saying that his debts are owed to three banks: the Banque du Caire (LE650 million), the National Bank of Egypt (LE120 million), the Islamic Bank (LE98 million) and Banque Misr (LE12 million). He asserted that he has been able since August 1999 to pay back as much as LE580 million.
On the other hand, Lakah was quoted as having said that several government ministries and private sector companies owe his companies LE960 million. The ministries of health and education alone owe him LE360 million.
In another interview with the magazine Al-Mussawar, Lakah charged that the chairman of the Banque du Caire was taking a hard-line position against him and refusing to reschedule his debts. He explained that "the problem with the Banque du Caire is a difference in views over the size of my debts and when they should be paid back. In view of the current market recession and liquidity squeeze, national banks should help businessmen by rescheduling their debts. The role of banks during these hard times is to help businessmen survive the liquidity crisis, rather than strangle them mercilessly," said Lakah.
In statements published by Akhbar El-Yom, Economy Minister Youssef Ghali and Governor of the Central Bank of Egypt, Ismail Hassan, emphasised that Lakah is in a good financial position. Hassan said that banks will do their best to make sure that Lakah's businesses are not negatively affected by his accumulated debts. Ghali argued that "it is not strange in a parliamentary election season to hear every now and then rumours about businessmen."
In the Akhbar El-Yom interview, Lakah complained that political considerations were largely behind the rumours targeting him. He accused Abdel-Ahad Gamaleddin, a member of the ruling National Democratic Party (NDP) who represented Cairo's Ezbekiya district in the outgoing People's Assembly, and other rival businessmen of masterminding the campaign.
Lakah had announced some time ago that he would contest the approaching parliamentary elections in the Ezbekiya district. To the consternation of his rival, Gamaleddin, Lakah had started, during the past two years and a half, to offer the residents of Ezbekiya several free services. The confrontation between the two men reached a climax last month when rumours circulated that Lakah would replace Gamaleddin as the NDP candidate in Ezbekiya.
In statements to several publications, Lakah asserted that last month's rumours caused him a financial loss of LE300 million. This was largely due to the fact that the share price of the Lakah Group dropped from $6 to $4 in barely 48 hours. Following last week's rumours, the share price dropped further to $2.7. Lakah also said that the value of the Global Depository Receipts (GDRs), registered in the name of the Lakah Group on the London Stock Exchange, dropped by 30 per cent last week or 80 per cent since last month's rumours.
The past year had witnessed the escape outside the country of an unprecedented number of business people. The phenomenon led economic analysts to warn of disastrous implications for the national economy. Former Economy Minister Mustafa El-Said told Al-Ahram Weekly that recession is largely to blame. However, he also argued that "the fact that the government left a handful of tycoons to take over the bulk of business activity and have easy and unlimited access to bank loans" is also responsible.
Lakah heads what is regarded as the largest Egyptian private sector group in terms of paid-up capital. Lakah's interests have spread in recent years into construction, health care management and aviation. Lakah holdings were floated on the Cairo bourse in November 1998, with Rami Lakah owning 38 per cent of shares and his brother, Michel Lakah, owning 31 per cent. The Banque du Caire holds eight per cent of shares and international investors own the remaining 23 per cent.
Businesswoman Aliya El-Ayyouti and six businessmen who were convicted of committing a series of financial malpractices in what came to be known as the "case of the loan deputies" fled the country last year to dodge LE640 million in unpaid debts. Also last year, four businessmen -- Hatem El-Hawari, Mohamed El-Garhi and Mark Adel Fahmi -- fled the country, with unpaid debts amounting to LE1.6 billion.
Earlier this month, the Socialist Prosecutor-General ordered that the moveable and unmoveable assets of businessman Mustafa El-Beleidi be placed under sequestration. El-Beleidi was reported to have fled the country for owing the Banque du Caire LE148.5 million in loans and credit facilities.
According to Hitler Tantawi, chairman of the Administrative Control Authority, 10 businessmen fled the country over the last year. Their debts are estimated at LE4 billion, Tantawi told Al-Ahram.
Related stories:
A businessman's blight 3 - 9 August 2000
