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Al-Ahram Weekly On-line 28 Sep. - 4 Oct. 2000 Issue No. 501 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly On-line 28 Sep. - 4 Oct. 2000 Issue No. 501
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Elections Region International Economy Opinion Culture Special Travel Living Sports Profile People Time Out Chronicles Cartoons Letters Businessmen held to account
By Gamal Essam El-DinRami Lakah, the 37-year-old businessman who was accused of fleeing the country to escape LE1.2 billion in unpaid debts to banks, returned to Egypt on 18 September, opening a new chapter in the four-month saga during which he came back to Egypt in two other occasions to refute allegations that he had fled the country.
Rami Lakah 
Upon his return, Lakah asserted that while his debts to Egyptian banks are no more than LE1.2 billion, the value of his assets is approximately LE1.5 billion. "This means that I'm in a good financial position because the value of my assets is far higher than that of my debts," he said.
Lakah said that he decided to return to Cairo a few days after Prime Minister Atef Ebeid had urged "fleeing businessmen" to come back to Egypt to negotiate with their creditors to settle their debts. While Ebeid was harshly criticised by opposition newspapers for the "benign position of his government towards fleeing businessmen," Lakah praised Ebeid's stance. "Ebeid is the first liberal prime minister in Egypt and he has to be given a chance to carry out the reforms he promised."
Telling the press about his financial difficulties, Lakah said these began last January. "At that time, the nation's liquidity crisis and the economic recession became very difficult. Many ministries and government agencies failed to pay my company, and they were LE400 million in arrears," he claimed. Lakah says this situation coincided with "the collapse of the [Egyptian] market for light-bulbs and medical equipment, for which the Lakah Group is the main supplier." The combination of these setbacks, according to Lakah, plunged his company into a severe financial crisis.
This is why, Lakah added, the problem is not with banks "but rather with the government ministries and agencies which owe me over LE400 million."
Lakah denied rumours that banks agreed to forgive a portion of his debts. He also affirmed that he will run in this fall's parliamentary elections for the seat of the downtown Cairo commercial district of Al-Azbakiya.
At the end of June, Lakah, a Roman Catholic who played a major role in organising Pope John Paul II's visit to Egypt in February, left for London allegedly to escape LE1.2 billion in unpaid debts to the Banque du Caire. However, he returned shortly thereafter, saying that the rumours about his flight had been stirred up by rival businessmen. His rivals, Lakah says, had designs on his businesses and were eager to frustrate his plans to run for parliament.
The Lakah case has created a controversy over the soundness of the Egyptian banking system and the treatment of businessmen by the government of Prime Minister Atef Ebeid.
Within this context, the Governor of the Central Bank of Egypt (CBE) Ismail Mohamed and the Minister of Economy Yousef Boutros Ghali were singled out for criticism by opposition parties and the business community. The opposition accuses Ghali and Mohamed of being soft in the fight against corruption in the banking system. It is also critical of CBE's lack of independence from the government. Ghali was even accused of adopting a conciliatory stance towards the fleeing businessmen at the expense of banks and their customers' deposits.
For its part, the business community says the government has turned a blind eye to the negative impact of the current market recession on businessmen and the private sector. Mamdouh Thabet Mekki, a prominent businessman and a deputy in the outgoing parliament, told Al-Ahram Weekly "The fact that Prime Minister Atef Ebeid called upon fleeing businessmen to return [to Egypt] to settle with banks is a good sign that the government is finally admitting that it is partially responsible for the plight of these fleeing businessmen."
Minister Ghali said this week that Lakah's return confirms that the government's policy to encourage banks and businessmen to negotiate the settlement of debts works in favour of both sides. "There is no reason to flee abroad because sooner or later the fleeing businessman will return to settle his debts -- especially as the government seeks to create a favourable climate for this," Ghali said.
CBE's Hassan affirmed that Egyptian banks are ready to work with businessmen to achieve solutions to their fiscal problems. "In spite of this, everyone should recognise that Egyptian banks never waive their financial rights," Hassan emphasised.
In another case in which a businessman has fled Egypt after defaulting on loans, the Socialist Prosecutor-General (SPG) Gaber Rihan decided last week that Mustafa El-Beleidi should be tried in absentia by the Ethics Court. El-Beleidi, who left Egypt early last month, was accused of fleeing the country to escape LE148.5 million in unpaid debts to the Banque du Caire. Rihan recommended the court place the El-Beleidi family's movable and unmovable assets under sequestration.
According to Rihan, El-Beleidi was loaned LE148.5 million two years ago but defaulted on repayment, refusing even to surrender the collateral with which he obtained the loan. Explaining his decision to refer El-Beleidi to the Ethics Court, Rihan said that in spite of being given several grace periods, El-Beleidi not only failed to repay his debt, but that during this same period his wealth increased dramatically without any documentation to show how this occurred.
Among the El-Beleidi assets that will be sequestred are four companies involved in the manufacture and marketing of textiles, leather products, cosmetics and perfumes. El-Beleidi is well-known as the largest agent in Egypt and the Middle East for a number of major European and American cosmetic products including Lancôme and Lactuel. A committee formed by the SPG has assessed El-Beleidi's wealth at LE128 million. "This takes the form of 15 companies, 80 cars, eight warehouses, two farms, four luxury villas and five apartments," the SPG's committee report said.
El-Beleidi is rumoured to have fled to the United States where he owns a large mansion.
Related stories:
Lakah buys time 31 August - 6 September 2000
Business blues 24 - 30 August 2000
