21 - 27 June 2001
Issue No.539
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Al-Ahram Weekly Online 21 - 27 June 2001 Issue No.539 |
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Opening old files
The licensing of Egypt's first mobile phone network four years ago was subject to parliamentary debate this week. Gamal Essam El-Din listened in
MobiNil, Egypt's largest mobile phone operator, came under parliamentary fire this week, as two MPs accused it of malpractice, and even of causing the so- called "liquidity crisis".
Ahmed Nazif
Mohamed El-Badrashini
Seif Mahmoud
The MPs, Mohamed El-Badrashini and Seif Mahmoud, submitted two interpellations (questions that must be answered by a cabinet minister) regarding MobiNil's alleged malpractices, directing them at Miniser of Telecommunications and Information Technology, Ahmed Nazif.
The interpellations, which were debated by parliament on Monday, alleged that MobiNil acted irregularly in 1997 to acquire the nation's first mobile telephone licence. MobiNil's major shareholder is Egyptian businessman Naguib Sawiris. El-Badrashini and Mahmoud also blamed MobiNil for the current liquidity squeeze in the market, claiming that it charged exorbitantly for its services. "These astronomical fees stripped national banks of cash deposits and eventually caused the liquidity squeeze," El- Badrashini said.
El-Badrashini and Seif also alleged that MobiNil has deprived the state of LE5 billion in revenue over the last four years. "The government sold away a service which could have turned out to be a gold mine and a very generous source of income," Mahmoud argued.
Minister Nazif rejected the charges. He said that the state earned LE3.5 billion by awarding two companies, MobiNil and Click, licences to provide mobile telephone services. "This is in addition to LE150 million [received] in annual licence fees," Nazif said.
El-Badrashini, an independent MP with Nasserist sympathies, described the alleged irregularities as a "swindle and a great conspiracy against Egypt". According to him, it all began in 1997 when the Arab Republic of Egypt National Telecommunications Organisation (ARENTO) announced an international bid for the privatisation of its mobile telephone service. "This service, which was the first of its kind in Egypt, was established in 1996 and managed to serve as many as 80,000 citizens in one year," El- Badrashini said.
El-Badrashini claimed that an American businessman, Bill Martin, arrived in Cairo late in 1997 to register for the competitive bid on behalf of one of the biggest telecommunication companies in America. El-Badrashini did not mention the name of Martin's company and no one in parliament bothered to ask.
El-Badrashini then presented a letter which, he said, Martin addressed to then US Secretary of State Madeleine Albright. In the letter, Martin told Albright that Talaat Hammad, minister of state for cabinet affairs at the time, came to his hotel lobby and "plainly told our people that the Egyptian government wants our company to cooperate fully with Naguib Sawiris, because this project is a Sawiris project." El-Badrashini also alleged that Sawiris and Hammad suggested that the American company could be Sawiris' junior partner for a payment of LE200 million. El-Badrashini claimed further that the American company's offer was higher by LE2.271 billion ($664 million) than the offer submitted by Orascom (the Sawiris-owned company) for the mobile bid. Yet the bid went to Orascom.
Minister Nazif responded that the US firm could be "an insignificant company that was not able to register for the bid." Assembly Speaker Fathi Sorour intervened to say that "El-Badrashini is speaking about a company which may have submitted an offer for the bid, but nobody knows for sure if the documents he is presenting to us are true or false."
The speaker intervened also when El- Badrashini started lashing out at former minister of state Hammad. "Why didn't you submit this interpellation while Talaat Hammad was in office," Sorour interrupted. To which El-Badrashini replied that he had not been a member of parliament at the time. Sorour went on to urge MPs to refrain from slandering the members of the previous government (under then Prime Minister Kamal El- Ganzouri).
Sorour rejected a request by El- Badrashini and 34 other deputies, asking for the matter to be referred to a fact- finding committee.
Seif Mahmoud, a Wafdist MP for Port Said city, made further charges, when he alleged that Hammad and Sawiris "conspired" to use money from national banks and pension funds to speculate on MobiNil shares listed on the Cairo Stock Exchange. "At the beginning, the national banks and pension funds were forced to buy MobiNil shares at a price of LE10 per share. Then they were forced to sell those shares back to MobiNil's Naguib Sawiris personally at their original price of LE10. Later, the share price rocketed to LE180. As a result, Sawiris was able to generate no less than LE6 billion in profit. This is in addition to LE770 million he borrowed from banks," claimed Mahmoud. These malpractices, he went on, were mainly to blame for the market's subsequent liquidity squeeze.
Mahmoud also wondered why ARENTO (now Telecom Egypt) is considering establishing a third mobile network, to be run by the government body. "Why did Telecom Egypt decide in 1997 to privatise its mobile telephone service for LE1.2 billion and why is it now considering establishing a new one at a cost of LE5 billion?" he asked.
Nazif explained that the original government-owned mobile telephone service had cost LE2 billion in 1997. "This is a very substantial amount and this is why we decided to privatise this service through an international competitive bid," he said. He went on to assert that in 1997, Telecom Egypt did not have the technology and know-how to expand the mobile service. "We are now highly qualified to establish a third mobile telephone company and we expect this company to cater to no less than five million people in two years. This company will cost LE5 billion, but that cost will not be footed by the government. The company's shares will be floated on the stock market and we expect that there will be great demand [for them]," he said.
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