3 - 9 October 2002 Issue No. 606 Front page	Current issue Previous issue Site map
Published in Cairo by AL-AHRAM established in 1875		Recommend this page

Banking on a clean-up

RETURNING from a short visit to Libya President Hosni Mubarak told journalists that the government will pursue every possible means to protect depositors from the misuse of their funds, reports Gamal Essam El-Din. "We will never allow anyone to appropriate funds from banks and get away with it," he said.

He added that "claims that tough legal action against those who default on loans will harm the banking system and economic conditions are malicious. How can we allow those who have embezzled billions to escape? How can we allow them to head to Europe with plundered funds?"

The president also revealed that a new draft law on the banking system will place the Central Bank of Egypt (CBE) under the direct purview of the president of the republic in an attempt to guarantee the CBE's independence and to strengthen its supervisory role.

Meanwhile, Prosecutor-General Maher Abdel-Wahed this week prevented Mohamed Abul-Fath, the former chairman of Banque Du Caire, from leaving the country. Abul-Fath is undergoing investigations into claims that he abused his position by providing LE12 billion in credit facilities to a small group of businessmen in the absence of any collateral.

Abdel-Wahed also ordered that the assets of five businessmen -- Hossam Abdel-Fotouh, Hatem El-Hawari and his brothers Hazem and Mohamed, and Mohamed El-Garhi -- be sequestrated following defaults on loans of LE3.7 billion made by Banque Du Caire and Misr Exterior Bank (a joint-stock Egyptian Spanish Bank).

Abdel-Wahed's decision followed the government announcement, two weeks ago, of its initiative aimed at helping loan defaulters settle their debts. Then, Prime Minister Atef Ebeid said the government would not hesitate in taking legal action against those who failed to respond to the government's initiative. On Tuesday, though, President Mubarak made it clear that such responses "fell short of what was required".

In the past two weeks the government has begun a massive clean-up of the banking system which has included changes in the senior staff at 12 banks. Furthermore Abdallah Tayel, former chairman of Misr Exterior Bank and the chairman of the People's Assembly Economic Affairs Committee, has been referred to the prosecutor-general on charges of fraud. He is accused of providing LE1.7 billion in unsecured loans against hefty commission.

CBE figures estimate non-repayment of loans now account for 14 per cent of the LE355 billion extended in credit.

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