Battle of the bank
reports on the growing opposition to the sale of Banque du Caire
"We are faced with a mindset that believes in selling, but the sales are riddled with corruption. The people have the right to decide how to administer public money because it is their money." The voice of Yehia Hussein Abdel-Hadi, founder of the latest anti-government group "No to selling Egypt", echoed in a meeting room at the Press Syndicate on Sunday as his audience listened in silence.
Abdel-Hadi was referring to the government's decision, made public three weeks ago, to sell 80 per cent of the state-owned Banque du Caire, Egypt's third largest bank. Just over a year ago, Abdel-Hadi was a government employee, the man in charge of Banzione, sister company to the Omar Effendi store group which was sold off to a Saudi investor last year. He was the whistle-blower who made public the gap between the LE1.14 billion official valuation of Omar Effendi's assets and the actual selling price of LE589.5 million. Although the prosecutor opened an investigation at the time the enquiry was swiftly closed and Abdel-Hadi was forced to resign. A few months later he joined ranks with the opposition Kifaya movement and set up the "No to Selling Egypt" group which aims to mobilise Egyptians into protesting against the way in which public assets are being sold.
In a statement on 13 July the group accused the government of "lying" over assurances that there would be no sales of state-owned banks in the future. "This is what they said before they put the Bank of Alexandria up for sale. Now they are selling Banque du Caire... Even a statement denying any intention of selling off the Suez Canal must now be read with scepticism."
The group has urged Banque du Caire's clients to move their accounts to the two remaining state-owned banks, Al-Ahli and Misr in an attempt to counter the sale. Abdel-Hadi says a significant number of Banque du Caire clients have heeded the group's advice, though he could provide no statistics to support the claim. But, he told Al-Ahram Weekly, "[bank] officials appear to be sufficiently disturbed by this to have threatened to sue us for damaging the national economy".
Despite efforts by officials and the state-run media to defend the government's decision to sell Banque du Caire, opposition to the privatisation of the 55-year-old bank is growing. On Saturday the left-wing opposition Tagammu Party organised a demonstration in front of its headquarters in central Cairo to protest against the sale. Hundreds of security forces surrounded the demonstration to prevent it from marching to the main street, though the angry chants of protesters lapped around the statue of nationalist financier Talaat Harb, which stands in the centre of the square that bears his name. "Selling banks jeopardises national independence," they shouted. "Talaat Harb founded Banque du Caire and Ahmed Nazif is selling it."
Banque du Caire was established in 1952, three months before the 23 July Revolution which ousted the monarchy and transformed Egypt into a republic which adopted socialist and pan-Arab principles under Gamal Abdel-Nasser. The all-Egyptian bank saved the Egyptian economy in 1956 when the then powerful foreign British and French banks operating in Egypt refused to finance the cotton crop to punish Nasser for nationalising the Suez Canal in 1956. Three months later Britain, France and Israel launched a military attack on Egypt. When foreign banks were Egyptianised in 1957, Banque du Caire bought the two oldest, the French-controlled Le Crédit Lyonnais and Comptoir National d'escompte de Paris.
That Banque du Caire is now being sold to foreigners -- and there is no doubt that this is what Prime Minister Nazif's euphemism "strategic investor" means -- has caused fury across the political spectrum with leftists, Islamists and even the liberal Wafd Party joining to denounce the sale. There are even those, like Gouda Abdel-Khalek, a professor of economics at Cairo University and member of the leftist Tagammu, who believe the timing of the government's announcement to sell Banque du Caire coincided deliberately with the 55th anniversary of the 1952 July Revolution. He was speaking at a seminar organised on Sunday.
"In 1952," Abdel-Khalek told Sunday's "No to Selling Egypt" meeting at the Press Syndicate, "the July Revolution espoused six principles, which included ending the occupation of Egypt and the control of foreign capital. In July 2007 we are being told that these were hollow words, that capital has no borders and the public interest actually lies in selling the bank." The U-turn is dangerous, he continued, because "it was British control of Egypt's banking system in the 19th century that weakened Egyptian resistance to the British occupation of Egypt in 1882."
By selling Egyptian assets to foreigners, he warned, the government is jeopardising national security. "Even in the most liberal of modern economies, the US, a line is drawn," he told the audience, reminding them of the way in which US politicians blocked plans by the Dubai-based Ports World company to acquire the operation of six American ports last year because they considered the move a national threat.
It is significant, said Abdel-Khalek, that the cabinet announced its decision to sell Banque du Caire following the return of General Intelligence Chief Omar Suleiman and Foreign Minister Ahmed Abul-Gheit from a visit to Washington on 11 July. "The visit came in the wake of intense US pressure on Egypt and threats to cut the $1.3 billion of annual US military aid to Egypt."
"Why are officials in this country in such a hurry to sell Banque du Caire? And why are they marketing it in the worst possible way, constantly reiterating what a disaster it is? Do they know what they're doing? Or is this all a preset scenario? Were they planning to sell it all along, even when they were saying the opposite?"
On Monday the US announced a $13 billion military aid package for Egypt.
Abdel-Halim El-Ghazali, a leading member of the banned Muslim Brotherhood who attended the seminar, said the conservative group supports privatisation, but only under certain conditions. These include a transparent valuation process conducted by "independent parties" and restricting the sale of public assets to Egyptian nationals. The revenues generated by privatisation, he said, should then be used to fund development and production projects. "But we are against the entire privatisation process as it has been conducted in Egypt because none of the conditions have been met. It is theft, not privatisation."
Along with other state-owned banks, Banque du Caire suffers from a massive portfolio of non-performing loans, with vast sums lent unsecured to influential businessmen. The accumulated debts have proved crippling, though critics of the privatisation of banks say that it is not state-ownership that is the problem, but endemic corruption.