3 - 9 August 2000
Issue No. 493
|Published in Cairo by AL-AHRAM established in 1875|
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A businessman's blightA prominent business tycoon's assets have been put under sequestration. What went wrong?
An order by Socialist Prosecutor-General (SPG) Gaber Rihan placing the moveable and unmoveable assets of businessman Mustafa El-Beleidi under sequestration sent shock waves this week reverberating through the country's business circles, reports Gamal Essam El-Din. The order also applied to the assets owned by El-Beleidi's wives, sons and daughters. Moreover, Rihan barred El-Beleidi from travelling outside the country.
In a public announcement, Rihan explained that the action against El-Beleidi was the result of his having owed the Banque du Caire LE148.5 million in loans and credit facilities, which he obtained without offering adequate collateral.
According to Rihan, the assets that will be placed under sequestration are four companies involved in trade, marketing and the manufacture of textiles, leather products, cosmetics and perfumes. A special committee will be formed by the Socialist Prosecutor to evaluate the assets of the four companies and confiscate their proceeds in the bank's favour. El-Beleidi is a member of the American Chamber of Commerce and the Egyptian Businessmen's Association.
According to published reports, El-Beleidi was a successful businessman until the beginning of 1998 when he began to suffer a severe financial squeeze as a result of a sharp drop in his exports -- mainly textiles, leather products and cosmetics -- to the Russian market. El-Beleidi reacted by selling his franchise rights for the domestic distribution of Marlboro cigarettes to businessman Lutfi Mansour, currently chairman of the American Chamber of Commerce, against LE90 million. This, however, was not enough to ease El-Beleidi's financial plight.
El-Beleidi then moved to invest in private aviation and borrowed heavily from banks to establish a private aviation company. But this did not prove lucrative because of heavy competition in this sector.
Workers at El-Beleidi's group of companies began to feel the pinch of the crisis. Two months ago, as many as 500 workers at a factory in the 10th of Ramadan City east of Cairo staged a sit-in strike and complained to the Socialist Prosecutor that they had not been paid for two months. Following the intervention of the Central Security Forces, the sit-in was abandoned but workers took possession of the goods that had been stored inside the factory.
At the time, Kamal Shuweikh, MP for the Belbeis district to which the 10th of Ramadan City is attached, sought information about the sit-in from Minister of Manpower and Emmigration Ahmed El-Amawi. Shuweikh also asked El-Amawi to step in so that the workers might be paid their financial dues, but the latter declined to take action.
Workers alleged that El-Beleidi had been selling off some of his real estate properties in Cairo and Alexandria as well as privately-owned luxury cars. They claimed that what he received in return was merely LE13 million.
After El-Beleidi became bogged down in debts, his rivals attempted to have him expelled from the position of chairman of the cosmetics branch of the Federation of Egyptian Industries. The move, however, faced strong opposition.
Business circles reacted with apprehension to the order imposing sequestration on El-Beleidi. Observers said the action may tarnish the image of the business community in this country.