Sunday,22 October, 2017
Current issue | Issue 1180, (16-22 January 2014)
Sunday,22 October, 2017
Issue 1180, (16-22 January 2014)

Ahram Weekly

Wooing the businessmen

More out-of-court settlements with Mubarak-era businessmen are under way, reports Sherine Abdel-Razek

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Al-Ahram Weekly

Hussein Salem, the businessman whose name was linked to the deal to export Egyptian natural gas to Israel and who was one of the closest buddies of ousted former president Hosni Mubarak, made his first public appearance since the 25 January Revolution last week.

The mogul, whose businesses range from tourism and aviation to oil, spoke by phone on the talk shows of two private TV channels where he showed a willingness to reach an out-of-court settlement of the cases against him.

In return, he said, he would be able to support the country’s economy by providing job opportunities in the tourism sector, as well as by funding the restoration of police stations, churches and mosques.

Salem has been sentenced to a total of 37 years in prison as a result of different charges that included money laundering and wasting state assets by selling gas to Israel at discount prices.  

Hani Saleh, the cabinet spokesperson, called one of the shows and said that the government would consider the settlement proposal, adding that Egypt was open to “all honourable businessmen” and well-intentioned initiatives.

While the word “honourable” stirred up reservations on the social-media networks that night, the idea of reconciliation with Mubarak-era business tycoons has become more appealing and accepted.

Yassin Mansour, the chairman and major shareholder in the real estate developer Palm Hills, met minister of investment Osama Saleh a couple of weeks ago to discuss future investment plans and the problems facing the company, according to a statement from the ministry of investment.

The meeting came less than a month after Mansour’s return from London, where he had been staying since the revolution after being charged with illegally acquiring state land.

This followed the return of Hamed Al-Chiati, the tourism sector tycoon, whose company Travco owns and manages more than 67 hotels in Egypt, after he had also reached a settlement with the government on a five-million square metre plot of land that the government took from the company in 2011 after charging Al-Chiati with the misappropriation of state land.

The reconciliation with the three businessmen was on the table during the one-year rule of former president Mohamed Morsi. While Salem offered to give up half his wealth in return for dropping the charges against him, Hassan Malek, the Muslim Brotherhood’s main financier, approached both Al-Chiati and Mansour in London last year to convince them to return to Egypt.

But “I refused to make any settlement with the Muslim Brotherhood-backed government, as what I was offered were just promises with no concrete plans for settlement,” Al-Chiati said in an interview with the local daily Al-Masry Al-Youm earlier this week.

Heba Khalil, deputy head of the Egyptian Centre for Social and Economic Rights, said that plans to reach settlements with the businessmen had been surfacing since the rule of the Supreme Council of the Armed Forces (SCAF) after Mubarak’s fall and they had continued under Morsi’s Islamist-backed rule.

However, both businessmen and the laymen are now more receptive to the new government’s offers to find solutions for businessmen charged with corruption than they were under the rule of the generals or the Islamists.

The settlement law issued in January 2012 when the country was under military rule allowed for charges to be dropped if settlements were made. This was followed in 2013 by a set of amendments to the investment incentive law that made settlements even easier since they did not stipulate the physical presence of the businessman concerned when agreeing on the terms of the deal, Khalil said.

“There was a general sense of uncertainty soon after the Revolution and during the days of the SCAF. Then there was little love lost between the business community and the Muslim Brotherhood, and this put a brake on the settlements, especially with big businessmen,” said an investment analyst at a leading investment bank.

“In both periods, the businessmen felt like a discriminated-against minority, and they were not willing to discuss legal and financial arrangements with a community that looked at them like a bunch of thieves,” he added.

Resentment towards Mubarak-era businessmen heightened during his last couple of years in power, when the country suffered from obvious corruption and cronyism. This was reflected in a post-revolution flurry of court cases filed against many heavyweight business tycoons.

Khalifa said that a lot of such cases were dropped under and after Morsi’s rule, and a “little-known detail of these settlements was that in most cases there were no penalties.”

However, according to the analyst, in an economy like Egypt’s, which is in urgent need of the money such settlements could bring, no one would benefit from jailing the businessmen. Now the latter are willing to return what they are accused of illegally acquiring, should the authorities grasp the opportunity.
He said that the economy needed the support of such businessmen.

“Al-Chiati is a heavyweight in the tourism sector, and it is said that out of each five tourists that come to Egypt four come through Al-Chiati’s companies. Mansour is one of Egypt’s richest men according to Forbes magazine,” he said.

While agreeing that jail would not solve the problem, Khalil said that the cases “should not be settled out of court. They should be looked into by judges in specialised courts and after the court issues a verdict based on proven corruption they can then ask for a settlement.”

She said that just repaying the real price of a piece of land that was illegally acquired was not a fair settlement. “Those convicted should have to pay a high fine for their misdoings,” she added.

The reconciliation agreements do not just concern local businessmen, since many foreign investors, mainly from the Gulf, are also in line for such settlements, according to promises made by the minister of investment at a conference held last month in Cairo and pitched at Gulf investors.
A number of investment deals involving such investors, including privatisation agreements, were annulled by post-revolution governments, provoking a number of legal cases that have gone to international arbitration.

Egypt is the third-largest country in the world regarding the number of international arbitration suits filed against it, according to Khalil. Settling such cases would send a positive message to the rest of the world on the investment climate in Egypt, the analyst said.

Khalil also said that the fact that Egypt has had to seek out-of-court settlements with foreign investors had been because international arbitration would impose high penalties on the country.   

Moreover, “the bulk of the cases have been filed by investors from countries we have bilateral agreements with,” she said, adding that these agreements provide foreign investors with high levels of protection.

If a company that has bought land at a low price then loses it because the state takes back the land, judges in the international courts will not be interested in the real value of the land, she said. Instead, they will look at the harm done to the investor.

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