They were once privileged by the mere existence of the regime. Bank facilities were easily extended to their companies as preferential treatments were provided when related to taxes, customs and in their dealings with the state bureaucracy. Moreover, accusations of profiteering from their relations, whether personal or business, with senior state officials were swept under the rug.

Now that the regime is toppled and scandals of corruption or embezzlement of public funds are chasing many former state officials and businessmen, and travel bans are launched against more than 50 of them, the solid ground those previously lucky were standing on is being shaken.

Some of these businessmen are facing charges, others are expected to face ones soon, a fact that market observers believe will weigh down on their listed companies' performance and on the market as a whole.

"No one can predict the direction of the market when it opens but the effect on the companies whose executives are facing corruption charges will definitely be negative," said Taymour El-Dereeny, head of sales at Al-Naeem Brokerage.

"The fear is from small investors who do not look into the fundamentals of the companies but buy and sell only out of fear or worry. They will be dumping their holdings of companies that are even rumoured to have any relationship with the regime," said El-Dereeny. The market lost 16 per cent on the first two days of the 18 day-long revolution, and its regulator has been suspending its activities since 27 January. It is to resume its activities on Sunday.

The list of the mighty would be affected companies include the companies owned by business tycoon Ahmed Ezz, those related to former ministers of housing and tourism, Ahmed El-Maghrabi and Zoheir Garana, and companies rumoured to be co- owned by the Mubaraks.

El-Dereeny pinpointed the fact that while most of those companies have strong fundamentals and very clean balance sheets, the strong potential for growth they once had is now somehow being questioned in light of the developments.

Al-Ezz Steel Rebars (EZSTR) is believed to be the biggest loser. Ahmed Ezz is facing a long list of charges on top of which is rigging the last parliamentary elections. The list also includes his misuse of power to monopolise the steel market through his ownership of El-Ezz Steel Rebars and 55 per cent of Ezz Al-Dekheila, previously known as Alexandria National Iron and Steel Company, thus controlling around 60 per cent of the steel market.

Claims previously suppressed that Ezz bought Al-Dekheila for a very low price have always existed since he bought it in 2000. Former MP Mustafa Bakri said in a televised interview on Monday that he will send all documents proving these claims to the prosecutor-general.

In a precautionary move aiming at calming investors' worries, EZSTR issued a release stating that the travel ban issued against its chairman and major shareholder "is strictly personal to Ezz and does not affect the operation of the company."

Moreover, the note stated "evidence" negating allegations of Ezz's involvement in any monopoly, saying that investigations launched by the Egyptian Competition Authority in 2006 into the extent of compliance by Egyptian steel producers including Ezz Steel with the provisions of the competition law, found there had been no abuse of a dominant position by Ezz Steel, nor any breach by the company of the competition law. "All business operations of Ezz Steel are fully transparent and are compliant with Egyptian laws and regulations including the Securities Listing Rules of the Egyptian Exchange, the capital market law, the competition law, the anti-money laundering law and the code of corporate governance," according to the statement.

Palm Hills and Credit Agricole Bank are owned by Mansour and Al-Maghrabi group, where former minister of housing Ahmed El-Maghrabi owns a majority stake. Like EZSTR, both companies have strong financial positions but the effect of the after- Mubarak regime failure overshadows the future. Al-Maghrabi faces charges of using his position to secure government land plots for his company and to others by direct order and not through tender, thus violating Egyptian law.

Commercial International Capital (CI Capital), the research arm of the investment bank CI Capital Holding, issued a comment that real estate developers with pending land bank issues might be exposed to corruption cases leading to the withdrawal of the related land by the government as these land plots were acquired illegally. Previously, it was expected that such issues would be resolved as the government was planning to pass a new law through parliament to solve these land issues in a legal way. This scenario might not take place now according to the comment. As such, CI Capital expects the company to see one per cent of its land bank withdrawn which might have a negative impact on its share performance.

EFG-Hermes, Egypt's and one of the region's largest investment banks, revealed in a note issued earlier this week that Gamal Mubarak, the younger son of Hosni Mubarak, is a shareholder in the company EFG-Hermes with assets of $8 billion in 2010. The problem here, according to a market analyst who asked to be anonymous, is that the bank was the largest advisor to the Egyptian government on the privatisation programme that raised a lot of accusations of selling the crown jewels at very low prices to businessmen related to the regime. "Whether Gamal Mubarak's presence as a shareholder facilitated this or not is yet to be seen," he said.

According to a New York Times article published on Sunday, Gamal Mubarak's connection to EFG- Hermes reaches back to 1996 when, along with two partners, he set up an investment firm called Medinvest Associates in London. Medinvest, in turn, is owned by an international securities fund in Cyprus called Bullion Company. According to EFG- Hermes, Gamal Mubarak owns half of Bullion and records in Cyprus show his brother Alaa is on the board.

Bullion owns 35 per cent of EFG- Hermes's private equity operation, out of which Gamal Mubarak owns 18 per cent. Bullion has $919 million under management and invests in oil, gas, steel, cement, food and cattle.

According to an EFG-Hermes statement, the fund constituted only seven per cent of the bank's business and that the bank "has received no special privileges or consideration from the Egyptian government and has always operated under legal and transparent best-practices."

While all the above mentioned companies have well known connections with the regime, other relations with members of the National Democratic Party (NDP) or the cabinet are not that well known but are believed to be affected as well.

"Enter the speculators," says El Dereeny. "They are very keen to know the network of relations between the companies and each other and with the regime so that they can use it in affecting share prices in case of any development. They definitely know who is married to whom and who is sitting on the board of which company," he explains.

A good example of those companies is 6 October for Development and Investment Company (SODIC ). The company is a real estate developer that made outstanding growth during the last years. SODIC is owned and chaired by Magdy Rasekh, father-in- law of Alaa Mubarak.

The company, established in 1996, faced hard times in the early 2000s until it got the land of its first large project, Beverley Hills, located on seven million square metres and represented a turn of its fortune. Many housing experts, including consultant Mamdouh Hamza and ex-housing minister Hasaballah El-Kafrawi, have said that the land was allocated to SODIC at a very low price, LE32 per metre, compared to at least LE1,000, the price of each meter after developing the land.

Another example is Egyptian resorts owned by businessman Ibrahim Kamel. Kamel was a member of the NDP's general secretariat and one of the most influential businessmen in the party, and belongs to Gamal Mubarak's close friends' circle. Kamel has activities in real estate, tourism and aerospace industries.

"Kamel is thought to be one of the main beneficiaries of the former regime. There are no allegations so far against him, but there are rumours that he might be involved in directing the thugs to Tahrir Square after president Mubarak's second speech to the nation," said the anonymous analyst.

Three of those companies, EFG- Hermes, Palm Hills and Ezz Steel Rebars, have shares traded as Global Depository Receipts (GDRs) in the London Stock Exchange. The three witnessed a decline in the first sessions after the revolution started, but ended Friday's transactions higher by 33, 31, and 29 per cent respectively.

(Published in Al-Ahram Weekly)