Hussein Salem: A businessman from the times of crony capitalism (part four)

Karem Yehia, Sunday 26 Jun 2011

Al-Ahram's investigation of Hussein Salem's wealth looks at his record in Sharm el-Sheikh

Hussein Salem
Hussein Salem (centre) with a much younger Mubarak (file photo)

We had to go to Sinai to follow the trail that we believe could help us solve the many puzzles that we have encountered in our attempt to investigate the life of the poster child of crony capitalism in Egypt, Hussein Salem.

Salem had made a fortune building hotels in Sharm el-Sheikh, the luxurious resort town in the deep south of the peninsula. It has always been Mubarak’s favourite residence as president and, still, as former president.

First, we talked to Khaled El-Barbary, a construction engineer who is familiar with Salem’s record of accomplishments in Sinai.

El-Barbary told us, “By 1987, five years after the Israelis withdrew from Sinai, a rush of real estate expansion was underway along the Naama Bay.”

He added, “During that time, I witnessed the erection of a massive hotel that I heard would be called Movenpick [later renamed Jolie Ville and then Maritime Jolie Ville]. I asked the construction crew who the owner was. They quickly answered me: an arms dealer, Hussein Salem, who comes here on a special plane with President Mubarak.”

Even ordinary people had begin to sense that something was fishy about Hussein Salem.

The ascendancy of the godfather

Walking through the streets of Sharm Sheikh, weeks after the outbreak of the January 25 Revolution, the air smelled like Hussein Salem was still king of the town despite the fact that he fled in a private plane just four days after his troubles began.

We found streets that bore signs like ''Governor Only". People told us that those signs meant that those streets belonged to Hussein Salem. The shattered street sign of the road that stretches adjacent to Salem’s Maritime Jolie Ville is also called Hussein Salem.

Some locals, we learned, are currently trying to rename the street "Saad El-Din El-Shazli Street" in honour of the 1973 war hero and general whom Mubarak persecuted. However, they are still waiting for official approval.

In the administrative offices of local government in Sharm and El-Tor, the capital of the governorate, clerks still mention Salem’s name with awe as if the man had just left those buildings.

We saw a clerk presenting a file to a superior for review, while leaning and politely whispering, “Sir, this was a request from the Lady.”

In reality, we felt that, on some level, the January 25 Revolution never made it to Sinai.

Almost nobody we talked to wanted to go on record. However, we found one courageous Hamdi Abdel-Fatah, a legal accountant who resettled in Sinai in the 1980s. (Even Abdel-Fatah asked to speak to us in Cairo, away from Sharm el-Sheikh.)

Abdel-Fatah was secretary of the Maritime Sports Club in the 1980s and 1990s. He said that he witnessed elite businessmen signing endless real estate deals over the years at the club from 1987 till 1997.

However, Abdel-Fatah added that those deal-signing sessions moved to Salem’s Movenpick in 1997, exactly a year after the hotel hosted a big Middle East/international peace conference.

Since then, Salem’s real estate empire began to swell, engulfing more and more land. Salem built a massive conference hall, a huge golf course, luxurious palaces (one of which Salem sold to Mubarak for pennies), and a fancy mosque (for Mubarak to pray in when he visited town).

Local people in Sinai complain that during those bonanza years, Salem didn't build a single project to serve the local community.

Young people told us that they could not afford to pay exuberant rent rates to find an apartment. They said that they also could not afford to buy drinking water. Salem’s water purification plants, young people told us, sells small tanks of purified water at a whopping LE16 a pop.

These people wonder how a government that spent millions building the infrastructures that Salem needed to make huge profits says that it cannot afford to provide them with decent housing or water.

Bedouins, Salem’s mythical ancestors according to the fantasy stories he told, benefited very little if anything from his projects.

Hamid Khodeir, a local council member in El-Tor city, told us that Salem and his business friends never contributed to the welfare of Bedouins in Sinai. Worse, Khodeir added that Salem and the rest increased the Bedouins' suffering and sense of marginalisation.

“These businessmen took everything. Sharm and Sinai seemed to belong to them and no one else. The state gave them everything. The Bedouins benefited nothing,” Khodeir said.

Back in Cairo, General Abdel-Moneim Said, who was governor of Southern Sinai between 1991 and 1993, sympathized with the locals' plight. “I proposed a 20-year plan to develop Sinai to the central government, with a cost of LE110 million. I don’t know what came of my idea.” In his opinion, "Hussein Salem did not contribute anything that benefited ordinary people in the governorate.”

The land game

A high-level official in the governorate confided to me that he believed that Hussein Salem gained power due to his close relationship to Mubarak and his son Gamal. “People lived here for over 30 years and could not gain access to land slots as small as 300 metres to build a house for their families, but they would give businessmen over a million metres in a flash.”

He went on to complain that, "Sharm was above any laws. There were no rules that could not be broken.”

The official gave one telling example of this state of lawlessness. In 2002, he said, the governorate had just finished building the Naama Bay Walk next to Salem’s Jolie Ville at the cost of LE3 million. The original scheduled next step was to rent commercial shops along the Walk to local people.

Despite that original plan, and out of nowhere, Mubarak ordered the governor to grant the Walk to his friend Salem.

This meant that, by our calculations, Salem made LE15-30,000 on every single one of the 60 commercial stores along the walk in the past nine years.

Back to crony capitalism

Twenty years after he made his way back to his country of origin under the auspices of his friend Hosni Mubarak, we found that Hussein Salem had concentrated all of his investments in Egypt in the Sinai Peninsula, and specifically around Sharm el-Sheikh.

Salem came back to Egypt in full force to grab a big slice of the Camp David pie after he had already swallowed a huge slice of the American military aid pie.

He invested in two very lucrative projects: Meridor plant for gas distillation in 2000 and East Mediterranean for gas exports in 2005. Then he turned around and sold his shares in both companies, making a huge profit.

It seems to us that Hussein Salem was always the businessperson who knew when and how to close all kinds of so-called “profitable sensitive transactions”, thus augmenting his fortune at every step of his journey.

Back in the early days of Mubarak’s rule in the 1980s, ordinary Egyptians living on tens of pounds a month used to wonder how on earth a businessman like Rashad Uthman, the Salem of that era, so to speak, managed to increase his fortune from half a million pounds to 68 million pounds between 1976 and 1982.

By contrast, by the end of the Mubarak years, nobody in and out of Egypt was even able to begin to guess how many billions Mubarak, his family, and friends like Hussein Salem have amassed.

In her pioneering study, “Who owns Egypt: The social origins of the elite, 1974-1980", Samia Said brilliantly traced the phantasmagorical wealth accumulated by capitalists in the 1970s through their marriage to corrupt politicians during the Sadat era.

Said did not mention Hussein Salem’s name in her study simply because he had no investments in Egypt during the period she covered.

It seems to us that prior to the January 25 Revolution, it would have been much more difficult for Said to write a sequel to her study looking at what happened in the period after Mubarak came to power, in terms of how Egyptian “crony capitalism” took on a new, scary meaning thanks to people like our own Hussein Salem.

For one, things like “information”, “data”, and “records” about the shenanigans of certain big, well-connected businessmen like Hussein Salem became nightmarish to find and collect.

This sad situation came about because the many Mubarak crony capitalists were able to skilfully buy off the state’s ever expanding, repressive, and corrupt police and intelligence agencies.

These Orwellian agencies, such as the infamous State Security, in turn mastered the art of information suppression, intimidation of witnesses and so on.

Thus, these agencies were nothing more than vehicles for the rule of crony capitalism in society and they were able to keep many Egyptians in the dark for a long time.

Now Salem is being tried for his role in exporting Egyptian gas to Isreal at a very low price. The story continues..

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