Orascom Construction Industries (Photo: Al-Ahram Hebdo)
Netherlands-based contractor and global producer of natural gas-based chemicals OCI N.V. has appealed a preliminary ruling issued on Tuesday against Nassef Sawiris, the chairman of its Egyptian arm Orascom Construction Industries (OCI) and the wealthiest man in Egypt.
Therefore, the ruling in absentia sentencing Sawiris to three years in prison and fines worth LE50 million "was suspended and rendered unenforceable immediately following the ruling," according to a statement by OCI.
Sawiris was initially charged with failing to pay due cheques to Egypt's Tax Authority (ETA).
"The lawsuit was filed by the ETA prior to the Prosecutor General’s decision issued on 18 February 2014 acquitting OCI S.A.E. of any wrongdoing and of any violation of Egypt’s tax laws, and thus did not take this decision into consideration," said OCI, emphasising that the company was continuing to challenge the tax claim.
The origin of the dispute between Orascom and the Egyptian treasury began in 2007 when OIC sold one of its subsidiaries, Orascom Building Materials Holding (OBMH), to the French cement giant Lafarge through a market transaction of $15 billion.
In March 2013, the Ministry of Finance under president Mohamed Morsi accused OCI of tax evasion and demanded the company pay LE14.4 billion. But the two sides later reached an agreement that OIC had to pay $7.1 billion in several instalments, the last of which was set for 2017.
OCI paid an initial payment of LE2.5 billion ($0.36 billion) by mid-May 2013, then it was supposed to follow it up with LE900 million by December, the sum for which the company is facing scrutiny for non-payment.
A few months ago, OCI NV announced in a statement that the Egyptian prosecutor-general on 18 February had "fully exonerated Orascom Construction Industries, the company’s Egyptian subsidiary, of any wrongdoing and all charges of tax evasion."
However, ETA head Mostafa Abdel-Kader said in April that the authority had not dropped its case against Orascom Construction Industries regarding the latter's tax evasion.
A court hearing is scheduled for 7 July 2014, according to OCI press release.