Catastrophes Mubarak should be held accountable for

Ahmed El-Sayed Al-Naggar
Saturday 20 Dec 2014

Hosni Mubarak and his regime should face political trials before a revolutionary court for the legacy of corruption, waste of public money, and impoverishing future generations they left in their wake

The great January 25 Revolution was not an illusion, no matter how loud the voices of sceptical newspapers, corrupt satellite channels and merchants of death. It is rather the greatest Egyptian revolution in modern history, which ignited the energies of a great people against tyranny, injustice, corruption and failure, whatever its share of success, failure or conspiracy.

The despotic regime that the people revolted against was not protected except by a police apparatus that practised detention, torture, and abuse against the defenceless. Mubarak's regime did all it could to suppress the revolution, by teargas, bullets and bloodshed.

The testimony of the second man in that regime, and the most disciplined element of it, General Omar Suleiman, regarding Mubarak's knowledge of every bullet shot at demonstrators and the role of Al-Adly were not mere allegations or false statements. Because if it were so, he would have objected to what a large national newspaper published, quoting him, in 2011.

Three decades of corruption and wastage of what previous generations and governments had built  lost through horrifically corrupt privatisation deals  are nothing but illustrative of the true nature of the Mubarak regime. That regime transformed gradually into a corrupt order that crushed and drained Egypt and pushed it towards regional and international marginalisation. Social injustice, which resulted in fields of wretchedness, poverty, slum areas, marginalised and street children, was not a false claim against the Mubarak regime. Laxity and miserably low rates of savings and investment and subsequent huge increases in the number of unemployed who suffered from being deprived of earning their livelihood with dignity were but some of the manifestations of the catastrophes of Mubarak's rule and the influence of the evil entourage that surrounded him like a ring of fire.

The blatant and flagrant corruption in the granting of lands allotted for agricultural and industrial development at ludicrous prices and with minimal fees to cronies and hardened corruption figures, and allowing them to sell it for enormous sums, for the sake of crooked profiteering, came at the expense of Egypt and its people. Starting with the Pyramids Desert Society, which Mubarak himself presided over for some time, lands were supposed to be used for agricultural purposes and then transformed to housing purposes without the state getting any price difference. In the same context, "businessmen" closely connected to the Mubarak regime were granted most of the lands of the Cairo-Alexandria Desert Road, the lands of Toshka and Al-Owainat, the lands of the North West Suez Gulf, the lands of new cities, the lands of the Green Belt surrounding 6 October City, and other areas. This happened without applying any economic criteria, allotting it through direct command at extremely low prices, without committing buyers to agricultural or industrial development in a distinct timeframe, and without punishing them for changing the initial purpose of the land, especially from agricultural projects to real estate development, though through this change they accumulated mountains of wealth, usurping it from the people and the state.

For instance, agricultural development lands were sold for LE200 per feddan (one feddan equals 4,200 square metres) in installments over long term periods on the Cairo-Alexandria Desert Road. These lands were transformed into luxurious residential resorts where the square metre price of this undeveloped land reached almost LE1,000, while the square metre price of buildings is more than LE4,000. This means that the price of the feddan — bought from the state at LE200 — on 21,000 feddans reached LE4.2 million as undeveloped land, and LE16.8 million as building land. This is but one form of large scale and horrific corruption, ridiculing the values of governance, that marked Mubarak's rule.

Wasting natural gas by selling it to the Zionist entity and Spain at less than quarter of its fair price in international markets is another example of corruption, the wasting of public money, and laxity and irresponsibility during Mubarak's regime. Natural and mineral resources topped by gold were wasted in another such episode, where the Australian company Sentamin on behalf of its Saudi owners got 97 percent of the gold output of Al-Sukkari gold mine until recouping what it said its expenses were in developing the mine. It would get half the output afterward.

The wasting of quarry wealth, in the form of crude exports sold at the cheapest prices, and in the form of ridiculous prices for mining according to a law made in 1956, is but another episode of destroying the rights of future generations. For instance, the price of one ton of limestone remained two piasters, the same for one ton of clay, and 20 piasters for a ton of granite. It is correct that there were other fees that were collected by local administration units and some sovereign bodies, but all these were ridiculous and had nothing to do with the worth of the natural resources.

The train fires, ferries capsizing, contaminated blood, carcinogenic food and grains, and transforming Egypt into a giant reservoir for liver and kidney diseases, cancer, blood pressure problems and diabetes were but a bitter concentration of the failed and corrupt nature of Mubarak's rule.

The verdict on Mubarak and the symbols of his corrupt regime did not negate the crimes of his era, but were related to procedural and legal matters. I will not say the verdict was related to political bias, although it is probable, for we are all human.

This opens the door for the political trial Mubarak and his regime deserves, for he should not have been tried by his laws and evidence collected by the apparatuses of his regime. He deserves to be tried in front of a revolutionary court in a way that prevents that he circumvent what he and his regime committed against Egypt and its great people before and during the revolution.

The truth is that Egypt in Mubarak's "happy" era constituted a stage providing all the factors that facilitate corruption to thrive with a free hand. According to theoretical models, corruption becomes rife in non-democratic countries where transparency (announcing information regarding the state, public money and public economic activities) is weak or absent, and where real and effective accountability for state officials, economic institutions and bodies, and the public sector are meagre or nonexistent.

Moreover, corruption is widespread in countries characterised by low-income for state employees, to the extent of not providing a decent life, as has been the case in Egypt. This in turn pushes employees to exploit their positions to gain illegitimate income to help make ends meet. This applies to junior employees and administrative leaders, with the latter building up huge fortunes. Furthermore, giving state officials credentials to grant or deny licenses, or official documents, or estimate and collect taxes without strict controls, as has been the case in Egypt, leads to an escalation of corruption, particularly absent laws to deter corruption.

Also, the somewhat weakly independent control bodies in the Mubarak era due to direct subordination to the executive, represented in the president (the Central Auditing Organisation), the government represented in the Justice Ministry (the Anti-Graft Authority), prime minister (Administrative Control Authority), along with weakened control efforts, made even the positive work by these bodies locked in the drawers of executive power.

The corruption in national newspapers, which became gigantic in Mubarak's era, was a distinctive mark in this field, where control reports and especially those of the Central Auditing Organisation, pointed out this corruption but the Mubarak regime did not allow for real and expeditious trials of corrupt figures. Many national newspapers devoted pages to corruption in reports on granting lands for ridiculous prices, and then profiteering, as already described. But nothing further was done.

I will recount but some additional corruption cases in the Mubarak era, to illustrate further the horrors and economic ruination his regime inflicted on Egypt and its people.

The infamous Toshka contract

A law issued in 1951 prohibits foreigners owning agricultural lands in Egypt and this was endorsed under the rule of President Gamal Abdel Nasser, where the land of Egypt became the exclusive property of Egyptians only, not to be shared with anyone. However, Mubarak circumvented this and opened the door for foreigners to own agricultural and non-agricultural lands in a way that was corrupt, squandering public rights, assets and money.

In September 1998, the General Authority for Rehabilitation Projects and Agricultural Development, of the Agriculture Ministry, presided over by Mahmoud Abu-Sedira, signed a contract with the Kingdom Agricultural Development Company owned by Alwaleed Bin Talal on the allocation and sale of 100,000 feddans in the Toshka Project for his company at the price of LE50 per feddan, at a total of LE5 million, of which he paid 20 percent upon signing. This was done although every feddan's cost in infrastructure LE11,000, financed by the public money of the Egyptian people — equivalent to 220 times the price by which the land was sold to Bin Talal.

As for the water tariff, it was four piasters per cubic metre for the first 5,000 cubic metres every feddan consumes. Thus water expenses for every feddan were LE200 during the whole year. The price increased to five piasters for every cubic metre starting from 6,000 consumed by the feddan. Thus, water expenses for every feddan that consumed 6,000 cubic metres was LE250. If the feddan's water consumption exceeded these amounts, the price of water for more than 6,000 cubic metres was six piasters per cubic metre.

In contrast, Egyptian peasants struggle to access water, which is often available only for two weeks and vanishes the next two weeks. The contract permitted Bin Talal to grow any kind of crops he wished, and grants him the right to import any kind of seeds and botanical species and animal breeds, without getting prior formal authorisation from Egypt and without submitting to any restrictions related to quarantine. He was also exempt from all taxes and fees for 20 years, after 10,000 feddans started to yield, which has not yet happened. This exemption covered the contractors Bin Talal would use in executing his project and those working directly for him. He was afforded the right to hire foreign labour and without delay or restriction get unrestricted work permits for three years to be renewed permanently for the same period without delay. The contract granted Bin Talal's company get electricity at the lowest prices paid by consumers in Egypt — in other words, electricity at a subsidised minimum price. He was also free to set the schedule for his project according to his sole and absolute will. And he had the right to get rid of agricultural drainage water, or any running water in the Toshka Depression, in any way he chooses without the Egyptian government being able to hold him responsible on this issue. The contract is subject to international arbitration.

Despite modifications made to the contract after the great January 25 Revolution, Bin Talal still retains 25,000 feddans. Some 10,000 feddans became owned by him and 15,000 feddans came under the usufruct system for three years, which he can own if he develops it in this period. This settlement lessened the amount of corruption, but it did not eliminate it, because the value of the 25,000 feddans obtained is LE1.5-2 billion.

The Pepsi deal

From the overflowing corruption of Mubarak's era, some privatisation deals subjugated Egypt to international capitalism and undermined its economic independence in the context of entire system of economic dependency policies. The US firm Coopers & Lybrand Consulting rated the assets of Pepsi Cola Egypt to about LE76 million. After long negotiations, the company was sold to the Egyptian company Alkan-Muhammed Nusair and Pepsi Cola International and the Saudi Bugshan company. The deal was signed in April 1994, worth LE157.6 million.

In 1999, Pepsi Cola Company announced that it bought a share amounting to 77 percent of the Pepsi Co-Egyptian Bottling Company (Egyptian Pepsi Cola) at a sum of $400 million (Al-Ahram newspaper, 5 February 1999), or about LE1.350 billion according to the exchange rates of that year. This means that the worth of the entire company was LE1.740 billion, which was sold for LE157.6 million four years before where the inflation rate was extremely low. This deal was criticised severely when the former chairman of the board of the PepsiCo-Egyptian Bottling Company (Egyptian Pepsi Cola) announced that the worth of its Al-Minya and Port Said factories was estimated to be LE150 million. How were eight factories comprising 18 production lines, and a vehicle fleet for distribution, sold for the price of only two factories?

In addition to reservations concerning the price of the factories, production lines and the vehicle fleet, the valuation of the lands owned by the company was controversial. The price did not put into consideration the probability of using the lands for purposes other than building factories or warehouses, including real estate housing or other uses. Note there was no clause that bound the company not to use the land for other purposes after the company was sold from the public sector to the private sector. The company owns lands in Mustapha Kamel Street, Alexandria. The land price as construction land at the time of selling it equalled half the selling price of the whole company. The company also owns land in Pyramids Street, Cairo. If the land's worth was estimated according to construction land market prices, it would also exceed the total selling price of the company.

The Meridien Hotel

The Meridian Hotel is situated on the extreme north tip of Al-Manial Island in the Nile, in a unique location with utmost distinction. Its area is 21,000 square metres and was owned by Cairo governorate. When the hotel was up for sale in 1993, the square metre price in this location was not less than LE30,000. Thus the price of the land alone was worth LE630 million, or more than $185 million according to prices of that year.

The hotel was sold to a Saudi buyer for $75 million — that's about 40 percent of the land's worth. Take note that the hotel's selling price did not exceed the net profits of the hotel in a four-year period.

This deal was like other hotel sale deals, such as the Sheraton Cairo ($135 million), the Sheraton Hurghada ($16 million), which were models for selling for no reason and for corruption in valuing public assets and wasting public money eventually.    

The Egyptian American Bank and Alex Bank

When the public money share in a bank such as the Egyptian American Bank (EAB) came up for sale, it was assumed that the owners would show the advantages of their merchandise (the EAB). However, what the Egyptian Central Bank governor and the Alex Bank president said at the time could not be understood except as undermining any valuation of the bank up for sale. They asserted that the bank's worth in the stock market, when the valuation started aiming at selling it, was much lower than the price offered to buy it.

If it is natural that the buyer goes to the seller, Alex Bank's president travelled to Paris many times to finalise the sale deal, instead of negotiating with Calyon Bank's representative. He justified this by saying that negotiating with all the French bank's board of directors was better than negotiating with a representative.

The EAB share price in the stock market in the last six months of 2005 was between LE56-70. On 4 January 2006, a joint announcement by the Egyptian Central Bank governor Farouq Al-Oqda, Minister of Investment Mahmoud Mohie-El-Din and Alex Bank was made noting that the share price did not exceed LE45. It was a bad declaration, constituting pressure on investors to lower the share price to this level with the assistance of complicit brokerage firms, to enable the investment minister to sell the bank. Indeed, it was announced that EAB was sold to Calyon Bank for LE45 per share, in addition to the buyer's acquisition of last year's profits, which were LE5 per share. This meant that the real selling price of the bank was only LE40 per share. This difference between the selling price of the bank's share in the Calyon deal and its price in the stock market at the time of sale means that small investors lost the difference between the bank's share price in the stock market before the announcement of the deal (LE56) and the offered selling price for the bank in the Calyon deal (LE45). It also meant that the share of public money in the EAB lost LE320 million due to this difference in the deal price. Note that Law No 195 for the year 1992 regarding the capital market stipulated that finalising a selling operation must be done by the average of the closing price during the week preceding notification, or the price displayed in the offer, whichever is higher.

The great shock in this deal was that two ministers in the Egyptian government at the time, Minister of Housing and Urban Communities Ahmed Al-Maghrabi and Minister of Transport Mohamed Mansour were buyers jointly with Crédit Agricole France (Calyon). Their share in the deal was 25 percent and Calyon Bank's share 75 percent.

In the same context, the selling deal of 80 percent of Alex Bank to an Italian bank constituted a qualitative leap in the privatisation process. The majority of shares of Alex Bank were sold for $1.6 billion (equivalent to LE9.1 billion), despite the fact that the bank was restructured for about LE7 billion.

The Tanta Linen Company

The Tanta Linen Company is situated in Mit Hebeish Al-Baharia in Tanta, at the beginning of Tanta-Mit Ghamr Road branching from the Cairo-Alexandria Road and just 50 metres away from that road, on 74 feddans (i.e., 310,000 square metres). It comprises seven factories for different kinds of linen products and oils that meet local demand. It also exports some of its products abroad. The company also owns warehouses, cars, trucks and other assets, in addition to machinery, equipment, the brand name and the fame.

Due to the extremely high land price in this area, the price of the land owned by the company was more than LE1 billion. In this case, even if the government sold the public company to the Egyptian or foreign private sector, it should logically sell the company's machinery, equipment, brand name, fame and contracts, and transfer it to the closest industrial district in new cities and provide housing for its workers in the cost price. It also should keep the land in the state's possession, either to sell it according to market prices for real estate development, or use the proceeds to construct new productive projects and offer fair compensation to workers who will not be transferred to the new headquarters due to their preference of pension settlement, or not selling the land and utilising it in setting up services or educational projects for the benefit of the people who are the original owners of the public sector.

The Ministry of Investment, when Mahmoud Mohie-El-Din was at its head, sold the Tanta Linen and Oils Company with all its possessions of lands, machinery, equipment, cars, different assets, the brand name and fame for only LE83 million. The Saudi buyer paid 40 percent of the total price as the first installment on contract signing and the rest was paid in three installments. This means that the selling price of the company with all its possessions was almost eight percent of the value of the land the company owned!

This is but a portion of the legacy of corruption, destruction and catastrophes that the Mubarak regime inflicted on Egypt, and that he deserves to be tried for in a political and revolutionary trial that didn't materialise until now.

The writer is chairman of the board of Al-Ahram Establishment.

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