Controversial privatization deals haunt Egyptian Premier
The fragile Egyptian economy is weakened because of the political uncertainties after the Revolution of January 25, which toppled President Hosni Mubarak, but now, there is more bad news for the economy. Several court decisions have indicated old corrupt privatizations of state companies and ordered them back to the state control, putting at risk the confidence of investors.
A recent example is the last ruling, which affected the Arab Company for Foreign Trade, which was sold in 1999 for a value 30 times lower than it was worth. The private investors paid at the time 13 million Egyptian pounds (about $ 2.1 million) when the actual value was about 400 million pounds (66.6 million).
The Egyptian Center for Economic and Social Rights (ECESR), which investigates irregularities in the privatization field, has managed so far to take to court and to convict six similar operations.
Now, some believe that in several economic sectors foreign investors may flee the country at the risk of losing their investments. Also, there are arguments which assert that any sign of nationalizing of private companies could damage the confidence in investments in Egypt. Although they recognize that in some cases there were incidents of corruption or misuse of certain powers, they consider that this should not be at the expense of buyers, business and government would have to negotiate an agreement that is beneficial for both sides.
Another problem that the Egyptians are facing is that when the current Prime Minister, Kamal Ganzouri, exercised the same position between 1996 and 1999 115 public enterprises were privatized, i.e. a total of 30% of public companies sold. And the recent cases, in which the court ordered the nationalizing of private companies, were from companies privatized during the period of Ganzuori. So, the tricky situation is how to trust someone who has been careless with public money in the past now, even though in recent weeks Ganzuori has detached from the corruption charges that peppered his previous government. (Source: english.nuqudy.com)