Egyptian Business community stunned by state swoop against Mustafa El-Beleidi
A government order freezing all the assets of an indebted businessman has sent shock waves through the country's business community.
A report in the daily Al Ahram said Prosecutor General Gaber Rihan placed the moveable and unmovable assets of businessman Mustafa El-Beleidi under sequestration. The order also applies to assets owned by El-Beleidi's wives, sons and daughters. Rihan also barred El-Beleidi from traveling outside the country.
Rihan said in a statement that El-Beleidi owed the Banque du Caire LE148.5 million in loans and credit facilities and had no adequate collateral Rihan said the assets to be placed under sequestration are four companies involved in textiles, leather products, cosmetics and perfumes. The prosecutor will set up a committee to evaluate the assets of the four companies and confiscate them in the bank's favor. El-Beleidi is a member of the American Chamber of Commerce and the Egyptian Businessmen's Association.
Reports in Egyptian newspapers say El-Beleidi was a successful businessman until the beginning of 1998 when he began to suffer from a severe financial squeeze after a sharp drop in his exports - mainly textiles, leather products and cosmetics - to Russia.
El-Beleidi responded by selling his franchise for the domestic distribution of Marlboro cigarettes to businessman Lutfi Mansour, currently chairman of the American Chamber of Commerce, for LE 90 million. This proved insufficient to ease El-Beleidi's financial plight.
El-Beleidi then moved to invest in private aviation and borrowed heavily from banks to establish a private aviation company. But this did not prove lucrative because of the heavy competition in this sector.
Workers at El-Beleidi's group of companies began to feel the pinch of the crisis. Two months ago, 500 workers at a factory in the 10th of Ramadan City east of Cairo staged a sit-in and officially complained they had not been paid for two months. Following the intervention of the Central Security Forces, the sit-in was abandoned but workers took possession of the goods stored in the factory.
Workers alleged that El-Beleidi had been selling off some of his real estate properties in Cairo and Alexandria, as well as privately owned luxury cars. They said he LE 13 million.
After El-Beleidi became bogged down in debts, his rivals attempted to have him expelled from the position of chairman of the cosmetics branch of the Federation of Egyptian Industries. The move, however, faced strong opposition.
El-Beleidi is not the first businessman to face sequestration. Meeting the same fate earlier was Mahmoud Wahba, a leading businessman whose debts to the National Bank of Egypt and the Banque du Caire had amounted to LE 174 million. The Socialist Prosecutor later lifted the sequestration after Wahba managed to settle his debts with the two banks.
Business circles reacted with apprehension to the order imposing sequestration on El-Beleidi. Observers said the action might tarnish the image of the business community in this country. — (Albawaba-MEBG)
© 2000 Mena Report (www.menareport.com)