Tag Archives: Gamal Mubarak

Egypt’s Mafia Fund

A private equity fund launched by Gamal Mubarak managed to reel in millions of dollars of investment from Egypt’s elite, revealing the depths to which political and business connections ran as he began rising in stature in the late 1990s.

According to a document obtained by Rebel Economy, Gamal Mubarak’s $54 million Horus I Fund, created in 1997, attracted some of the country’s most controversial businessmen including steel fugitive tycoon and Mubarak-confidante Hussein Salem, steel magnate Ahmed Ezz, who was acquitted in June after being charged with monopolising the country’s steel market, and the ex-CEO of Egyptian investment bank EFG Hermes, Hassan Heikal. Heikal is a defendant in an insider trading case involving both of the Mubarak sons. His former colleague, Yasser El Mallawany, who is still officially an employee of EFG, is another investor in the Horus Fund.

[caption id="attachment_2059" align="aligncenter" width="640"]Full list of investors who committed to Gamal Mubarak's fund Full list of investors who committed to Gamal Mubarak’s fund[/caption]

The fund, which was operated by EFG Hermes and invested in Egyptian projects and companies, attracted millions of dollars of investment from members of Egypt’s old guard, some of whom have been targeted in corruption cases since the fall of Hosni Mubarak in 2011. Although there is no evidence the fund engaged in corrupt activity, the connections between the people named as investors on the account has never been properly investigated by the Egyptian authorities.

The list of individuals and companies published above raises questions that have so far been left unanswered by Egyptian investigators.

The document, which details how much individuals and companies committed to the fund at the time of launch, also provides a window into the everlasting influence of Mubarak’s old guard and their long-standing ties to Gulf nationals in Saudi Arabia, Kuwait, the United Arab Emirates and Qatar.

It represents the beginning of Gamal Mubarak’s foray into private equity, where his financial interests in the Egyptian economy, from tourism to agriculture to oil, began to grow. The fund was created prior to Gamal’s entry into political life, when he acquired 18% of EFG Hermes Private Equity.

Among the handful of Gulf companies listed is First Arabian Development and Investment Company, run by Hamza al Kholi, a prominent Saudi Arabian businessman, and Yahya Al Yahya, the chief executive director of Gulf International Bank.

The ZAD Global Direct Investments Fund is also a notable appearance on the list. This investment company, founded by Prince Mishaal Al-Saud, second child of the Prince Abdullah bin Turki bin Abdulaziz Al-Saud in Jeddah is a privately controlled investment company, organized, owned, controlled and operated as the investment vehicle for the family of Prince Mishaal  for the purpose of managing the family’s investments.

Some businessmen have used clever ways to hide their investment activity. A company connected to Hussein Salem appears on the document. Clelia Assets Corporation, a Panama registered company, is linked to his name.

Salem fled Egypt in 2011 when he came under fire for tax evasion and his complicity in a corrupt gas deal.

Other controversial names on the list include Mohammed Abou El Enein, the chief executive of Cleopatra Ceramics, a major Middle East ceramics firm that has faced repeated labour strikes.

Abou El Enein, who once called himself “the noblest businessman on Earth”, was at one point under investigation for allegedly violating labour laws. Workers have staged sporadic strikes asking for improved working conditions and higher wages.

The fund is a worrying sign of how little progress Egypt has been made in defeating a tight circle of Egypt’s mafia, some of whom were subject to now forgotten corruption cases.

And now, there is evidence that some of Mubarak-era moguls may make a reappearance on Egypt’s political and business scene. Hussein Salem, who is currently exiled in Spain, has reportedly asked to make a deal with the interim government that would end any court cases against him. He has said he is presenting a new initiative to the interim government which includes funding for the unemployed in the tourism sector, as well as restoration of police stations, churches and mosques.

Hassan Heikal, who resigned from EFG Hermes earlier this year, has indicated that he will be acting in a consultancy basis to the Egyptian government. He has signalled he will offer ideas and launch new initiatives “that offer long-term solutions to Egypt’s fiscal challenges and economic development,” according to a statement he made when he resigned.

But the army has a strategy of its own. It’s interest is in preventing an examination of its own assets and business interests, which not only is likely to affect other investigations but focus on a shift away from Mubarak-era crimes toward the Muslim Brotherhood and the former president Mohammed Morsi.

So as the army continues its assault against the Muslim Brotherhood, journalists and civilians, the more these characters will disappear into the background, leaving them free to operate, uninterrupted.



The Mubarak’s Secret London Home, Vaults & All

In the Knightsbridge area of London, a huge Georgian town house has become a symbol of the conundrums facing baffled Egyptian investigators in their hunt for what they believe are the Mubarak family’s hidden millions.

It was here, at 28 Wilton Place, where Gamal Mubarak, the former president’s youngest son, resided from at least the early 1990s until 2010, according to The National newspaper who covered this story a couple of weeks ago.  

And according to the UK property website Zoopla, the house is worth a cool £6.75 million ($10.4 million).  

Of course, at first glance this is an example of the extravagant life of the Mubarak family. But something more sinister is at work.

According to The National, London property records for 28 Wilton Place show Omar Zawawi, an Omani businessman, owns the property. If you’ve never heard of him, it’s time to Google.

He is owner of Omar Zawawi Establishment, a Muscat-based conglomerate. He is also special adviser for external liaison to Sultan Qaboos, the ruler of Oman and an all-round powerful man. 

While the National’s story politely claims “there is no suggestion that any of his dealings with Gamal Mubarak were anything but above-board and legitimate”, Rebel Economy is not so sure. 

In fact, the story catalogues what appears to be long-standing ties between the Mubarak family and Dr Zawawi: 

According to news accounts, Dr Zawawi’s contacts with the Mubarak family date to at least 1980, when Mena, the Egyptian state news agency, reported a meeting between Dr Zawawi and then vice president Mubarak.

On February 6, 2011, five days before Mubarak was forced from office, Dr Zawawi, now in his 80s, travelled to Cairo to deliver a letter to the president from Sultan Qaboos, according to news reports.

And in June 2011, Gamal and his brother Alaa sent a letter to Dr Zawawi, a copy of which was published in the Washington Times newspaper on June 24, 2011.

In the letter, Mubarak’s sons insisted that no member of his family could receive a fair trial in Egypt and asked Dr Zawawi to “use your esteemed global standing to shed light on what is going on”.

It’s a telling indication of the way the Mubaraks saw themselves – as similar to Gulf dynasties and monarchies. What’s even more telling is that real Gulf dynasties and monarchies allowed the Mubarak family to think this was true to give the Gulf better control over the Arab world’s most populous country.

Rebel Economy spoke with an Egyptian banker familiar with the relationship between the Omani businessman and the Mubaraks. He said Mr Zawawi took Gamal under his wing in the late 1980s, giving him use of his house and even buying him a luxury car in London. 

A final, tantalising detail in this mystery is the four vaults in the basement of the London house. Rebel Economy got a copy of the blue prints available here and below, and the design statement here
 
What was in those vaults, the Egyptian investigators may be wondering? Brooms or gold? 

vaults



Regime Change at Egypt’s EFG Hermes

The chief executives of Egypt’s biggest investment bank, EFG Hermes, have been quietly replaced as the bank attempts to clean up its image ahead of a potential takeover from Qatari firm Qinvest, three sources close to the matter have said.

Hassan Heikal and Yasser El Mallawany, who were last year charged with alleged insider trading alongside the sons of the former Egyptian President Hosni Mubarak, are still “technically on board but have been removed from the executive function,” said one investment banker close to the bank. Mr Heikal and Mr El Mallawany are still getting a paycheck but remain in their positions only on paper, the banker said.

EFG Hermes denied any changes were made. The changes have not yet been officially announced and Mr Heikal and Mr El Mallawany are still employed as CEOs at EFG Hermes.

[caption id="attachment_1329" align="alignright" width="144"]Yasser El Mallawany Yasser El Mallawany[/caption]

Karim Awad and Kashif Siddiqi, who were last year announced as the new co-CEOs as part of the Qinvest takeover, are now running the bank, a second banker said.  They were head of Investment Banking and head of Asset Management respectively.

Under Qinvest deal, Mr El Mallawany and Mr Heikal were to leave on completion of the transaction that would see Qinvest take control of the bank.  But the deal has stalled because of delays in getting government approval in some Arab countries, according to a statement from EFG in January.

Mr Heikal, who has been living in London for at least a year, is now “pursuing other opportunities” and is “definitely not involved in the running of EFG,” a third source said.

A registry form at the Dubai International Finance Centre in the United Arab Emirates, where EFG Hermes is also registered, lists Mr Awad and Mr Siddiqi as the new directors.  Mr Heikal and Mr El Mallawany are listed as former directors, ending their position in June 06 2013, just 7 days after the case of alleged insider trading was brought against them in Cairo.

In addition, EFG Hermes main website also suggests changes at the helm.  As of February 16, the website title Karim Awad as Co-chief executive of the investment bank, and lists him first in the ranking on the profiles page. But this change was made only a week ago, when the website had described him under the old title of  head of investment banking.

[caption id="attachment_1330" align="alignleft" width="210"]Hassan Heikal Hassan Heikal[/caption]

The change is subtle, but indicates a significant shift in the bank’s executive management.

EFG has seen a sharp drop in its market value since the turmoil of the 2011 uprising in Egypt, partly because of its association with Gamal Mubarak, son of the former Egyptian president who owned a stake in its private equity business.

A further shadow was cast over EFG when its two co-chief executives, Mr Heikal and Mr El Mallawany, were among the nine alleged to have made an illegal profit of more than 2 billion Egyptian pounds ($331 million) through corrupt stock exchange transactions last May. The case is ongoing.