Mubarak Trial Update

In a truly historic event, deposed President Hosni Mubarak attended his first trial session on August 3, along with his two sons Gamal and Alaa Mubarak, as well as former Minister of Interior Habib Al-Adly for charges of corruption and conspiring to commit murder.

A day before the first session, the Egyptian Exchange dropped to its lowest point since May 10, falling 2.1% to 4,967 points with big companies losing out such as Orascom Telecom, which dropped 5%, EFG Hermes, which fell 3.5% and Commercial International Bank, which decreased 1.7%.

On the other hand, Egypt’s most popular resort town, Sharm El-Sheikh, where Mubarak was being held at the International Hospital since his ouster on February 11, witnessed a major hike in its hotels’ occupancy rate, surging to 58% in August from a mere 8% in February.

Transported from Sharm El-Sheikh to Cairo, the allegedly ill Mubarak was wheeled in on a hospital bed at the Police Academy, formerly known as the Mubarak Police Academy. The first session saw Mubarak and his sons deny all charges against them, and after complete disarray broke out in the courtroom among the civil defense lawyers, the trial was postponed to August 15. The court had ordered Al-Adly’s trial to be separated from Mubarak’s and postponed Al-Adly’s trial on the next day to August 14.

During the second session, Judge Ahmed Rifaat ordered the trial’s television broadcast to be stopped, as well as the merging Al-Adly and the Mubaraks’ trial again. The trial was then postponed to September 5.

Mubarak is accused of conspiring in the premeditated murders  of protestors during the 18-day uprising, abusing power to amass wealth, as well as selling gas to Israel at below market value. If found guilty, then the deposed president could be sentenced to death.

Gamal and Alaa are charged with the abuse of power and the illegal amassing of wealth regarding their acceptance of five villas worth over $5 million (LE 29.75 million) under a phony sales contract, which could resul in both getting several yars in jail. Al-Adly is charged with conspiring to commit premeditated and attempted murder of protestors. Also facing the death penalty, Al-Adly has already been sentenced to 12 years in prison for charges of corruption. Egypt is the first country in Middle East to put a former president on trial without foreign intervention.

OCI wins power contract
Orascom Construction Industries, Egypt’s largest listed developer, was awarded a $181 million (LE 1.08 billion) project by the Cairo Electricity Production Company to construct a combined cycle power plant, according to a Reuters report.
The power plant will produce 1,500 megawatts and will help supply Egypt’s ever-rising energy needs. The project is scheduled to take 32 months to complete and is to be located in the Giza governorate.

Telecom Egypt’s revenue drops
Telecom Egypt (TE), a landline monopoly, witnessed a 15% drop in its 2Q2011 results, according to the company’s statement in July. The firm made net profits of LE 826 million, down from LE 971 million the year before, and 7.9% less than in 1Q2011.

The number of users of TE’s services has witnessed a noticeable change as the number of landline users dropped to 9 million at the end of July. However, the number of ADSL subscribers has increased to reach over 1 million subscribers. This shows a 1% increase in the number of Egyptians getting online during 1Q2011. The increased figures indicated a 37.3% climb per annum.

Losses were lighter than many predicted, with a statement from Beltone Financial saying that they proved the “relative resilience of the telecommunications sector versus other sectors amidst the current political uncertainty in Egypt.”

Many assume that the decline in users of TE’s landlines and conventional services were inevitably going to drop given the advent of mobile technologies and the affordability of cell phones as well as mobile lines and cards. More and more people are coming to rely on their mobiles, rather than the conventional landline.

Minimum wage set for private sector
Starting October 2011, a minimum wage of LE 700 will be effective for the private sector, but this excludes the tourism sector, Al-Ahram Weekly Online reported.

Minister of Manpower Ahmed Al-Borai, said the minimum wage will not be applied to the tourism sector as it is still suffering considerable losses after the January 25 Revolution. The minimum wage will instead be set for the sector in January 2012.

Al-Borai said in several Egyptian dailies that “projects with fewer than five employees will not be required to apply the minimum wage.”
Kamal Abass, head of the Centre for Trade Union and Workers’ Services told Al-Ahram Weekly Online: “The investors’ associations in eight governorates signed the minimum wage agreement in the Ministry of Manpower on [August 20].”

He then added that business owners opposed the value of the minimum wage imposed and asked the minister to approve decreasing social insurances, which the minister refused.

Germany waives debt
Germany plans to waive €240 million (LE 2.06 billion) in debt owed by Egypt on the condition that the funds are used to support democratic reforms, according to the German Foreign Minister Guido Westerwelle as quoted in a Reuters report.

The announcement came during a meeting between the countries’ foreign ministers where they discussed ways to see economic ties between Germany and Egypt intensify.

The debt forgiveness will span a period of four years once approved by the German government. The deal also includes a two-year investment of €150 million (LE 1.29 billion) to support setting the foundations for democratic reforms.

Egypt’s estimated balance of payments for FY2011/12 stands at $11 billion (LE 65.77 billion) — much of which will be funded through foreign commitments.  

Former prime minister charged
Along with a series of corruption investigations, the administrative prosecution is investigating charges against former Prime Minister Ahmed Nazif of selling state-owned land at a pseudo-auction to Emaar.

The 4 million square meters in Cairo’s Moqattam district were sold to the UAE-based company in February 2005 for a total LE 357 million.
According to Al-Masry Al-Youm’s report, the charges were filed by Al-Nasr Housing Company and the Holding Company for Construction, Tourism and Cinema and claimed that the auction was only attended by representatives from Emaar and that the former minister of investment gave the company special benefits.

Steel prices decrease 5.6%
Prices of steel witnessed a 5.6% decrease over the past two months in Egypt, according to the Central Agency for Public Mobilization and Statistics (CAPMAS). After the decrease, one ton of steel reached a value of LE 7,525.

The report released by CAPMAS stated that this decrease is unprecedented. Some analysts attribute the decrease to the fall of Ahmed Ezz, owner of Ezz Steel and a high-ranking member in the fallen National Democratic Party (NDP) during deposed President Hosni Mubarak’s reign.

Palm Hills suffers losses
Shares of Palm Hills Developments, Egypt’s mega-developer, plunged to a three-month low last month as the company suffered LE 81.4 million in losses for 1H2011, according to The National.

“There is a lot of negative publicity involving the company,” Majed Azzam, an AlembicHC analyst told The National. “That has led to a lot of sales cancellations.”

The mega-developer has been undergoing difficulties following the events of the January 25 Revolution as it faced accusations of being related to the old regime and receiving special offers for purchasing lands from the old regime.

However, Palm Hills Chairman Yassin Mansour and Ahmed El Maghrabi, the former Egyptian housing minister, were found not guilty of the corruption charges involving a dubious land sale. On the other hand, a public persecutor announced last month that he will file for an appeal in the ruling of Mansour’s case.

Shares in Palm Hills closed at LE 1.77 last month, falling from a high of LE 4.39 in March.

Tourism down 30%
According to the monthly bulletin released by the Central Agency for Public Mobilization and Statistics (CAPMAS), tourists arrivals in   June fell by 30% compared to June 2010.

This June, 732,000 tourists visited Egypt, while in the same month last year the country welcomed 1.03 million tourists.
The bulletin also indicated that tourists arrivals from Eastern Europe decreased 35.2%, making it the region with the greatest decline of tourists traveling to Egypt. Western Europe saw the next biggest drop in visitors, falling 28.5% compared to June 2010.

Arab tourism remains relatively unaffected and only slid 0.3% in June to 182,000 from 183,000 tourists. But Al-Ahram Weekly Online reported that figures regarding Arab tourists could be “misleading,” since many may be visiting Egypt for political purposes.

Sami Mahmoud, head of the international department at Egypt’s Tourism Development Authority, told Al-Ahram Weekly Online that tourists from the Gulf area have decreased 42% versus the same period in 2010.

CI Captial Research released a report in May, estimating that Egypt’s profits from tourism will be $7.6 billion (LE 45.44 billion) for 2011. This number is a 35% decrease from last year’s tourism revenues.

However, Mahmoud had told Al-Masry Al-Youm that the number of Israeli tourists going to Sinai was not affected amid violence that took place on the borders between the two countries.

On August 18, five Egyptian security personnel were killed due to an Israeli raid near the border of the Sinai Peninsula. Despite conflicting reports of how they were killed, an official in the Interior Ministry said they were “most probably” mistakenly caught in the crossfire between Israel and the militants from Gaza, according to Al-Masry Al-Youm.

Although the turmoil affected the border between the two countries, 2,000 Israeli tourists entered Egypt in the two days following the events said Mahmoud.

He also added that foreign media coverage will determine the kind of impact the recent incident will have on tourism flow. The number of tourists visiting Sinai increased 30.6% last July, according to Mahmoud. bt

The Nation in Brief was written by Amr Aref, Passant Rabie, Farah Yousry and Hana Zuhair.