Saturday, June 25, 2011

Hussein Salem: A businessman from the times of crony capitalism (Part One)

حسين سالم:
قصة رجل أعمال من زمن رأسمالية المحاسيب

الأهر ام

تحقيق إستقصائي‏:‏ 
 كارم يحيي

Al-Ahram, in a four-part series, traces the hidden story of one of the richest men in Egypt, now wanted on charges of corruption

Karem Yehia
Edited and Translated by Mostafa Ali
Hussein Salem
Hussein Salem

Minister of Justice, Mohammed El-Guindi, described Hussein Salem as the man who holds the keys to corruption in this country. Local Egyptian media called him the "black box" of the fortunes and activities of the deposed president Hosni Mubarak in the world of business. The American network ABC News called him the "front man" in a story that attempted to track where Mubarak and his family’s money went.
In a month-long trip of journalistic investigation, Ahram managed to dispel some of the myths and lies that surround this mysterious man. We managed to uncover certain important facts about the man. We also obtained some rare photographs of Salem, which tell us quite a bit about his persona and history.
However, the secrets that surround Hussein Salem remain, by and large, sealed in closed drawers - from the White House and Congress of the United States, to the Royal courts in Persian Gulf countries, passing through several cities in Europe and all the way back to Cairo and Sharm El-Sheikh in Egypt itself.
For example, nobody knows the size of the man's wealth. Nobody knows where his cash is. Does he actually pay taxes? How much does he pay?
Even Said Jameel, the man many sources informed us was Salem’s own personal lawyer, tried at first to deny having anything to do with Salem when we sat down to interview him for this story.
However, we did manage to learn enough about Hussein Salem Kamal El-Din Aboul-Einen, aka Hussein Salem, 77 years of age.
The first and most important fact worth mentioning is that Hussein Salem singlehandedly added new meaning and dimensions to the concept known as “crony capitalism,” or the unholy marriage between private capitalists, financiers and investors on the one hand and government officials on the other, which has become a defining feature of late capitalism, especially in a country like Egypt.

The mystery man

How could government information agencies and mainstream newspapers in a country as highly centralised as Mubarak’s Egypt fail to maintain even simple and basic data about a man like Hussein Salem?
Salem was actually born on 11 November 1933 and not 1928, the same year Mubarak was born, as some papers claimed. He has not served even a single day in the armed forces, let alone any time alongside Mubarak in the air force, as several sources made us believe for quite some time. In fact, for one, Hussein Salem sustained an eye injury during childhood, which prevented him from performing any military service.
Moreover, after the death of his father, who was a school teacher, Salem took on the responsibility of working and providing for his mother (Hosnia Tabozada who was of Turkish origins and Salem’s father’s second wife) and his two siblings - his older sister Thuraiya and his brother Rafiq, 10 years his junior.
As the real record shows, Salem was the oldest child and his family’s provider after the death of his father and therefore could not have served in the military.
Our own trusted sources revealed that Salem was actually born in the neighbourhood of Khalifa in the district of Muqattam, a suburb of Cairo, not in the village of El-Saf near the Helwan suburb of Cairo as Riqaba Idariya (the Egyptian Administrative Control Authority) records indicate.
In fact, Salem’s own father was the one born in El-Saf, Helwan. There, he married a country girl who gave birth to Salem’s five half siblings: Abdel Hamid, Salah, Qadriya, Fawziya, and Samiha - all now deceased.
Samiha actually married into the Arabian tribe of Abaydah which is concentrated in the vicinity of Ismailiya Governorate and extends into the Sinai peninsula. This fact might explain stories that were circulated about his “Bedouin roots”, a rumour that was used to explain his business dealings in Sinai since the late 1980s.
Interestingly, an informed source confirmed that Salem himself weaved this rumour of his kinship with Bedouins in order to firstly solidify his business deals with Bedouin tribes in Southern Sinai, who in turn would guarantee protection for his tourism investments and interests in the area, and secondly, obtain further land concessions from his friend Mubarak and officials in the latter’s administration - all part of the game of crony capitalism.

Archive talk

All these misrepresentations and half-truths which we obtained from reliable sources forced us to take another, closer, look at newspapers’ archival material on the man.
We found out, for example, that no data centres at any of our major newspapers had a file on Hussein Salem prior to the January 25 Revolution and before he fled the country in February 2011. Even the 1992 second  edition National Egyptian Encyclopaedia of prominent Egyptians, which is published by the governmental Information Agency and contains biographies of 64 contemporary figures among 4269 public ones, failed to mention Salem, a man at the peak of his financial and political prowess at the time.
With difficulty, one is able to find the man’s name or the name of his son Khaled on some sports pages under golf news and in some stories on oil and tourism, and only in a very limited number of newspapers. Miraculously, we were able to find one interview with Salem in an Egyptian paper, The Economic World Today, dated 17 March 2007.
 It was as if someone in a higher office has given strict orders to the media to keep Salem and his family out of newspaper pages during that period.
It was also very difficult to find copies of archived articles or coverage of Salem in the western press, despite the fact that Salem’s name started to be mentioned by western media in the early 1980s because of accusations levelled against him about financial tampering in arms deals. All we were able to find were two interviews with him by American Military Aid Journal and Forbes magazine, dated 31 May 1988 and 17 August 2000 respectively.
Mysteriously, both Forbes and its arch-rival Fortune 500 magazine have no mention of the size of Salem’s wealth or anything about his business partners.
All of these “secret clouds” confirm, as our reliable sources told us, that Salem did not talk much to the press about his life, preferred to stay out of the limelight, and did not even allow people to take his photos in weddings and social gatherings.
Given all that, it is quite significant that unlike men of lesser wealth and influence, Hussein Salem did not publish any public eulogies of the former president Anwar Sadat who was assassinated on 6 October 1981 in any newspaper.
His name, furthermore, would not reappear in the press until 8 September 2008, when Salem, uncharacteristically, published condolences to the family of former minister of defence, Field Marshal Abdel Halim Abou-Ghazala, on his death.
Characteristically, though, Salem used no label or business title for himself in the advertisement, and referred to the deceased Field Marshal simply as “a dear friend.”

A lucky clerk in the Nasser era

Sources who spoke on condition of anonymity, despite this long trail of secrecy and mystery, told us that Hussein Salem graduated from the Faculty of Commerce in the summer of 1956 (weeks before Nasser made the decision to nationalise the Suez Canal and the trilateral attack on Egypt that followed).
Shortly after his father’s death, Salem’s family, now headed by his mother, moved from the Khalifa neighbourhood to an apartment on the top floor of a building located on a small street called Sphinx- near Baghdad Street- in the Korba area of Heliopolis.
Salem’s mother struggled to provide for him and his siblings solely on her late husband’s meagre pension (and even after she sold a five-acre plot of land the family owned and another similar sized plot she personally owned).
Sources say that Hussein Salem was not a talented or bright student. He graduated from Heliopolis Public High School only after having to repeat the final academic year twice. Nevertheless, Salem’s friendship with the younger sons of the wealthy businessman Zuhair Garanah, who was also a minister in Nasser’s first cabinet after the July 1952 Revolution, pushed him in the direction of pursuing a business career.
Unlike his younger brother, Salem did not show any interest in volunteering to join civil defence militias, which Egyptians formed to defend the Canal against the foreign invaders. Sources say that Salem grew up in constant fear of everything after his father’s death of typhoid, and was convinced that he would not himself live past the age of 40.  In fact, the story has it that during the entire period of trilateral bombings of eastern Cairo in the fall of 1956, Salem hid under his bed!
There are no indications that Salem opposed Nasser’s decision to nationalise the Suez Canal or any other foreign holdings in Egypt during that period. If anything, Salem expressed resentment among his close friends about Nasser’s decision in 1961 to nationalise the holdings of major Egyptian capitalists- otherwise known as the July Socialist Decrees.
At the time of the trilateral attack on Egypt, Salem had just begun working as a clerk at the Textile Support Fund, which was located in the famous Immobilia Building in midtown Cairo. In some ways, Hussein Salem was a lucky young man. Nasser provided many jobs to young people to combat high unemployment rates among them. Very shortly after graduating from the Faculty of Commerce, one of Salem’s relatives recommended him for work at the Textile Fund. He landed the position, which paid 18 pounds per month- a high amount for a government clerk at the time - and carried with it possibilities of travelling outside of a country that he considered too saddled by a closed economy and scarcity of consumer goods.
Salem definitely enjoyed the fine things in life at the time. He had a passion for watching Hollywood films in the theatre, for Frank Sinatra, as well as for English Victorian furniture. This explains why he furnished his five star hotel, Jolie Ville in Sharm el-Sheikh, in an extravagant Victorian style. Celebrities who attended the opening of Salem’s Jolie Ville in October 1991 are reported to have been impressed with his exquisite taste.
Hussein Salem married Nazimah Abdel-Magid Ismaiil in 1959. The new family moved into a nine-pound per month, three-bedroom apartment across the street from El-Mazah Phone Building in the Golf area of Heliopolis.
According to testimony from a neighbour, who preferred to remain anonymous, Salem owned no cars and showed no signs of wealth for most of the 1960s and 1970s.
It was only in 1977 that things began to shape up for Salem. After returning to Egypt from a short assignment in the United Arab Emirates, he moved with his family from his Golf area apartment into a new unit in an apartment building he constructed in Saba Emarat area of Heliopolis.
He had landed a new job with a salary of 43 pounds per month at the Arab Company for External Trade. However, the birth of his children, Khaled in 1961 and Magda in 1963, strained his finances. Close friends of Salem say that he constantly borrowed money to pay Khaled’s fees at the English private school Saint George in Heliopolis.
Other sources claim that the Arab Company for External Trade was nothing but a front operation for Nasser’s Intelligence Services. A former CEO of the company, who refused to give his name, recalled that Salem was a strangely private employee who travelled on dubious trips abroad on numerous occasions. This source added that, perhaps, Salem was supervising arms deals to support national liberation struggles in North Africa, as part of Nasser’s foreign policy at that time.
Salem’s short-trips, mini-adventures and arms’ deals of the 1960s and early 1970s are of course very small and very different to his extensive arms deals and bigger business partners in the latter part of the 1970s.
However, before we begin to travel along this part of his journey, we will have to make two more stops full of secrets along the way: Baghdad and Abu Dhabi.

Tuesday, June 21, 2011

Egypt's 'noble poor' denied their role in the revolution

Labour and farmers protesting last week
Photo by Mai Shahin: Labour and farmers protesting last week in front of the ministerial council

Egypt's revolution demanded social justice, and the popularity of a recent blog post highlighting the injustices endured by the poor before and since 25 January shows little has changed
Lina El-Wardani 
Ahram Online
21 Jun 2011
Activist Mohammed Abul Gheit’s blog shot up in popularity with his post The Poor First, You Bastards for highlighting the poor’s role in the revolution. For the first time readers saw martyr’s photos and stories (20) from the lower classes, ranging in age from 16 to 35.
Importantly, the article pushes the boundaries of Egypt’s classicism by posing the question: Why is the poor's role in the revolution ignored?
"Why don't we see those people's photos? Is it because they are poor and vulgar? Because their clothes are cheap? Why are the only popular photos of martyrs from middle- and upper-middle classes?" wonders Abul Gheit in his blog that has seen 10,000 likes on Facebook and 6,000 comments.
Indeed, the poor's role is ignored by most politicians, intellectuals and researchers, and somehow, Egypt’s Revolution was classified as a middle-class revolution.
In fact, all classes were seen in Tahrir Square. During the height of the revolt, from 25 - 28 January and mostly from Cairo's poorest districts: Imbaba, Boulak and Attaba, including the fights with police in the alleys that exhausted the police and played a major role in the success of the revolution. A case in point: on the pivotal date for the revolution, 28 January, the police attacked protesters and citizens the whole day and then disappeared. While the middle- and upper-classes took the beating, tear gas bombs and bullets peacefully, the lower classes fought back and defeated the police.
Activist Amr Ezzat, however, resists Abul Gheit’s minimisation of the middle-class’ role in the revolution: "The middle class was the brain and initiative of revolution, also I hate the word poor, you distance yourself from them and the concept returns us to charity rather than rights, I like the political terms of labourers, farmers, people who have rights, and this brings us to necessary political argument not social charity," added Ezzat.
Abul Gheit's blog post narrates tens of stories of how the residents of poor and disadvantaged areas were the ones who really fought back using stones, makeshift weapons, such as knives and sticks, Molotov cocktails and often with their bare hands.
Treatment by the judicial system
To add insult to injury, many believe that the trials of officers accused of killing civilians at the site of protests are at turtle speed. Last Monday the Alexandria Criminal Court adjourned - again - the case of six high-ranking officers charged with the murder and attempted murder of peaceful protesters to 17 October. The courtroom broke out into chaos. Today the officers were released on account of their occupation.
The families were outraged by what they called the “unjustified” postponement of the trial. The lawyers of the policemen reportedly raised fingers at the families, countering that their sons are "not martyrs: they are losers who happened to be near the police station," according to Al Badeel news website.
The lawyers aren’t the only ones judging Egypt’s poorer citizens. It’s a striking pattern to see the poorer citizens arrested by Egypt’s ruling military under the pretence that they are “thugs” and receive worse treatment than those who are obviously middle- or upper-class, including less protection from lawyers and more abuses occur against them because they won’t receive as much media limelight.
What’s important?
So why is the poor's role in the revolution brushed aside so? According to Ayman El Sayad, analyst and editor in chief of Weghat Nazar, this goes way back to the 70s, forty years before the 25 January Revolution, when Egyptian values changed and it no longer mattered how educated or respectful people are, but rather how much they have. Those who attend public schools and universities are not treated the same as those who attend private ones. "Your value lies in what you are wearing, etc. As the hierarchy of society changed; its criteria changed. I believe that the poor are the main fuel of the revolution. The people who have nothing to lose are the noblemen behind the revolution," concluded El Sayad.
Abul Gheit and El Sayad are on the same wavelength in this respect. Abul Gheit linked a video of the police station in Sayeda Zeinab (a poor district in central Cairo) as it was being burnt down. In the video a middle-class young man warns a poor man: “Careful; they are shooting live bullets,” to which the young, poor man replies "It doesn't matter any longer whether I live or die."
The analysis Abul Gheit gives for this exchange is "He [the poor man] didn't tell him, ‘I'd die for Egypt,’ or ‘I am a martyr of Islam:' his simple answer means his life as a poor and humiliated person is not better than dying. No one could imagine that the politicians would later say that if we don't establish the constitution first that we would be betraying the martyrs’ blood, and that group [that is pushing for] the elections first would counter: we know the martyrs better than you do and we have sacrificed more than you."
The whole argument of whether to establish the constitution first versus hold the elections first doesn't mean much to 40 per cent of Egyptians under the poverty line, unless this directly affects their living conditions. They believe that this is all media talk and no one really cares about them.
The result is that the poor are now blaming the revolution and revolutionaries for exacerbating their poverty post-revolution, explains Abul Gheit.
Amr Ezzat believes this argument is demeaning to the poor and politics at the same time: “I don't agree with the blog's main argument because it is against politics, while the most important thing the revolution did is politicise Egyptians.”
Since the revolution food prices have almost doubled. Unemployment for young people hovers around 30 per cent. Many of those who have jobs are under-employed and earn very little.
In a recent survey by the International Organization for Migration (IOM) 41 per cent of the youth in Egypt confirmed that the events post-revolution make them want to migrate.
The survey reveals that the first weeks of the revolution didn't seem to influence Egyptians’ decision to migrate. However, the decline in economic activity afterwards and the loss of jobs and incomes acted as a primary push factor for youth who reported intentions to migrate.
When asked what their top five most important issues are, they ranked jobs and employment as a primary issue; then corruption; security; constitutional reform and at the bottom of their list was education and the presidential and parliamentary elections.
Is it just a matter of a minimum wage?
The poor might also interpret the government’s answer to the recent minimum wage demands as biased against them. The government recently decided to raise the minimum wage to LE 700 (just over $100/month), promising to raise it to LE 1200 ($200) within five years. But why should the poor have to wait five more years after over thirty years of being marginalised and impoverished?
Senior employment expert, Dorothea Schmidt, with the International Labour Organization (ILO) is sceptical of this scheme. She argues that the government’s plans to implement a minimum wage in Egypt will have minimal impact on improving the poverty situation.
In fact, many economists caveat that a minimum wage without a maximum wage and a rearranging of salaries structure has little significance.
“The LE700 that the government wants to set as a minimum wage in both the public and the private sectors shouldn’t involve that much debate," said Schmidt to Ahram Online earlier this month, adding that large companies wouldn't be harmed by this step, as it implicates only a small increase in production costs.
Schmidt believes that informal workers are ignored by the new policies, as they do not tackle the wage conditions of those employed in the informal sector, a group with the lowest average wage rates in the country.
Statistics suggest that over 35 per cent of Egypt's labour is working in vulnerable jobs, lacking social insurance, health insurance, unionisation, etc. Informal employment in the private sector includes up to 75 per cent of total labourers.
Also, the law that criminalised strikes and protests passed only a month after the revolution ousted the president seems particularly biased against the poor and those who have long been suffering poor working conditions and salaries.
The financial budget announced by Financial Minister Samir Radwan earlier in June forecasts an expenditure of LE514.5 billion ($86.6 billion), with revenue increasing to LE350.3 billion from 285.8, according to a cabinet statement.
However, when comparing the increase in the vital section, such as education and health, the increase is less than 10 per cent from last year, which is much less than the revolutionaries hoped for. The same applies for the tax increase from 20 per cent to 25 per cent on those whose annual income exceeds LE10 milllion, according to many analysts, is much less than expected if you want to bridge the wide gap between the rich and the poor.
If this is the stance of the government, how about the politicians and intellectuals? They are mostly pre occupied with the issue of constitution first or elections first.
Many believe that the current government is biased against the poor and afraid of the businessmen.
Between being ignored and the decline in economy, which has left the poor even poorer, they seem to be simmering resentment against the revolution and the middle-class.
"The elite are separated from the street; they are centred in conference rooms, on TV channels; they only discuss what they want and not what the revolution wants. That's why we find two political figures with the same ideas forming two parties instead of one, because they both want to be stars" accuses El Sayad, adding that “’s a fake elite that, sadly, sabotages the revolution. This is common in history: the noble poor create the revolution and the politicians inhale its benefits," adds Sayad.
Abul Gheit ends his post by quoting Erdogan in the 90s in an Islamic organisations conference that his plan is to solve the sewage problem. He didn't say he would implement the sharia (Islamic law) and that's how he became prime minister: because he focused on daily problems of the Turks, but here in Egypt, we don't have an Erdogan. We only have boring and old politicians indulging in their meaningless discussions of secular or Islamic, constitution first or elections first, and to those he says "The poor first."

Suez Canal strike enters Day 8!

Ahram Online

21 June 2011

Strikes by workers at seven Suez Canal Authority companies are continuing for their eighth consecutive day as their demands remain unmet.

On Tuesday morning, protesters marched through the streets of Ismailiya holding an open casket, inside of which was an effigy inscribed with the words 'the late Fadel'. The crowd hung the effigy from a bridge at the end of their march.

Ahmed Fadel is the CEO of the Suez Canal Authority, facing a baptism of fire for not responding to protesters’ demands.

Workers began protesting on 3 April, demanding they receive wages equivalent to those who work for the Suez Canal Authority itself. Interim Prime Minister Essam Sharaf has already given orders to the head of the Authority to resolve the situation.

Employees are demanding a 40 per cent increase in basic salary, a 7 per cent hike in bonus payments and larger meal allowances.

Workers claim they were promised raises in pay and bonuses by Fadel on 19 April but he apparently hasn not lived up to his word.

On Monday, workers blocked road number 6 In Ismailiya in an expression of discontent with media reports which claimed the strike was disbanded on Sunday.

Main canal operations are still functioning despite disruptions to supporting services. The Suez Canal is one Egypt's main foreign currency earners, generating $4.5 billion in 2009-2010.

Strikers hold mock funeral for CEO Fadel