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FEATURE

suspect citizen

lingering wariness of liberal capitalism and high-profile scandals add up to an image problem for egypt's business class

by joseph logan

currency speculators, holders of fraudulent academic degrees and the clients of the world's most expensive prostitutes wouldn't seem to have that much in common, but they're all, according to a recent issue of rose al youssef, members of the same species: businessman. and even allowing for that magazine's trademark lack of subtlety, it's a characterization that doesn't stray far from what's common in print, the visual media and in the popular imagination, according to some members of egypt's business community.

"you can always spot the businessman in a movie," says emad adeeb, editor in chief of the financial daily al alam al youm. "he's the rich guy who rapes the gardener's daughter and then refuses to admit it's his child."

it isn't the best of times to be identified as a businessman. a handful of highly publicized scandals involving the finances and commercial ventures of members of the people's assembly and capital market participants have cast an extremely unfavorable light on egypt's business community in recent months.

the ongoing "loan deputies" case, in which 32 mps are accused of acquiring some £e 1 billion in loans without proper guarantees, has implicated such businessmen as tourism and real estate developer sadeq okasha, who allegedly also passed a bad check worth £e 1 million and forged documents certifying his ownership of a hotel in giza. contractor and mp mahmoud azzam allegedly received £e 179 million worth of improper loans from his wife and nile bank vice president aleya al ayyouti, who allegedly fled the country with the help of the former prosecutor general, regaa el arabi. and magda el manasterly, whose brokerage company megavest was one of the first to begin operations after the passage of the cap-ital markets law, has been accused of defrauding clients of millions of pounds - and possibly faking her own death to escape punishment.

such reports echo previous scandals like the disastrous experience of the islamic investment companies - many of them pyramid schemes whose collapse in the late 1980s cost half a million small investors as much as four billion egyptian pounds. the echoing has at times been explicit. early this year, the economic committee at the people's assembly warned that the tide of corporate bond issues was beginning to resemble the old pyramid schemes. with such fiascos still vivid in the minds of the egyptian public, the association of corruption with the activities of prominent businessmen is strong.

most depictions of businessmen aren't drawn in strokes as crude as what adeeb described. but the coverage of and response to business news even in generally sympathetic media outlets reveals a degree of skepticism about the moral standing of businessmen. as the number of defendants in the loan deputies scandal began to mount in august, wafd party functionary ali salama recommended that those convicted of improperly acquiring loans be executed, warning that the defendants in question only hinted at the true scale of corrupt business practices afoot in the country.

salama's prescription may be radical, but his assumptions aren't. "it's something that's embedded in the education of the majority of the population," explained mohamed el semary, vice president of business development at efg-hermes. "after three decades of a socialist economy, there's something in the psyche that equates capitalism with greed and views the activity of businessmen with suspicion."

the roots of this perception, most observers agree, lie in the nasserist experiment with a nominally socialist mode of economic organization and social policy. a command economy and nationalized industries enshrined the state as the starting point for economic initiatives, just as newly expanded services like education and health care left egyptians looking to the state for their well-being. with the growth of what eventually became an immense public sector, the role allotted individual businessmen was, at best, circumspect and morally uncertain. "it's a perception that to enter into these kinds of gainful arrangements, one has to surrender a part of his integrity and morality," said abd al aziz ezz el arab, a lecturer in the american university in cairo economics department. "whether it's a fair perception is another question, but that's it."

there's also little doubt that the pace of economic re-form in the country has outstripped change in public sentiment about the social role of private enterprise. privatization of state-owned companies is touted as evidence of the government's success in building a more competitive and more prosperous economy. but the sense that the sale of public sector concerns, unprofitable and unwieldy though they may be, is tantamount to scrapping pieces of every egyptian's patrimony remains strong for many.

perceptions are changing. even some employees of companies that are being sold off see the necessity in shrinking the size of the state sector, el semary said. but change is coming slowly, and the charge that state assets are being sold cheaply still carries a lot of weight.

"you don't undo the last 48 years all at once," said hani rizq, president of milkyland and international foods co.

but business people argue that the ingrained statism isn't the only thing standing in the way of a better public perception of private enterprise and businessmen. they accuse the arabic press, particularly tabloids and partisan publications, of ideological bias and criminal irresponsibility. rizq, whose companies have signed export agreements with israeli partners, has been accused by the twice-weekly al shaab of participating with minister of agriculture youssef wali in an alleged israeli plot to destroy egyptian agriculture and poison the population through genetically altered foodstuffs. such attacks, rizq said, show that the press is irresponsible.

"they've acted as though this was a question of press freedom, but it isn't," rizq said. "it's a question of abusing the liberties they have to make assaults on people."

tarek nour, chairman of tarek nour communications concurred, adding that the phenomenon betrays a fundamental bias within much of the egyptian press. "these people come from a class that believes in socialism," he said. "they're bred to regard anyone involved in business as a thief."

few would dispute, however, that some members of egypt's business community have given a hostile press rich material with which to work. the caricature of the egyptian businessman - a grotesquely obese pleasure-seeker, complete with cigar and bag of cash - is fueled by the professional and personal conduct of a few. businessmen's reputation for conspicuous consumption and indifference to their communities may be unfair, rizq said, but ostentatious displays of privilege have done much to entrench it. greater sensitivity to yawning gaps in income and opportunity are necessary if businessmen are to rid themselves of this stigma.

"personally, it means taking it upon yourself to be aware of people's perceptions and not behaving in ways that are provocative," rizq said. "i'm not going to throw big parties that are a slap in the face to people who are barely getting by."

in all likelihood, however, rehabilitating the image of businessmen will demand more than personal austerity. a handful of spectacular incidents involving egyptian businessmen in recent years have provided ample fodder for those who regard the country's leading entrepreneurs as privileged criminals.

a 1997 factional dispute over control of americana advertising began with protracted bouts of mudslinging in the local press. it culminated in a skirmish at the americana offices between police and men former americana advertising head nour says were hired as security to protect his staff from thugs employed by his rivals. a hairdresser who intervened in the confrontation was killed, and several policemen were injured. the incident formally united businessmen and thugs in the popular imagination. now, nour said, businessmen are growing more aware of the need to manage their images.

"no one likes bad press," he said. "it's a killer for the company."

concern about the consequences such incidents have for perceptions of businessmen as a class are leading some members of egypt's business community to stress the social responsibility accompanying private enterprise and greater adherence to the ideal of responsible corporate citizenship. if the private sector is to be afforded greater sway in shaping the institutions and opportunities that affect the lives of most egyptians, they argue, it must hold itself to standards of conduct more demanding than merely avoiding lurid episodes.

at bottom, rizq said, this sort of responsibility doesn't represent something entirely new in relations between powerful egyptians and society at large. it reflects, he said, an "understanding that the privileged have certain obligations to those who are less fortunate and to those they employ. it was there before the revolution, and it hasn't gone away."

but if the impulse isn't new, the way it's being channeled is. although highly visible donations such as the mansour maghrabi-financed garden near the gezira club still figure largely on the agenda of businessmen who regard themselves as socially conscious, there is a novel emphasis on working such ideals into the structure of corporations and their day-to-day operations. businessmen owe it to their workers and communities to create a standard of ethical conduct that guides an organization's activities and external relations, mansour said. "it is part of the duty businessmen have," he said.

visibly responsible corporate behavior - meeting tax burdens and obligations to shareholders, and investing in infrastructure and public services for the communities that provide facilities and labor - holds the most promise for improving the standing of businessmen, mansour said. establishing ethical conduct as a habit within corporations, he argued, will be the best evidence of good faith on the part of businessmen, so long as it is integrated into the structure of the organization.

"it's a question of institutionalizing it, and assuring that it isn't a one man show," he said. "once you've done that, people can judge for themselves that a company has a conscience."

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