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IN BRIEF

Ambassador to return to Israel
Ambassador Mohammed Assem has been tapped as Egypt’s new ambassador to Israel, the first diplomat to fill the post since Cairo withdrew its envoy in November 2000 to protest Israel’s heavy-handed crackdown on the Palestinian intifada. Assem, a close confidant of President Hosni Mubarak who previously served as Egypt’s ambassador to Sudan, is expected to take up his new post later this month.

The decision came following the Sharm Al-Sheikh summit held in February between Egypt, Israel, Jordan and the Palestinian Authority. All sides promised to exert every effort to end the bloodshed that has killed nearly 1,000 Israelis and some 3,600 Palestinians since the intifada began in September 2000.

Jordan, the only other Arab country to have signed a peace treaty with Israel, is also expected to return its ambassador to Israel soon.

Caught on tape
Two high-profile government officials were arrested in Tanta on charges of bribery. The undersecretary of the Ministry of Irrigation and general manager for irrigation in Gharbeya governorate were arrested after police filmed them allegedly accepting bribes to ensure that three contractors received contracts. The contractors were also detained.

Oil-for-food scandal exposed
A UN diplomat who headed the oil-for-food program for Iraq and an Egyptian businessman living in Geneva were both implicated in a report exposing corruption and graft in the UN-sponsored oil-for-food program in Iraq. The UN report accused Benon Sevan, a career UN diplomat, of soliciting favors from Saddam Hussein’s government on behalf of Egyptian trader Fakhry Abdelnour. It said the Geneva-based trader made more than $1.5 million in profit by trading restricted Iraqi oil and paid more than $160,000 in bribes to Iraqi officials to secure the deals.

Sevan allegedly introduced Abdelnour to officials in 1998 as a “friend” of the Saddam regime. His name was added to the list of individuals who received coupons for the purchase of Iraqi crude oil, though bribes were allegedly required to push the private deals through.

According to the report, Abdelnour bought millions of barrels of Iraqi oil – which was then considered the cheapest in the world – and resold them to corporations for a premium. It is believed that Abdelnour made as much as $300,000 in profit from his first allocation of 1.8 million barrels in 1998, and another $1.2 million from the subsequent sale of 5.5 million barrels over a period of three years.

Garbage up for grabs
The government will use a £E 96 million loan to establish a “bourse” for industrial waste. The odiferous stock exchange will help industries find buyers able to recycle industrial waste, protecting the environment while reducing their production costs. The Danish International Development Agency (DANIDA) will finance the project with a low-interest loan.

The first step to creating the bourse will be to prepare a list of standard categories of waste among 105 different industries and prepare a bidding scheme. Bids are expected to start at £E 80,000 for run-of-the-mill industrial trash, and run as high as £E 3 million for the real juicy stuff.

Companies queue up for QIZs
More than 400 Egyptian companies have submitted registration applications to operate under the qualifying industrial zone (QIZ) agreement, which allows Egyptian companies quota- and duty-free access to the US market provided their products include 11.7 percent Israeli content. Egypt had extended that application deadline by one week to allow interested companies to prepare the needed paperwork for consideration by a joint committee of Egyptian and US customs officials.

Ali Awni, head of the QIZ Unit within the Ministry of Foreign Trade & Industry, told Business Monthly that the only pre-condition is that companies must be within one of seven designated zones: Shobra Al-Kheima, Nasr City, 10th of Ramadan City, 15th of May City, Southern Giza, Al-Ameria and Port Said. “There were some applications from outside the designated zones, but more than 400 applications are being raised for consideration by the joint committee. This is just the first round of applications for the committee’s first meeting. However, applications may be submitted at any time for consideration during the second meeting of the committee,” he said.

Minister of Foreign Trade and Industry Rachid Mohamed Rachid said the applications of 45 companies were rejected because their factories were located outside the designated zones. The seven QIZs have 231 factories exporting $304 million worth of goods to the US market, he said, adding that the US is expected to approve the expansion of the deal to cover more areas.

State banks cashing out
The pace at which the government is selling shares in public banks is picking up. Last month, National Bank of Egypt sold its 20-percent stake in National Société Générale Bank (NSGB) and is reportedly planning to sell its shares in Commercial International Bank (CIB) and International Islamic Bank (IIB). The other three of the “Big Four” seem to be following suit. Banque Misr is preparing to sell its share in Misr International Bank (MIB); Banque du Caire is planning to divest from American Egyptian International Bank; and Bank of Alexandria is preparing to sell its stake in Egyptian American Bank (EAB).

Plans to sell the Big Four’s shares in joint ventures date back to 1993 and are really nothing new, says former Central Bank governor Ismael Hassan. In the 1990s, government policy limited public ownership in joint venture banks to around 20 percent of their paid-in capital. Now that the economy is picking up, banks are enacting on this, gaining maximum profits in the sale of their stake to local and international banks looking to enter the market or expand their base.

Others see the stake sales as a preparatory step towards privatizing the banking sector. Minister of Investment Mahmoud Mohieldin has calmed worried naysayers, stating that the privatization will only occur in cases where it’s in the public’s best interest.

No tax breaks – not even for the little guy
Minister of Finance Youssef Boutros-Ghali has rejected a proposed amendment to the draft tax law to offer a tax break to mom-and-pop businesses. The amendment, proposed by the economic committee of the Shura Council, would exempt small businesses from taxes for three years from the date of establishment.

Boutros-Ghali refused the amendment outright, arguing that the point of the draft law is to reduce the number of tax breaks, not to introduce new ones. He also rejected the committee’s proposal to annul taxes on holding companies. The committee had argued that public sector firms should not pay taxes because they play an important role in securing Egypt’s social net. Boutros-Ghali, however, would have none of it. He argued that all companies in Egypt – whether public, private, local or foreign – should be subject to the same tax treatment.

TE bond oversubscribed
Telecom Egypt’s £E 2 billion bond issue closed with over-subscription. Late last year, state fixed-line operator Telecom Egypt announced the issuance of 20 million tradable bonds valued at £E 2 billion to mature over a five-year period. Described as Egypt’s biggest corporate bond issue, the offering was split into two tranches, the first fixed at an interest rate of 10.95 percent, and the second floating at 0.70 percent above the Central Bank of Egypt (CBE)’s discount rate.

Middle East Ratings & Investors Service (MERIS) – a local affiliate of Moody’s Investor Service – gave Telecom Egypt’s bond issue a national scale credit rating of AA with a “stable” outlook. “We received requests to buy £E 3.83 billion worth,” Telecom Egypt chairman Akil Bashir said, adding that the majority of the buyers were institutions.

Oil blackens cotton shipments
The Egyptian Cotton Exporters Union has formed a committee to look into a series of incidents in which motor oil contaminated cotton shipments. The shipments were refused in 2004 after importers discovered the Egyptian white fiber to be coated in a film of motor oil. The committee will attempt to determine the source of the oil, and steps to avoid a recurrence.

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