Egypt will be taken to the international arbitration courts by Saudi investors for asset seizures that led to losses of over $350 million.
Shaikh Abdul Elah Kaki and his family, who own the Noubaria Seed Production Company and Tanta Flax and Oil Company, have sued the Egyptian government for $250 million and $100 million in two separate legal claims.
Noubaria Seed company, Alexandria-based fruit and vegetables export company, was acquired by the Kaki family in 1997 after the privatisation by the then government led by Hosni Mubarak. Later in October 2011, the company was seized by the state following a ministerial decree.
In a similar manner, Tanta Flax, an exporter of flax seed and fibres, was acquired in 2005 in a privatisation drive but a Cairo court ruling annulled the decision. The company has been deprived of supplies, but was allowed to function. This means the firm is expected to pay wages of the employees.
The law firms acting on behalf of the company were unable to get any information as to why the seizures took place. Benjamin Knowles, the Clyde and Co partner working on the Tanta Flax dispute, said that his client would be claiming $100 million that had been lost in costs, assets and wages paid to employees.
“It’s basically been a coup,” said Jo Robert Lambert, a partner from Clifford Chance, the firm acting for Noubaria.
The decision is not likely go well among investors as there is uncertainty about whether their assets are the next to be seized by the Egyptian government. The Egyptian military rulers had earlier taken action against a number of Dubai-based firms such as Damac, and sentenced its chairman in absentia. The interim government has taken many businessmen to courts who conducted business deals with the Mubarak regime and confiscated their assets or land.
Shaikh Abdul Elah is a prominent Egyptian businessman with investments in GM Egypt and Delta International Bank. The acquisitions during Mubarak-era were through a legitimate tender process. However, many analysts argue that many deals were reached that involved bribery and corruption.