Top aviation officials have been charged in a major corruption case that has rocked the industry. Amirah Ibrahim reports In one of the largest cases of its kind, five top aviation officials and five of their private sector partners will be tried on corruption charges. The five officials include the former head of the Aviation Authority Abdel-Fatah Kato, and four other heads of sectors at the former Aviation Authority. The five businessmen include Egyptians and Iraqis who are the main shareholders of the UK-based company, Malicorp. Prosecutor-General Maher Abdel-Wahed said the company had taken part in a series of improper actions as it pursued "the right to build a BOT airport in Ras Sedr in Sinai, with the help of officials in the former Aviation Authority, causing serious damage to the aviation industry and business, with estimated losses of LE6 billion." On Tuesday, Ibrahim Manaa, head of the Holding Company for Airports, held a press conference to reveal more details on the case. "In August 1999, the Aviation Authority -- which was later dissolved in 2002 -- invited investors to build a new BOT airport in Ras Sedr. The British Malicorp company applied, as did several other companies, and its offer was accepted," Manaa said. "Malicorp signed a contract in November 2000, by which it had to deliver a LE2 million bank guarantee letter, and establish a joint Egyptian-British company to manage the airport, within 90 days, as stipulated by Egyptian law. "The company did not fulfil those requirements. Meanwhile, since the project was to be built in Sinai, national security entities informed aviation authorities of certain objections they had regarding this company. Thus, aviation authorities broke the contract on 12 August 2001. The measure was confirmed by the cabinet, which broke the contract on 29 August 2001, and the file was closed." The British company, Manaa said, then filed a complaint in May 2004 against four Egyptian government bodies: the Transportation Ministry, under which aviation had been affiliated; the current Aviation Ministry; the Holding Company for Airports, which controls airport business; and the Egyptian Airports Company, which manages all Egyptian airports except for Cairo International. "The company requested international arbitrators, and asked for $8 million compensation for damages to its business and lost profits. They later raised their compensation demands to $100 million, and in end they demanded $514 million in compensation." The closed files were opened again, and a team of experts from Cairo University's engineering school and the Holding Company for Airports carefully studied each document. Several improprieties were discovered and reported to the legal authorities. "We discovered about three contradictory documents regarding the company's capital," Manaa' said. "The first said it was two English pounds sterling, the second estimated the capital at 1,000 sterling, and the third said 100 million sterling. English authorities were not able to ratify the last figure. We also recently obtained an important document from the English Companies Authority regarding Malicorp's budget indicating that its capital was only two million English pounds." According to Manaa, the Aviation Ministry has filed a counter suit against the British company requesting compensation. Speaking to Al-Ahram Weekly, Aviation Minister Ahmed Shafiq indicated that he informed the general prosecutor in October 2004 about the dispute with the English company. "The investigations continued until it was revealed that five aviation officials, including the former head of the Aviation Authority, would have to face charges." Shafiq said, "the English company's financial status alone should have indicated that it was not a serious company, and should not have been granted the project. Yet, we also discovered other serious problems. The company modified the project specifications that had been approved by Egyptian authorities, lowering the requirements in the process. They shortened the airport's runway by half a kilometre, thus reducing their costs by LE1.6 million, and decreased the tarmac's capacity from five to three planes at a reduced cost of LE3.6 million. Even the passenger terminal's capacity was decreased from LE2.5 million to just one million, at a reduced cost of LE3.6 million. The contract's duration had also been modified from 40 years to 41 years." Shafiq said he thought these discrepancies were so serious that they warranted the general prosecutor's singling out the former aviation officials for trial, although "we did not specifically accuse them."
