A young Egyptian IT executive awaits trial in New York on fraud charges. Reem Nafie looks into the perplexing case of Linkdotnet CEO Khaled Bishara , the chief executive of Linkdotnet and a board member of Orascom Telecom Holding, has pleaded not guilty to charges that he defrauded the US Agency for International Development (USAID) of more than $1 million. According to a complaint filed in a Manhattan federal court in April and obtained by Al-Ahram Weekly, Bishara's firm, Linkdotnet, invoiced USAID for about $2.1 million for telecommunications equipment that the company had actually only paid just over $800,000 for. Linkdotnet allegedly used most of the remaining funds to pay off a past purchase of equipment, according to the complaint. Because the money was wired to accounts in Ireland, Dubai and Canada, the actual charge is one count of wire fraud. The US Attorney's Office for the Southern District of New York confirmed that Bishara was arrested on 10 July, arraigned two days later and freed on a $500,000 bond and $300 cash. "In other words, Bishara paid only $300 in cash as bail, but guaranteed that $500,000 were placed in a bank account as an interest- bearing certificate," Dion Washington, a spokesperson for the prosecutor's office, explained. Bishara also "gave in" his passport and is not allowed to leave the US. There has been no indictment, and a "hearing scheduled for 9 August has been postponed until 8 September," Washington said. One of Egypt's biggest Internet Service Providers (ISP), offering customers Internet access and other web-related content and services, Linkdotnet is also partnered with Microsoft as part of their global MSN portal. The company's marketing manager, Omar Fahmy, described the charges as "an administrative matter". Linkdotnet's parent company, Orascom Telecom, is the largest cellular operator in the Middle East, with operations in nine countries stretching from Algeria to Pakistan. It is also Egypt's largest publicly listed company, with a market capitalisation of 14.7 billion Egyptian pounds. Orascom chief executive Naguib Sawiris declined to comment on the Bishara case, saying the matter concerned Linkdotnet, not the parent company. At press time, the share price of Orascom -- which owns 75 per cent of Linkdotnet -- on the Cairo Stock Exchange seemed unaffected by the news, which had been spreading rapidly through the Egyptian IT and financial world over the past few weeks. The story first appeared in an online report on the website of Business Today, an Egyptian English-language monthly journal. Within four days, however, it was inexplicably removed from the site. A few weeks later, it broke again -- nearly simultaneously -- in several Arabic papers and news wires. Bishara is well known as one of the youngest, most successful entrepreneurs in the Egyptian IT field, and Linkdotnet has won awards such as Microsoft's Customer Experience of the Year for 2004. As such, some of his colleagues in the business were shocked when they heard the news. One IT company manager who preferred to remain anonymous said, "I can't believe Khaled would do something like that; there has to be a mistake." Others said Bishara seemed over- enthusiastic about the company's USAID business. "We saw it coming," said an executive at a competing ISP, who wished to remain anonymous. "We knew something was going to go wrong." At Linkdotnet's offices in Cairo, meanwhile, said an employee who preferred to remain anonymous, "most of the company's top bosses were making a huge effort to keep the matter a secret." In fact, many of the company's employees only found out that Bishara had been detained via the Business Today story when it was first published. When they asked for a clarification from company management, they were told it was a rumour. However, now that the story has broken, Fahmy said the company's work remained unaffected by the news, and the employees "stand by their CEO and support him". According to the complaint, filed 19 April in the US District Court for the Southern District of New York, Bishara is charged with "having devised and intending to devise a scheme and artifice to defraud, and for obtaining money and property by means of false and fraudulent pretenses, representations and promises ... with a scheme to defraud USAID of more than a million dollars." According to Marvin Burgos, the special agent with USAID's office of the inspector general and the person who supposedly uncovered the alleged fraud scheme, "Bishara submitted a fraudulent application on behalf of Linkdotnet to USAID seeking foreign economic assistance and caused USAID to wire approximately $2,104,688 from an account in New York to Ireland, the United Arab Emirates and Canada purportedly to pay for communications equipment." Egypt is the second-largest recipient of USAID in the world, receiving some $2 billion dollars a year in assistance, more than half of which is earmarked for the military. The rest usually supports development projects. One of the foreign assistance programmes administered by USAID in Egypt is a commodity import programme (CIP) that seeks to promote development in the Egyptian private sector by providing financing to Egyptian companies to purchase commodities manufactured in the United States. The company repays the loan in Egyptian pounds to the Egyptian government, which in turn uses the funds, in consultation with USAID, for development projects in Egypt -- hence giving Egyptian companies access to relatively scarce, interest-free US dollars to purchase US commodities, and providing aid to Egypt for further development. Any Egyptian company that applies to the CIP for a USAID loan is required to purchase US goods and obtain at least three bids for the commodity, to help ensure that the price is reasonable. Bishara submitted an application to USAID on 11 August 2001 on behalf of Linkdotnet, requesting financing through the CIP for the purchase of communications equipment. As part of the application, Bishara allegedly included two unauthorised, phony bids from purported American suppliers of the communications equipment. The bids were from CyberCrossing, a company registered in Delaware that the complaint said was "without a known place of business", and Gulflink, a company based in California. Based on this information, USAID wired the money. According to the complaint, however, Bishara then used the funds to: "1. Purchase only approximately $828,891 worth of communication equipment from Saudi Egyptian Logistics and Electronics Company (SALEC), even though he had committed to purchasing approximately $2,084,688 worth of equipment from CyberCrossing; 2. To pay off a debt of approximately $828,891 Linkdotnet owed to SALEC from a previous transaction; and 3. Pay approximately $347,222 to SALEC as a profit on the transaction." Several attempts to contact Bishara via his personal e-mail address were unsuccessful. It remains unclear why he traveled to the US, even though he most likely knew that there was a warrant there in his name. USAID Investigation Officer Rob Perkins, whose department is responsible for "monitoring the money that leaves USAID and making sure it is spent in the correct manner", said he had "no idea why [Bishara] came" to the US, although he probably knew there was a warrant in his name. Industry sources in Cairo said he might have been headed to Canada to attend a major IT conference.
