The government's crackdown on businessmen who defaulted on their bank loans witnessed a serious new escalation this week. Gamal Essam El-Din reports On Monday, Prosecutor-General Maher Abdel-Wahed ordered that multimillionaire Hossam Abul-Fotouh be referred to trial before the Financial and Commercial Affairs Court. The trial will begin on 23 December. Abul- Fotouh faces charges ranging from dodging custom duties on alcohol and importing banned goods, to possessing unlicensed communications equipment. He was remanded into custody on Sunday for 15 days pending investigations. Worse, Abul-Fotouh is also being questioned by the Supreme State Security Court over allegations that he offered bribes to Mohamed Abul-Fath, the former chairman of Banque du Caire, in return for obtaining hefty credit facilities. Abul-Fath is currently being investigated based on claims that he abused his position by providing LE12 billion in credit facilities to a handful of businessmen in the absence of any collateral. Abul-Fath and Abul-Fotouh were barred from leaving the country last October by Abdel-Wahed. Abul- Fotouh's assets were also sequestrated following his alleged default on loans of more than LE1 billion owed to Banque du Caire and Misr Exterior Bank. The dramatic developments in the Abul-Fotouh case took the business community by storm. Abul-Fotouh, the Egyptian agent for a famous German automaker, had been in the midst of coordinating with the Federation of Egyptian Industries (FEI) in debt-rescheduling negotiations with the banks. His arrest this week shattered notions that the negotiations were going in the right direction. On 12 December, security forces stormed Abul-Fotouh's Maadi villa, where they found smuggled bottles of alcohol and satellite communications and wireless equipment. Police also found an old statue of the Virgin Mary, and nine bags containing important documents related to Abul-Fotouh's bank deals. During the investigation, Abul-Fotouh denied that the documents belonged to him. He also said he was ready to pay the required custom duties (LE6.5 million) on the goods that were found in his possession. Abul-Fotouh claimed that the villa belongs to Eissa El-Ayyouti, the ex- chairman of El-Nil Bank who is currently serving a prison term in the so-called "loan deputies" case. Abul-Fotouh's lawyer, meanwhile, said the documents that were found have nothing to do with Abul- Fotouh's bank deals. Another businessman in big trouble these days is steel magnate Abdel-Wahab Qouta -- a heavyweight National Democratic Party (NDP) MP. On Sunday, the People's Assembly voted to strip Qouta of his parliamentary immunity in order to clear the way for investigations on charges of alleged profiteering by Qouta, as well as the facilitation of the acquisition of public funds. A request submitted by Prosecutor- General Maher Abdel-Wahed said Qouta had managed -- via personal contacts with Misr Exterior Bank's former chairman Abdalla Tayel, to illegally reduce his debts to the bank. The reduction took place when Tayel, who also used to head parliament's economic affairs committee, allowed Qouta to pay back his dollar-denominated loan against an exchange rate of $1/LE4.27 instead of $1/LE4.61, the official rate set by the Central Bank of Egypt (CBE) at the time. This discrepancy led to an improper reduction of LE4.8 million from the value of Tayel's loan from Misr Exterior Bank. Qouta's defaulted debts to Misr Exterior Bank are estimated at LE20 million. To most MPs' surprise, Qouta defended himself before parliament by emphasising that it was actually his son, Mohamed Qouta, who obtained the loans from Misr Exterior Bank. Tayel, meanwhile, is in custody for three months pending investigation on charges of bank fraud and graft. Businessman Adel Agha has also run into a bit of trouble. On 12 December, prosecutor Abdel-Wahed ordered that Agha's assets be sequestrated -- the decision also applied to assets owned by Agha's wife, two sons and one daughter. Agha has been charged with obtaining LE488 million in loans from Banque du Caire without offering adequate collateral in return. He also allegedly smuggled LE11 million into overseas banking accounts. A Syrian- American-Egyptian businessman, Agha is currently serving a three-year prison sentence with hard labour after the Supreme State Security Court found him guilty of giving hefty bribes to former finance minister Mohieddin El-Gharib and other Customs Authority officials in return for their enabling him to get away with not paying millions of Egyptian pounds in custom duties. El-Gharib, 65, was also sent to eight years in prison with hard labour after he was convicted of three offenses: profiteering; misappropriation of public funds and depriving the state treasury of LE29 million in custom duties. On Monday, however, the Court of Cassation took observers by surprise with its approval of an appeal submitted by El-Gharib. The court ordered El- Gharib, and five other high-level officials at the Customs Authority, to be released from prison and retried before another circuit of the Supreme State Security Court.
