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Egypt steel tycoon jailed, but company lives on

Egypt steel tycoon jailed, but company lives on

Farah Halime
Farah Halime

By Farah Halime, Rebel Economy

An Egyptian criminal court sentenced steel tycoon Ahmed Ezz to 37 years in prison on Wednesday for profiteering and squandering public funds and fined him EGP 6bn ($889m).

Over the last two years, Ezz has morphed into a hate figure of the former regime, used simultaneously by the Egyptian courts to show it was getting justice done and by protesters as an example of the deceitful overlap between the National Democratic Party (NDP) of the former president and businessmen.

Ezz was charged with using his position as a leading official in the dissolved NDP to make illicit gains of about EGP 5bn. He received the harshest sentence to date.

He made several attempts to clear his name, and repeatedly denied any wrongdoing over the past two years, as Bradley Hope writes in The National:

“He hired Qorvis, a lobbying firm based in Washington DC, to ‘promote democratisation in Egypt’ and the need for a ‘transparent judiciary’, according to filings with the US Department of Justice.

“‘The allegations made against me are completely without foundation and are detrimental to my reputation and that of my family,’ he wrote in an open letter on 8 March 2011. ‘I refute all of the allegations brought against me and I know that a fair and proper legal process would prove my innocence.’”

But it is the rise of Ezz’s firm, Ezz Steel, into the country’s most powerful steel company that remains a controversy.  Even years before the uprising in Egypt, the company was subject to allegations of monopolistic behaviour, Hope writes.

Yet, the country’s main authority on this, the Egyptian Competition Authority (ECA) turned a blind eye, and in 2009 ruled that it had not broken antitrust laws.

Even as recently as August 2012, when Egypt’s Prosecutor General asked the ECA to look into the company again, it reiterated that it had not broken any anti-monoply laws

The company controls more than 50% of the Egyptian steel industry and has been linked to a number of cases suggesting it manipulated the market to gain a stronger footing, as an American University of Cairo paper details.  The removal of Ahmed Ezz from the company does not mean the same problems do not apply. 

Ezz Steel, aware of the accusations against it, dedicated a section of its website to the competition law in 2009, saying it is an “essential component” of the company. It said it had enforced its own compliance programme before Egypt issued its 2005 competition law, saying this “is probably an international first”.

Probably. Perhaps not.

The company must be vetted again and this time by a stronger regulator who can uphold  rule of law. Without this, it is difficult to see how Ahmed Ezz’s court ruling has any long-term meaning for Egypt.

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