(Corrects spelling of "Mursi" in para 3) (The author is a
Reuters Breakingviews columnist. The opinions expressed are her
By Una Galani
DUBAI, March 11 (Reuters Breakingviews) - There will be no
winners in Egypt from a confrontation of the Muslim Brotherhood
government with the Sawiris family. The country's Islamist
rulers don't want to see billionaire Nassef Sawiris delist his
firm, Orascom Construction Industries, and head to
Amsterdam. Authorities have escalated a tax probe on the family
business that could compromise the move, which won backing from
prominent potential investors, including Bill Gates. The
high-profile spat sounds a major alarm bell to foreign
Sawiris' bid to move OCI's primary listing to the
Netherlands is likely to end in the delisting of one of Egypt's
largest firms, with a market capitalisation of around $8
billion. The firm's global depositary receipts have already been
converted into shares in the Amsterdam-listed entity, OCI NV.
But the Dutch unit can't launch a mandatory tender offer for the
remaining shares listed in Cairo until Egypt's regulator
approves the deal.
That's unlikely to happen until OCI settles a claim that it
owes up to $2 billion of unpaid taxes relating to the sale of
its cement activities to France's Lafarge in 2007. OCI
insists the sale was exempt from any capital gains. Analysts
tend to support this view, lending credence to the allegations
that the claim is politically motivated. It was raised for the
first time last year after President Mohamed Mursi delivered a
speech promising to step up the government's fight against
The unpredictable investment environment has already
prompted an exodus of Egypt's billionaires. Nassef's outspoken
brother Naguib has sold most of his interests in the country
over the past two years, including Egyptian mobile operator
Mobinil. Egypt's second-richest family, the Mansour
Group, is in talks to sell the country's largest supermarket
The Egyptian government keeps saying it wants to reconcile
with business leaders, yet its chaotic methods, along with a
corrupt judiciary and newly politicised regulators, are creating
more damage by the day. If Egypt's top homegrown entrepreneurs
can't prosper in the country, foreign investors will wonder
whether they should even bother to try.
- Egyptian authorities have barred Nassef Sawiris, the chief
executive of Orascom Construction Industries, and his father
Onsi, from leaving the country as part of an investigation into
- The order from the public prosecutor is part of an
investigation into accusations they evaded about 14 billion
Egyptian pounds ($2.1 billion) of taxes during the sale of
Orascom Building, an OCI subsidiary, to French firm Lafarge,
state news agency MENA said.
- OCI says the Egyptian Tax Authority has made a claim for
4.7 billion Egyptian pounds and all capital gains resulting from
the sale of shares listed on the Egyptian Stock Exchange (EGX)
are tax exempt.
- OCI is separately finalising a deal that will shift its
primary listing from Egypt to Amsterdam and could eventually see
the firm leave the Egyptian stock market.
- The two-stage deal involved holders of OCI's global
depositary receipts converting into ordinary shares of OCI NV.
Holders of the firm's Egypt-listed ordinary shares would then be
given the option of cash or OCI NV shares.
- OCI has obtained commitments in excess of $2 billion from
investors, including Bill Gates, to pay shareholders that elect
to sell their OCI ordinary shares for cash.
- The firm's shareholders have approved the deal but the
Egyptian regulator asked last month for more information on the
- OCI has a market capitalisation of $7.7 billion.
- Reuters: Egypt's OCI to discuss tax claim with authorities
- For previous columns by the author, Reuters customers can
(Editing by Pierre Briançon and Sarah Bailey)