BREAKINGVIEWS-Brotherhood faceoff with Sawiris is bad for Egypt

(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

chain, Metro.

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

tax evasion.

- 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

on Sunday

- For previous columns by the author, Reuters customers can

click on

(Editing by Pierre Briançon and Sarah Bailey)