Egypt Tries Undoing Mubarak Deals

As Egypt struggles to revive an economy battered by last year’s uprising against Hosni Mubarak, private lawsuits are attempting to overturn the sale of state assets during his rule. The court actions present the new government with a dilemma: It’s trying to attract foreign investment while addressing the demands of a population that stages protests and strikes almost weekly. Many protesters demand the return of former state companies to the government, or a renegotiation of the prices of old deals. “I pity them,” says Hisham Fahmy, chief executive of the American Chamber of Commerce in Cairo, of Egypt’s new rulers. “They’re coming on the shoulders of a popular movement and, being the government, they owe it to the public to make sure there is social justice, and that’s hard to balance.” Potential investors are clearly concerned about the safety of investments. Foreign direct investment for the latest fiscal year was down 84 percent from its 2007 peak.

Most of the disputes relate to a privatization program, started in 1991, that critics of Mubarak say is one of his most corrupt legacies. What ordinary Egyptians especially resent is that the new owners of the privatized companies often forced workers into early retirement, a hot-button issue in a country with high unemployment. While Prime Minister Hisham Qandil has said the contracts will be respected, “this remains to be seen,” Mona Zulficar, nonexecutive chairwoman of Egyptian investment bank EFG Hermes, told an investor conference on Oct. 9. In all, 382 state companies were sold for 57.4 billion Egyptian pounds ($9.4 billion) from 1991 to 2009.