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Will Abraaj Group be able to sell its stake in Spinneys?

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Spoiled foodstuffs stall deal after many complaints from consumers and raids of Spinneys branches in City Stars, Mall of Arabia, and Hurghada

Arif Naqvi, CEO of Abraaj Group

Arif Naqvi, CEO of Abraaj Group

By Mohammed Ayyad

About four months ago, a senior official from the Abraaj Group (formerly Abraaj Capital) announced its intent to sell its stake in Spinneys and that it had received offers from large companies to purchase those shares. Majid Al Futtaim Holding offered complete and partial buyouts, with CEO Iyad Malas mentioning during an interview on the margins of the World Economic Forum in Jordan last May that Majid Al Futtaim Holding is seriously considering the matter. However another official from Majid Al Futtaim told Daily News Egypt that there are doubts in closing this deal.

Egyptians who had suffered side effects after consuming food products from Spinneys outlets in Egypt notified the Food Supply Investigation authorities which in turn uncovered that some Spinneys products were expired, contained carcinogenic substances, and were unfit for human consumption. These events have contributed to stalling the business negotiations.

Official reports obtained by Daily News Egypt revealed that seven tonnes of spoiled food products unfit for human consumption had been seized from the Spinneys branch at the Mall of Arabia. During a health inspection prompted by consumer complaints on 3 September, the Food Supply Investigation authorities seized food products which showed signs of damage and rot and emitted a foul odour.

Spinneys branches in Hurghada and City Stars are facing blowback after the official dossiers were released showing that they had sold expired products and did so without a licence, commercial registration, or tax registration. This series of events has damaged the company’s reputation and has raised questions about the soundness of its policies and procedures regarding sales and protecting the health and safety of consumers.

This has become a crisis of sorts for Spinneys which is now under full investigation. On the surface, the store’s promotional offers seem to ease the burden on the average citizen, but in fact, the store is secretly eroding away the health of the Egyptian people. These violations have made it more difficult for Abraaj Group to sell its stake in Spinneys.

Spinneys branch in City Stars Mall

Spinneys branch in City Stars Mall

Last February the Spinneys branch in Nasr City at City Stars Mall was raided after a tip from a customer who had bought spoiled meat. The raid discovered a large quantity of spoiled and expired food and imported meats which were being labelled as local. The raid’s report, number 4577, was released, and this is a message that we must awake and uncover who means to harm, destroy, and erase our nation and why they mean to mislead the Egyptian people.

In September the campaign to seize expired goods expanded to encompass shops and department stores. The Spinneys branches in City Stars, Mall of Arabia, and Hurghada were inspected after numerous reports were put forward which led to large quantities of spoiled food being seized. The attorney general interviewed the managers of the Spinneys locations under investigation and also decided to keep the seized food for evidence until the Ministry of Health releases its report. The health inspector of Giza has worked in conjunction with a committee on veterinary experts and together their inspection has revealed the presence of large quantities of spoiled food with inaccurate labelling as to when and where the goods were produced. The compromised goods included liver, poultry, turkey, minced meat, shellfish, and imported fish.

The final committee report stated that large amounts of these foodstuffs showed signs of damage, emitted foul odours, and were unfit for human consumption and should thus be destroyed. The management of one of these malls revealed that one of the Spinneys had been operating without licence for years. It had ordered that the store be closed in May until improvements were made and would remain closed if no licensing was produced.

Spinneys also placed false branding on its products, which prompted the brands to raise suit against the stores’ owners for the damage this has caused their brands’ image. They have also submitted a formal demand to mall management for financial compensation.

Mall management raised the issue to Spinneys, owned by Abraaj Group, regarding systematic irregularities and abuses. It had fined Spinneys on numerous occasions for legal, administrative, and security violations but these fines went unpaid.

Spinneys management resorted to ordering their staff to demonstrate in front of the mall, which deteriorated into problems with mall security, destruction of mall property, and accusations of forced seizure. This has been strongly denied by mall management, stressing that they have no relationship with Spinneys employees whatsoever who have no right to demonstrate and smash mall windows. They claim that this is a tactic from store management to exacerbate problems for mall management and distract from the violations and seizures while simultaneously tarnish the mall’s image. After the daily demonstrations in front of the mall had grown destructive, mall management summoned the police to put an end to the issue.

These events are directly connected to the Egyptian economy and are disrupting domestic and foreign tourism in Egypt. Mall management also stated that investors in Egypt were thankful for the authorities’ efforts to advance the Egyptian economy and tourism and get the wheel of production turning again.

Spinney’s Egypt was founded in November 2005 as a limited liability company with EGP 50,000 in capital. It is held by Spinneys Holdings Limited which is based in the British Cayman Islands and operates in Egypt, UAE, Lebanon, Qatar, and Jordan. Abraaj Group, the largest private equity firm in the Middle East, has the largest direct stake in the company. Abraaj Group includes prominent Gulf businessmen from Saudi Arabia, the UAE, Kuwait, Qatar, and Bahrain, most prominent of whom are Sheik Abdulrahman Al Turki, Hussain Nowais, and at its head, Arif Naqvi.


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