Kefaya calls for referendum on privatization, blasts corruption in new report

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CAIRO: The Kefaya Movement for Change has taken a stand this week against the privatization of state-owned properties, calling for a national referendum before any further sales can take place.

The activist group, whose public support has dwindled in the last two years, claims that the country’s privatization program has been marred by rampant corruption. They argue that many properties have been sold for far less than their actual value to investors with the right political connections. In this environment, they say, the state no longer has the legitimacy to sell Egypt’s public enterprises without first consulting the people.

Kefaya’s demands were raised in a new report released by the group, entitled “No to the Sale of Egypt. “Selling any more public assets is forbidden from May 23, 2007 until the people decide how to deal with their remaining possessions in a true referendum, not a farce, with full judicial supervision, thunders the report. No government response to the referendum demand has been forth-coming.

Kefaya activists insist that they are not opposed to the idea of privatization, as long as it is in the best interest of the country.

“We are not against privatization, especially if it results in more productivity and in new industries, Kefaya leader Abdel Wahab El Messiri told The Daily Star Egypt. “But here in Egypt it has opened the doors to a very parasitic form of capitalism. Managers destroy their own factories just to sell them off, sometimes just to make money off of the real estate.

“If privatization leads to new innovations in industry and improvements in people’s lives, then we support that, he added. “But that is not what it is doing now.

To illustrate their case, Kefaya points to last year’s high-profile sale of state-owned retail giant Omar Effendi to Saudi firm Anwal United Trading Company. The sale turned controversial when Yehia Hussein Abdel Hady, the head of Omar Effendi’s sister company Benzione, came out against it.

The state originally accepted Anwal’s first offer of LE 500 million for the chain, but Abdel Hady claimed its true value was LE 1.14 billion. He accused the state of offering the Saudi firm a cut-rate price in exchange for kick-backs. After months of investigation, the charges were dismissed, and during the controversy Abdel Hady was forced to resign.

After the investigation, Anwal raised its offer to LE 655 million. They also agreed to pay LE 50 million in early retirement packages for 1,200 employees, and to pump LE 200 million into the company for immediate renovations.

According to Magdy Sobhi, an economist at the Al Ahram Center for Political and Strategic Studies, privatization deals are rarely transparent and so it is difficult to know when they are corrupt. “I doubt that anyone in Egypt has all the details about the various privatizations that have happened, he says.

But by blowing the whistle on the Omar Effendi sale, he says, Abdel Hady exposed many of the inner workings of privatization and opened the process to more public scrutiny than ever before.

“We don’t have all the detailed information we need to decide what is corrupt, but if we have insiders to tell the world what is going on it sheds a lot of light on how privatization works, he says.

“If the buyers themselves were willing to raise their price by LE 100 million, then that could tell you something, he adds. “They may have known that they were paying too little in the first place and wanted to make the problem go away.

Corruption has become a hallmark of the Mubarak regime, say Kefaya leaders. They worry that the president’s son, Gamal Mubarak, is being groomed to inherit the executive office so that the system of patronage built by his father can remain intact.

“They want Gamal Mubarak to inherit the presidency, but not out of any great love for the Mubarak dynasty, says El Messiri. “They are afraid that somebody new would open all of the files in this country on their corruption, and expose them for what they are.

In light of this, members of the Movement for Change remain pessimistic about the possibility of peaceful reform within the system.

“In this regime, there are only the corrupt people and everyone else who is trying to resist them, says Kefaya activist Karima El Hefnawy. “This regime is totally corrupt. How can you reform a regime once it has become like this? We need a bigger change; we need a total change in the regime. That is the only way things will get better.

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