The Egyptian Financial Supervisory Authority (EFSA) will implement controls on internal dealers and board members at companies that have been manipulating stocks and financial reports data, even after the Public Funds Prosecution completes its investigation of them, chairperson of the authority Sherif Samy said.
The EFSA allows full freedom in trading stocks on the Egyptian Exchange (EGX). The authority will not prohibit those who have been manipulating the system from trading, but rather it will impose very tight measures on the deals they conduct and will subject them to strict reviews.
The EFSA decided to move a lawsuit against board members of three companies listed on the EGX early last week. The authority has gathered information proving their involvement in committing violations and manipulations of stocks. These companies are Golden Coast for Touristic Investment, Gharbia Islamic Housing Development (GIHD), and El Wadi for Touristic Investment (ELWA).
The EFSA will intensify its efforts to control minute daily trading on the EGX to detect any newly attempted manipulation, according to the chairperson.
Samy’s remarks to Daily News Egypt came after the authority’s decision to file a lawsuit against the chairperson and managing director of Golden Coast, Tarek Abbas; the managing director of Administrative Affairs Mansour Ahmed Zaher; and board member, Bilal Nadim.
The EFSA also decided to file a lawsuit against Mohamed Al-Isawi, a board member representing El-Khedewy for Construction & Development, among others, on charges of manipulating shares of GIHD.
Moreover, the authority is moving to file another lawsuit against Tarek Abbas who is also chairperson and managing director of ELWA.
The EFSA carried out all necessary procedures in investigating the defendants after first detecting their manipulation of the system, Samy said. The file has been referred to the Public Funds Prosecution for further investigation before moving to courts.
The EFSA did not disclose the names of all those accused—only the board members, Samy added.
The authority has recently decided to suspend trading for El-Ahram for Printing and Packing (EPPK) and Marsa Alam for Tourism Development Investment SAE due to violations in their financial statements.
Turning to the case of the EPPK, Samy said that the authority referred a number of the company’s officials to the Public Prosecutor, pending investigation of disseminating misleading disclosures.
Trading on EPPK shares returned two months ago after inspectors and auditors completed their investigations.
A committee which includes EFSA members is working side by side with members of the General Authority for Investment and Free Zones (GAFI) and members of the Public Funds Prosecution. This committee is still investigating EPPK headquarters and verifying the accuracy of its financial statements.
According to the authority’s data on EPPK, the committee found many violations. Among these violations is chairperson of the EPPK Ahmed Al Alimi signing contracts with a company in which he is invested, without presenting the contracts before the general assembly of the EPPK.
Moreover, the report stated there is a “suspicion” of fraud in documents the company had presented to the EFSA.
The EFSA had suspended trading on EPPK shares in January. A statement released at the time listed a number of violations that required amendment in light of the financial adviser’s report, where the budget listed EGP 17.58m as “Under Construction Projects” while it should have been EGP 0, among other accusations.
El-Ahram for Printing and Packing (EPPK) works in production, manufacturing and printing of packaging materials of all kinds, especially carton, paper, plastic, and multi-layered, with a current capital of EGP 41.6m, divided into 8.3m shares at EGP 5 per share.