PM: No collective settlement to bank clients' problems
Egypt, Economics, 8/5/2002

In an attempt to overcome the economic instability caused by the accumulation of debts of investors to banks and which led to the escape of dozens of investors out of the country, Prime Minister Atef Ebeid called upon fugitive businessmen to return to settle their problems. He promised they would not face any police or judicial procedures.

In a special statement to the newspaper al-Gomhuria, Ebeid highlighted the five goals to his initiative; lower bank interests and expenses, reschedule debts with an additional grace period, give more credential facilities after signing an accord between the investor and the bank with a contract, and finally present real guarantees for banks.

However, Ebeid said to Rosa El Yousef magazine that the government would not offer solutions to the problems of the investors. He pointed out that the aim is to return them to the negotiation table to prove their seriousness over settling their problems. Therefore, the problems of the bank's clients can not be settled collectively, as each one has different circumstances.

Commenting on the governmental initiative, the deputy chairman of Misr Banks Federation, Ahmed el-Baradei welcomed it, affirming that banks deal with depositor's funds and work on protecting them.

At the same time, he confirmed that each individual problem has different circumstances.

He pointed out that some businessmen used the loans in different activities than those that they had applied for the loan, and couldn't expect the bank's cooperation. Therefore, it is the role of the bank to check that borrowed funds have been utilized correctly.

The bank should support debtors with problems, by rescheduling their debts and even supplying them with more funds to keep afloat their projects. El-Baradei, who doubles as board chairman of Cairo Bank, affirmed that the client who utilized the banks' funds for personal means would be pursued as would those who have stolen funds.

Nevertheless, some businessmen expressed their suspicion over the government's initiative, especially as it was preceded by a similar one two years ago, which ended in freezing all settlements reached between the businessmen and the government and banks.

The lawyer of businessmen such as Rami Lakah, Hatem el-Hawari and Mohamed el-Garhi has cast doubts over the credibility of Ebeid's initiative.

He attributed his suspicion to the previous experiment conducted under the supervision of Minister Yousef Boutros Ghali and the ex-Governor of the Central Bank. However, no single agreement reached between the sides has been enforced.

Tharwat Abdul Shahid affirms that the missing businessmen need more assurance from the government, through the settlement of the problems of the investors in Egypt first, as proof of their seriousness to salvage investors, whether in or out of the country.

Mohamed el-Garhi, one of the famous businessmen suffering with colossal debts, criticizes a separate settlement for each businessman, a matter that will take years to sort out.

He added that the solution is to reach a clear mechanism to settle the problems of all businessmen, who can't repay their debts, especially if their problems are similar.

He noted that he is faced with many banking problems , now that the legislative administration has started taking procedures against him.

He wondered why the government did not apply this procedure to the Arab Contractors Company in the private sector.

He noted that when the Arab contractors suffered problems in the market and accumulated huge debts, the government worked on keeping them afloat by lowering the company's debts by the value of its assets, and offering a period of grace with the rescheduling of debts.

El Garhi expressed his readiness for settlement in the presence of a representative of the supervising agencies, so that bankers won't hesitate in taking decisions.

Another famous businessman, Taysir el-Hawari, who has debts of LE330 million, criticizes the call to missing businessmen, leaving the investors who remain here to suffer possible jail terms and bankruptcy.

El Hawari, who is a trader of strategic commodities of concrete iron, suggests a call, through the Chambers of Commerce's Federation, to investors with problems with the banks, and confirm that these problems will be settled.

He asks for the formation of a committee of specialists, to be headed by the former governor of the Central Bank, Ismail Hassan, to debate the different cases and determine those liable for floating and settlement, according to a clear time schedule.

Only then will the missing investors return back to settle their problems with banks and recommence their activities in Egypt.

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