The government's economic policy record has been sharply criticised by the country's top court in a ruling that has established the innocence of two businessman jailed at the start of 2001 in connection with a major iron and steel investment project south of Aswan (MEED 26:1:01).
Mohamed Bahgat and his business partner Mohamed el-Shimi have been sentenced to 15 years and 10 years in jail respectively on charges of squandering public money. Bahgat had won a concession to develop iron ore deposits in an area to the east of Lake Nasser. He formed a venture with several international partners, including SMS Demag of Germany and US Steel Corporation, to process the ore and build a steel plant. The case against the two men related to stakes taken in the venture by three state-owned entities. The government claimed Bahgat and El-Shimi had obtained these investments fraudulently, on the basis of a DM 54 million ($27 million) letter of guarantee (LG) for the order of equipment from SMS Demag.
The Supreme Security Court on 11 June ruled that the two businessmen had acted quite properly, and that the documents presented by the defendant were quite in order. Bahgat and El-Shimi were immediately released.
'I am very relieved,' says a German businessman who had been involved in the project from the start. 'I couldn't believe the original decision, and it was clear to me that there were political factors in the case.'
The court stated in its summing up that the case had exposed serious deficiencies in the government's approach to economic policy and attracting foreign investment. It said that trust, transparency and consistency were vital elements for the success of a policy aimed at creating the conditions for productive investment in the economy.
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