Business tycoon Hussein Salem was acquitted on Thursday by Cairo Criminal Court of charges of squandering public funds in the retrial of a case stemming from allegations that his company had sold natural gas to Israel at below market rates.
According to his lawyer Mahmoud Kebeish, Salem’s acquittal followed acquittals that were handed out to his co-defendants due to the absence of substantiating evidence.
When the initial verdict was handed down in June 2012, Salem was sentenced to 15 years in prison. The sentence was vacated for all defendants in February 2015. However, the prosecutor appealed the decision and a retrial was ordered.
The Illicit Gain Authority announced in August 2016 that the government had finalized a reconciliation deal with Salem in which he paid the government LE5.8 billion, according to the state-owned Al-Ahram newspaper. The February Cairo Criminal Court decision accepted Salem and his family’s petition against the decision to freeze their assets.
The reconciliation process began in March 2016, after the government accepted Salem’s offer to cede ownership of what he claimed was 78 percent of his assets in return for being allowed to return to Egypt without risk of prosecution.
During the press conference in which the reconciliation deal details were announced in August, Illicit Gains Authority head Adel Saeed described the deal as the biggest of its kind in Egypt. He also added that the government will not take any further legal action against Salem in accordance with the conditions of the deal.
However, the list of property given up by Salem does not include any assets or funds abroad, nor any investments or profits he made in the petroleum sector, which constitutes his main investment activity.
Egyptian Initiative for Personal Rights (EIPR) researcher Osama Diab previously told Mada Masr in August that the government’s estimation that it had acquired at least 75 percent of Salem’s assets is grossly inaccurate, as the Illicit Gains Authority’s asset list neither accounts for assets held in international banks, nor Salem’s offshore companies, which constitute a large portion of his fortune.
According to Diab, the assets acquired in the reconciliation deal do not make up more than 20 percent of Salem’s fortune.
Additionally, Mada Masr acquired an official state document bearing details of Salem’s assets, suggesting that he has ceded no more than a quarter of his real fortune. The document was submitted to a court during a 2011 case investigating gas exports to Israel in which Salem was one of the defendants.
The document contains Salem’s declaration of profits from his investment in the East Mediterranean Gas Company (EMG), as well as his shares in the company.
EMG was established on January 29, 2001, to take on the transfer and sale of gas to Turkey and other Mediterranean countries. Salem was the chair of its board and owned 60 percent of its shares, while the state Petroleum Agency held a 10 percent share. The Israeli company Mersaf held a 20-percent share in the company, while a British company held remaining 10 percent.
In 2005, all shares owned by Salem in EMG were transferred to the Mediterranean Gas Pipeline (MGPC), which acquired 65 percent of EMG.
In 2007, Salem sold 39 percent of MGPC’s share in EMG to the American EGI and Thai PTTI companies for a total of US$631.9 million. The price for a single share ranged between $7.16 and $13.25. Salem made a profit of half a million dollars from the sales process. He also made profit from the sales of an additional 28 percent of MGPC’s shares in EMG to a Thai businessman, the value of which has not been verified.