EGYPTIANS BEING THE gastronomes they are, food items were among the best-selling commodities sucked into the country in the days following President Anwar Sadat’s declaration of the Open Door policy in 1975.

With them came the birth of the Business Scandal and the demonization of all business leaders because of the misdeeds of a few, a trend that continues to this day.

As foodstuffs poured in, consumers found imported delicacies on shelves overnight, but often bit off a little more than they could chew: Much of the food turned out to have expired.

Penguin Cheese put dozens of North Cairo primary students in hospital with food poisoning after it was discovered that Salama Khalil Rady, director of the Finnish-Egyptian Trade Center, had between 1979 and 1981 brought 9 million boxes of expired cheese into the country. Despite a confession and seizure of condemning documents and forged licenses, Rady was released in early 1982 after investigations concluded that 43 of the 80-some students admitted to hospital after eating the cheese were lactose-intolerant.

Smarter than crooks who simply changed expiry date stickers on packaged goods, one genius decided to change the content, not just the labels. Mostafa Gaballa was given five years with hard labor for selling cat and dog meat as canned beef, turning a quick profit of LE 15,000 in the process.

While Gaballa was scamming in Egypt, Palestinian-born Aly Safady was cheating refugees in Gaza camps out of their money. After he was thrown out by the Israelis, he found his way to Egypt where he quickly became known as the Sugar Mogul. Earlier this year, he was led off in handcuffs after bouncing checks worth LE 750 million. Safady was sentenced to 39 years after being extradited from Saudi Arabia on an Egyptian Interpol warrant. He had fled the country in 2001, leaving behind LE 250 million worth of raw cane in his mammoth factory after failing to pay off LE 525 million to creditors.

Al -Ahram Archives Ramy Lakah

The years after the 1973 war saw the Egyptian nation gravitating toward a more religious outlook and, capitalizing on sudden market demand for riba-free (usury-free) banking, a handful of entrepreneurs presented investors with the “halal alternative.”

By 1986, 12 such companies found themselves with more money than they knew what to do with, enticing thousands of customers with sky-high interest rates of 35 percent and more at a time when banks were paying a comparatively paltry 11 percent. It was just too good to be true, and economic pundits predicted it was only a matter of time before the other shoe fell.

And fall it did. Whether it was when someone finally realized that such returns could only be a result of a classic pyramid scheme (where returns were paid out of new investors’ money and if the company made profit, so do the investors; when the company took a loss so, inevitably, would the investors) or whether, as the conspiracy theory goes, the government intervened to save the by-now crippled banking sector, is rather a moot point to investors who suddenly lost all their life savings.

Everything unraveled when Al-Rayyan, the biggest name in the industry, lost a reported LE 1 billion in the stock market crash of October 1987. Anxious investors flocked to company’s headquarters on Pyramids Road demanding their money. Down but not out, Al-Rayyan survived the debacle, but depositors, understandably, were antsy. A few months later, the People’s Assembly passed law 146 of 1988, prohibiting companies from receiving any public money in any currency unless they were operating as joint-stock ventures.

Obviously most were not. Nor could they liquidate their assets (Al-Rayyan’s were thought to be worth an estimated $350 million plus and additional LE 800 million in local cash) to pay dividends to depositors or return their deposits. Hysterical depositors began looting companies’ properties and trying to physically attack owners.

Al-Ahram Archives Mohieddin El-Gharib

Sadly, some just couldn’t stand the shock and dropped dead of heart attacks. Meanwhile, the companies had an impossible time trying to meet the government demands. Soon, warrants were issued for the arrest of billionaire owners including Fathi and brother Ahmed Tawfik Al-Rayyan, Ashraf Saad (Al-Saad), Abd El-Fattah Al Sherif (Al-Sherif) and Hoda Abdel-Meneim (of Al-Hoda Misr, who fled but was arrested in Greece).

All served time and eventually settled debts. Investors, if they were lucky, got their money back throughout the 1990s in LE 500 installments and household goods (at quadruple their market value), such as electrical appliances and plastic wares. Ahmed Tawfik Al-Rayyan recently finished his sentence and last month had his remaining debts rescheduled.

With substantial amounts of money gone, the economy of the early 1990s could only survive with a much-needed shot of private investment. Egyptian banks, particularly government-owned ones, did a brisk business providing clients with millions of pounds and dollars in loans to support their business ventures.

A slew of consumer goods hit the market, satellite cities and summer retreats mushroomed, and private satellite channels blared. But the recession had taken its toll, and many ventures were unable to break even, let alone turn profits. Soon, investors began faltering on their loan repayments. But the dodging couldn’t last forever, and it was either pay up or get locked up. For a number of fat cats, there was a cushier solution: take it all and run. And run they did, leaving banks and the Egyptian government in a state of panic.

The mass exodus began with Tawfik Abdu Ismail, then a member of Parliament and former minister of tourism, who was implicated with former Prosecutor General Ragaa Al-Arabi in the Aleya Ayyouti scandal of 1995. Four of the defendants in this case were parliamentary deputies, leading the local press to dub bad-loan scandals “The Loan Deputies.”

Al-Ahram Archives Abdullah Tayel

Ismail allegedly took some LE 450 million in loans while serving as chairman of the Commercial Bank of Daqahliya. MP Mahmoud Azzam was accused of receiving LE 179 million in unlisted loans from Ayyouti, then vice-president of the Nile Bank, who also happened to be his wife. Ayyouti got a ‘get out of jail free’ card from Al-Arabi and subsequently fled the country.

Among the most notorious to follow suit were cosmetics tycoon Mostafa El-Beleidy, medical goods chieftain Ramy Lakkah (who still denies that he took any of the money abroad), ex-Misr Exterior Bank head Abdallah Tayel, and former BMW hotshot Hossam Aboul Fotouh, who didn’t have time to flee the country before his arrest and the circulation of an x-rated videotape of himself in bed with top belly dancer Dina.

In tandem with the loan deputies scandals were the corruption cases. A far cry from the bribery stories of the 1980s, where the proverbial mahdoudi dakhl (limited-income employees) would take a few pounds to move things along, today’s sharks have sunk their teeth into more than just a free kebab dinner.

Maher El-Guindi, former governor of Kafr El-Sheikh, would beg to differ. Sentenced to seven years imprisonment for taking bribes in the hundreds of thousands, El-Guindi reportedly claims he only accepted free meals and a couple of Italian suits as gifts. Sharing his cell block at Torah Prison is Mohammed El-Wakil, former head of the Television News Sector at the Ministry of Information, sent down on charges he demanded payment from guests appearing on the nation’s top-rated morning show.

Former cellmate Mohieddin El-Gharib recently left Torah a free man after his conviction on charges of abusing his position as finance minister was overturned on appeal. The trend of high-profile crooks being arrested, charged and released is by no means new to Egypt.

One of the most talked-about examples is that of ex-Nasr City local council representative Fawzy El-Sayed, who was charged and acquitted not once but three times. El-Sayed was accused of fraud and forgery after he reportedly signed on the dotted line in place of a number of absent Nasr City landowners between 1983 and 1985. He has also been charged with faking permits from the Greater Cairo Water Authority and adding illegal floors to buildings.

By early 2002, he had been kicked out of the People’s Assembly, but just a few months later was given back the LE 26 million account that had until then been frozen.

One little footnote before we sign off: Does anyone out there remember Hitler Tantawi? The nation’s top vice cop as head of the Administrative Control Authority, Tantawi brought down El-Wakil and tens of other fat cats after President Mubarak declared war on corruption three years ago. He was retired earlier this year with thanks for his service.  et