Wednesday, May 30, 2012
CAIRO (Zawya Dow Jones)--The chief executives of Egypt's biggest investment bank along with the sons of former President Hosni Mubarak and five others have been charged for alleged insider trading on the country's stock market.
Yasser El Mallawany and Hassan Heikal, co-Chief Executives of EFG Hermes (HRHO.CI), the Arab world's largest publicly traded investment bank, are among the nine alleged to have made an illegal profit of more than 2 billion Egyptian pounds ($331 million) through corrupt stock exchange transactions.
The prosecutor general, who referred the case to the Cairo Criminal Court, accused El Mallawany, Heikal, Gamal and Alaa Mubarak, and five other businessmen of breaking stock market regulations by buying a controlling stake in Al Watany Bank of Egypt and then selling it without ever declaring their ownership. The charges allege they hid their transactions through a web of affiliated offshore companies and other funds, according to a charge sheet obtained by Zawya Dow Jones Wednesday.
At one point the men controlled 80% of the shares of the bank, the prosecutor general's statement said.
When contacted by Dow Jones Newswires, El Mallawany said he had not been arrested. Heikal referred queries to the bank when reached.
Hussein el Sherbini and Ayman Fathi Suleiman, two of the former board members of Al Watany Bank and co-defendants in the case, said in phone interviews Wednesday they were innocent of any crime.
Suleiman said the charges appeared to be a political move designed to prolong the detention of Alaa and Gamal Mubarak just days before they are scheduled to receive a verdict for other corruption charges relating to allegedly accepting villas in Sharm el Sheikh as a bribe. They will appear in court on Saturday, along with their father who is facing additional charges. The brothers face up to three years in that case. They are currently being held without bail. All three have pleaded not guilty and have fought the charges.
"We can see that it's all purely political," said Suleiman, who was chairman of Al Watany Bank at the time of the transaction.
A statement from EFG Hermes sent Wednesday said "its two Chief Executive Officers have no personal dealings, interests or benefits in any transactions related to the trading on Al-Watany Bank of Egypt's shares."
National Bank of Kuwait (NBK.KW) bought almost 100% of Al Watany Bank of Egypt in 2007, which EFG said in its statement was in connection to the charges. The prosecutor general statement did not mention National Bank of Kuwait's acquisition of Al Watany Bank of Egypt.
"The firm is taking all necessary legal action to defend its position in this matter," EFG said in the emailed statement sent Wednesday, adding the "accusations has not in any way affected the firm in terms of its operations, interests, assets, licenses, liabilities or its commitments to its clients or third parties."
EFG's board of directors has convened in an extraordinary session this evening, the bank added, where it received full briefing from its external legal counsels.
The secretary of Farid el Deeb, the Mubarak family lawyer, el Deeb declined to comment.
The nine men were involved in a conspiracy that allegedly began in December 2006 and included concealing their investments through offshore companies in Cyprus and the British Virgin Islands, according to the prosecutor general's statement. They never disclosed their ownership to the stock market, the statement said.
EFG said in an earlier emailed separate statement Wednesday that the bank "nor any of its subsidiaries has had a financial relationship of any form with any member of the former president's family with the exception of two securities trading accounts opened to trade shares on the Egyptian Exchange."
Alaa Mubarak and his wife Heidi Rasekh "managed their own accounts personally, as is common practice at all securities brokerage firms and with all clients," said the bank.
The general prosecutor ordered in February 2011 an investigation into Alaa and Gamal Mubarak and their financial dealings and their assets directly and indirectly in Egyptian companies, the statement from the general prosecutor said.
Alaa and Gamal Mubarak will continue to be held in prison until the case is resolved, while the rest of the accused should be released on bail and prevented from travelling, the statement said.
-By Farah Halime; Contributing to Dow Jones Newswires; +20111 4994453; Fhalime@gmail.com
(END) Dow Jones Newswires
30-05-12 2158GMT