Egypt Convicts Former EMG Head Hussein Salem In Absentia

Egypt Convicts Former EMG Head Hussein Salem In Absentia

A criminal court in Cairo on 12 October convicted in absentia the former head of East Mediterranean Gas (EMG), Hussein Salem, on charges of money laundering and profiteering. Mr Salem’s son Khalid and daughter Magda were also convicted in absentia of the same charges. Each was sentenced to seven years in prison, with a combined fine of $4bn. Salem and his son are currently under house arrest in Spain, where bank accounts have been frozen and property seized in regard to separate Spanish charges of money laundering and profiteering. Spanish courts are giving consideration to an extradition request by Egypt. Both Mr Salem and his son are Spanish citizens.

Mr Salem was one of former Egyptian President Husni Mubarak’s inner circle and is accused by the Egyptian authorities of supplying natural gas to Israel through EMG at a price well under its market value. He fled Egypt before Mr Mubarak was forced out of power in February, but was arrested in Spain under an international warrant. The Egyptian Gazette reported that the Israeli government would attempt to find Mr Salem’s assets in order to claim them against the costs incurred as a result of the stoppage of Egyptian gas shipments through the al-'Arish-Ashkelon pipeline. EMG and its shareholders in July filed for international arbitration against the government of Egypt (MEES, 1 August).

EMG Seeks Arbitration Against Egypt And Israel

Israel’s Globes reported on 9 October that EMG has taken legal action against the Egyptian General Petroleum Corporation (EGPC), the Egyptian Natural Gas Holding Company (EGAS) and the Israel Electric Corporation (IEC) with the intention of initiating arbitration procedures against them in the International Chamber of Commerce. In a statement released by Ampal-American Israel Corporation, which holds 12.5% of EMG, Ampal head Yosef Maiman outlined EMG’s position: “As we have said before, Ampal, as well as the other international shareholders, are determined to pursue every available avenue to secure the smooth operation of EMG. Ampal, as well as other international investors, have invested a substantial amount of money in EMG through direct investments and in EMG’s shares. EMG’s clients have also invested a substantial amount of money in power and industrial plants, all of which are based upon the gas sale and purchase agreements between EMG and its downstream clients. Moreover, these agreements are backed by the gas sale and purchase contract between EMG and Egypt’s state-owned upstream gas supplier as well as by a memorandum of understanding between the Government of Egypt and the Israeli government. As noted previously, we hope that the government of Egypt and the Egyptian state-controlled gas supplier elect to honor the obligations under the gas sale and purchase contract. However, we will continue to take all necessary actions to protect our investments.”

Copyright MEES 2011.