Egypt grounds Orascom chief as tax probe continues

Public prosecutor bans OCI CEO Nassef Sawiris from travelling

Nassef Sawiris, CEO, Orascom Construction Industries
Nassef Sawiris, CEO, Orascom Construction Industries

Egyptian authorities have barred chief executive of Orascom Construction Industries (OCI), one of the country's largest companies, from leaving the country as part of an investigation into tax evasion.

The public prosecutor has ordered that both OCI CEO Nassef Sawiris and his father Onsi Sawiris be barred from travel, pending a probe into accusations that $2.1bn in taxes were evaded during the sale of Orascom Building, an OCI subsidiary, to French firm Lafarge.

The charge, dating way back to 2007, follows a deal made by OCI to relocate its corporate address from Cairo to Amsterdam in a move which will provide new funding of up to $2bn, with the Bill Gates-led Comprising Cascade Investment set to invest $1bn in the expansion of the company.

Though the Egyptian and international media have been unable to contact the Swairis or Orascom directly for comment, a lawyer for OCI, Hani Sarie el-Din, told state newspaper Al-Ahram that he was "surprised" by the decision.

He said that negotiations about the taxes from the deal were continuing, and that there was “nothing suggesting a dead end in the negotiations."

Under the new order, if the Sawiris leave the country then they will be detained upon their return.

The company employs around 45,000 people in Egypt - half of its entire workforce - but the fundraising will involve it delistng its shares from the Egyptian stock exchange, relisting on the Euronext exchange and moving its registered office to Amsterdam. When announcing the move, Orascom Construction Industries said it would "not result in any changes to the day-to-day operations of the business in Egypt"

Last week, an official said the government was holding talks with OCI to dissuade it from delisting from the local stock exchange.

The Egyptian Financial Supervisory Authority (EFSA) has also asked for more information on the plans for OCI shareholders to either sell or switch their shares to the Dutch OCI NV, in a move that could delay completion of the deal.

The deal in January followed the announcement of a 31% drop in profits in the company's third quarter results for 2012.

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