The Selling of Omar Effendi: A Flashpoint in State Corruption
5. Beginning of the End
The selling Omar Effendi is a perfect illustration of the privatization issue in Egypt, shedding the light on the government officials’ corruption, and their exploitation of their positions.
Mahmoud Mohi El Din, who was the minister of investment in 2005, was sticking firmly to the privatisation tactic and by the end of the year, the ministry of investment had announced a new privatization expansion, one of its kind this time: the selling of Omar Effendi to a Saudi investor.
By commissioning a new valuation of the chain, the ministry of investment disclosed that 90% of Omar Effendi was to be sold to the Anwal United Trading Company of Saudi Arabia.
Yehya Hussein, the CEO of a sister state-owned company, was chosen, along with 14 other persons, to form a committee, whose purpose was to evaluate Omar Effendi, and set the final…show more content… This was due to the fact that this method overlooks the assets value and focuses on expected future cash flows of the company, and Omar Effendi was already having minimal profits at that time.
For all this,the committee thought that the most suitable way of determining the store’s value was by current market value,and adding an estimate for the Omar Effendi brand name, since it is an Egyptian landmark. They came up with 1.1 billion Egyptian pounds, out of which 950 million were the company’s real estate holding, and the rest is their estimate for the well-known name.
According to Mr.Hussein, during the committee’s opening meeting for evaluation, the chairman of the holding company told them that the minister was requesting a fast evaluation process as they were in a need to sell Omar Effendi in this year.He also asked them to be somehow lenient in evaluating it and to consider the buyer’s situation,despite the fact that they were the