Citadel makes its case known, Egypt

Citadel makes its case known, Egypt
Published: 18 April 2011

Citadel Capital, an Egyptian private equity company, denies a charge it bought a cement maker from the government at an under-valued price.

In repeated statements to the press in recent days, the company said it bought Helwan Portland Cement from private owners, not the government, contradicting reports that a claim was filed with the country’s public prosecutor on those grounds.

But the statements did little to keep the army of sellers at bay as the company’s shares headed to their lowest close on record.

"Even though the company might be clean investors are making any link to the [former] government and perceiving it as negative," said Mostafa Abdel Aziz, the head of regional trading at Beltone Financial in Cairo.

"Investors are now worried that if there are hidden cases with this company, it applies to other companies."

Also yesterday, the government banned Ahmed Heikal, the chairman of Citadel, from travelling outside Egypt pending an investigation into the purchase.

Along with Atef Ebeid, a former prime minister of Egypt, Mr Heikal is accused of conspiring to embezzle public funds and profiteering, and the prosecutor general’s office is investigating the case, according to the state news agency Mena.

The charges concern the privatisation and sale of public companies, including Helwan Portland Cement.

According to local news reports, Mr Ebeid is alleged to have approved the sale of the company to Mr Heikal for much less than it was worth.

Mr Heikal is in turn accused of making large profits by reselling the company at double the price to a foreign company. He was in London on business yesterday when the travel ban was announced. It was not clear whether he would be forced to return to Egypt earlier than planned.