Landmark verdict nulls Tanta Flax privatization

A Cairo court upheld on Saturday a previous ruling nullifying the privatization contract of the Tanta Flax and Oils Company, in what is considered a landmark verdict.

The Supreme Administrative Court in the Dokki district of Giza issued the final verdict on Saturday, nullifying the privatization contract of the Tanta Flax and Oils Company which was sold to Saudi investor Abdel Ellah al-Kaaki in 2005.

The ruling upheld a prior verdict issued on September 21, 2011 by the Administrative Court, which found that Tanta Flax had been sold for well below its real market value, at a mere LE84 million when its real market value was estimated at LE211 million in 1996.

Some estimates even suggest that the company was actually worth around LE500 million.

Tanta Flax, along with the Shebin el-Kom Textile Company and the Nasr Boilers Company, all had their privatization contracts nullified by the court in September 2011.

The privatization of Omar Effendi department stores and the Nile Cotton Ginning Company were also dealt a similar fate in May and December 2011, respectively.

The chief justice presiding over today’s case announced that “all appeals against the previous verdict are rejected.” While this means that the rulings cannot be appealed in local Egyptian courts, al-Kaaki has reportedly taken the cases to international arbitration.

The courtroom erupted with celebration when the workers heard the verdict, which they’d eagerly anticipated for years. Workers from other privatized companies, who had come to stand in solidarity with the Tanta Flax workers, also cheered in hopes for similar verdicts.

Gamal Othman, a worker and activist who had been sacked from the Tanta Flax and Oils Company several years earlier, said, “Today our company has returned to its rightful owner and rightful place: the public sector.”

He added, “We just hope the authorities enforce the verdict, to resume company operations in full capacity and to reinstate all sacked workers.”

Since the late 1990s, numerous committees have been established to salvage the state-owned textile companies — often resulting in privatizations, mass-layoffs and factory closures.

While the three public-sector textile companies, which had been privatized under the Hosni Mubarak regime, had their privatization contracts nullified in 2011, the state has repeatedly declined to reabsorb these three companies back into the public sector — thus leaving thousands of workers in a state of limbo.

From its original workforce of some 2,300 prior to the 2005 privatization, Tanta Flax had downsized to fewer than 200 workers, as the majority of its production lines came to a halt.

Workers claim that al-Kaaki had sought to sell-off both the factories and the land on which the company is based, in Mit Hebeish, located in the Delta governorate of Gharbiya.

Neither al-Kaaki, nor his administrators could be reached for comment.

On Saturday, the Supreme Administrative Court adjourned another trial pertaining to the privatization of the Nile Cotton Ginning Company. The verdict in this trial, along with the verdicts pertaining to other companies’ privatization contracts, has not yet been determined.

On April 17, 2013 a court sentenced former Prime Minister Hisham Qandil to one year in prison, along with his removal from public office, for failing to uphold the December 2011 verdict nullifying the privatization contract of Nile Cotton Ginning.

Qandil is still appealing the verdict.

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