Eagle Capital, a company unknown to the public, recently acquired businessman Ahmed Abu Hashima’s stake in Egyptian Media Group, which owns several media companies in Egypt, according to a press statement made on Tuesday.
Mada Masr dug into the details, speaking to eight sources with direct knowledge of the deal, most of whom spoke on condition of anonymity. The information they gave us sheds light on the involvement of Egypt’s General Intelligence Service in Egypt’s media landscape.
Eagle Capital for Financial Investments S.A.E, headed by former Investment Minister Dalia Khorshid, is a private equity fund owned by the General Intelligence Service, and was recently founded to manage the apparatus’ partial and full equity in several private sector projects and companies, according to sources who were in direct contact with the company. One of these sources met with Khorshid in person at the company headquarters in the Fifth Settlement on the eastern outskirts of Cairo.
Abu Hashima’s stake in Egyptian Media Group never exceeded a few stocks, and his role as chairperson of the board of directors was confined to representing the media group and signing company deals, according to a former executive official in the young businessman’s group.
The governing stake in Egyptian Media Group was in fact owned by the General Intelligence Service, which, after Tuesday’s acquisition deal, became the sole owner of the media group. Egyptian Media Group owns ONtv and six other newspapers and websites, the most notable of which is the privately owned Youm7 newspaper and website. It also owns two film and television production companies, seven marketing and advertising agencies and one security company, as listed on their website.
According to an official document obtained by Mada Masr from a source, on condition of anonymity, Egyptian Media for Marketing and Production was registered on June 2, 2013, under commercial registration number 66705 at the General Authority For Investment (GAFI). The acquisition was sealed through the Zulficar law firm, which represented Eagle Capital, as confirmed to Mada Masr in a telephone interview on Wednesday with managing partner Mona Zulficar. Out of a commitment to her client’s confidentiality, Zulficar would not reveal the details of the deal.
The law firm “oversees mergers and acquisitions across the whole country, all the time, so why all the fuss about the Egyptian Media Group?” she said, adding that Eagle Capital would organize a press conference soon to announce the details of the deal.
Abu Hashima was represented in the acquisition deal by Mohamed Samir Abdel Samad, a law professor and owner of the Samir law firm, according to a phone interview with the firm’s financial and administrative director, Ahmed al-Alfy.
Abu Hashima’s departure from Egyptian Media Group came against his will, another source revealed to Mada Masr, after head of Eagle Capital Khorshid was convinced that Abu Hashima’s financial and administrative decisions had resulted in the company incurring massive losses that could only be reversed with him out of the picture. This meant that he would not even be represented on the board of directors.
Officially, Abu Hashima expressed his “gratitude for the team and their efforts to build and develop the Egyptian Media Group and establish a pioneering role for the company among leading media institutions in Egypt.”
“I am confident the Egyptian Media Group and its subsidiaries and the team will keep up the distinguished work under the umbrella of Eagle Capital,” Abu Hashima added in his official statement.
Engineer Osama al-Sheikh was named as Abu Hashima’s replacement as the new chairperson of the media group, Khorshid announced on Tuesday. Sheikh previously headed the state-owned Egyptian Radio and Television Union (ERTU) and the privately owned Dream television network.
Abu Hashima gained a public profile in 2009 as his investments in the steel industry grew, but his political role began following the January 25 revolution when he bought Youm7 newspaper. He was known at the time for his close ties with the Muslim Brotherhood. When Brotherhood-affiliated former President Mohamed Morsi was deposed in 2013, Abu Hashima came to the forefront of President Abdel Fattah al-Sisi’s supporters and became one of the most prominent financiers of the Nation’s Future political party that supports the regime. He has donated several times to the state-owned philanthropy fund Tahya Masr (Long Live Egypt). However, his expansion within the media sector under the umbrella of Egyptian Media Group did not begin until 2016.
The exclusion of Abu Hashima from the Media Group was predicted by the Lebanese Al-Akhbar newspaper, which reported a month ago that he might be out of the media landscape “soon.”
Khorshid did not respond to Mada Masr’s telephone calls and messages to comment on the report.
Tuesday’s acquisition deal is notably the first public move by Khorshid, who disappeared from the public eye after leaving the Investment Ministry in February this year and then announcing her marriage to Central Bank Governor Tarek Amer.
In a similar deal earlier this month, which was not previously reported, the General Intelligence Service’s stake in the privately-owned CBC television network was secretly transferred to Egyptian Media Group As a result, after Tuesday’s deal, Eagle Capital became the holder of almost half of CBC’s shares, according to a source from the network. The governing share in CBC remains, up until the publishing of this story, under the ownership of businessman Mohamed Amin and his family.
United Printing Publishing and Information Technology Co. (UPPIT), a company owned by the General Intelligence Service, had in October 2016 acquired a stake in the merger of Al-Nahar television and CBC. This merger, however, fell apart and Al-Nahar network exited the group, leaving the General Intelligence Service represented by UPPIT and Mohamed Amin represented only by his Future Company.
Nonetheless, so far there is no intention to merge the ONtv and CBC networks, according to the same source at CBC, who asserted that the agreement holds that the two networks will remain separate, albeit with eventual coordination, given their shared ownership by Eagle Capital.
Hisham Kassem, publisher and former CEO of the privately owned Al-Masry Al-Youm newspaper told Mada Masr that he was told directly by owners of various newspapers and television channels that they were contacted by Khorshid in the past few weeks to negotiate possible partnerships with the General Intelligence Service, or to complete acquisition deals.
The intervention of security agencies in media has one aim, according to Kassem, which is the complete control of media by buying up outlets, rather than making do with the cooperation of their owners. “There are no plans for making profits and the profitability of these outlets is not even taken into consideration,” Kassem says. “It is merely a shopping rush in response to public instructions from the president to reach the level of full media lineup behind the leader, as was the case in the [Gamal] Abdel Nasser epoch.”
According to Kassem, the successive deals in the media sector by intelligence agencies is infuriating players in the media industry, firstly due to the massive amounts of capital going to waste in these deals, and secondly “because a large number of media personnel are sitting jobless in their homes, either because they refuse to work for security agencies or because these agencies blacklist them.”
In September, the Paris-based Reporters Without Borders raised concerns over the control of intelligence agencies in Egyptian media outlets.
The former official in the Abu Hashima group is also anticipating that Khorshid, as head of Eagle Capital, is set to acquire the businessman’s total stake in Egyptian Steel. She is then expected to negotiate a buyout of Qatari Sheikh Mohammed bin Suhaim Al Thani, who currently owns 70 percent of Egyptian Steel, according to the same official.
These deals are raising serious concerns as to the ramifications for more than just the media industry. A former government official and senior economist told Mada Masr that the whole business community is weary of the expanding role of intelligence agencies in non-military economic activities that are by nature neither a matter of security nor strategic concern. “What is the state logic in participating in these activities? Will this new company [Eagle Capital] be as transparent as a civilian corporation is expected to be?” asks the former government source.
This is “an intentional distortion of the market,” the source says, describing the situation as such because of the ways in which these developments undermine the principle of equal opportunities among investors, as companies owned by the security agencies get privileged treatment by the state as well as investors seeking closer ties with the state.