The co-chief executive of Egypt's biggest investment bank has been banned from travelling abroad, sending the bank's stock tumbling.
EFG-Hermes chief Mallawany banned from travel
A co-chief executive of Egypt's biggest investment bank has been banned from travelling abroad, sending the bank's stock tumbling amid fears of a renewed purge of businessmen associated with the previous government.
Yasser El Mallawany, a co-chief executive of EFG-Hermes, confirmed that he was barred from foreign travel but declined to say why.
"It's a precautionary measure taken to attend investigations related to our normal course of business," he said.
EFG-Hermes shares fell 5.7 per cent to 10.87 Egyptian pounds. The company confirmed the ban in a filing on the London Stock Exchange (LSE) without elaborating.
Gamal Mubarak, a son of the ousted president, indirectly holds an 18 per cent stake in EFG-Hermes Private Equity, a unit of EFG-Hermes.
Mr El Mallawany told The National last night, however, that he would resume his role at EFG-Hermes and that he was comfortable with the bank's legal position.
"We hope this matter will be cleared in the next few weeks, judging by cases in the past," he said. "We have to go through it. This is the price we have to pay for a country in the midst of a revolution."
He added that the bank has no relationship with Gamal Mubarak. "Gamal's stake is indirect, through a fund management company called Bullion. We have no direct relationship with him."
Mr El Mallawany was stopped at Cairo International Airport en route to the Emirates late on Sunday. The bank said it would update investors as it received more information.
The Egyptian Exchange lost 45 per cent of its value last year after the popular uprising that toppled Hosni Mubarak from the presidency. The benchmark EGX 30 Index fell 1.4 per cent yesterday to 4,516.44.
"There were rumours just after the revolution that he was banned from travelling. The reports were denied, then one year later we see a ban," said Wafik Dawood, the head of institutional sales at Mega Investments Securities, a brokerage in Cairo.
"In the last six months, we haven't seen any legal measures taken against businessmen in Egypt. There are fears that new files will be open for some of the listed companies."
EFG-Hermes, a financial powerhouse with US$5.4 billion (Dh19.83bn) of assets under management, played a major role in Egypt's privatisation of assets, a policy instituted by Mr Mubarak's government in the early 1990s.
The investment bank also undertook a number of large initial public offerings. It expanded into new markets such as Syria in 2010.
The EFG-Hermes Private Equity unit contributes 7 per cent to the group's total revenue, the bank said in a statement in February last year.
Mr El Mallawany was a member of the policy high committee of the National Democratic Party, the political group connected to Mr Mubarak. His role was to "give ideas regarding the technical issues of finance", he said in an interview with The National last March.
A number of leading businessmen were subject to investigations by Egypt's prosecutor on graft charges related to alleged profiteering from public funds. The steel magnate Ahmed Ezz, a top official in Mr Mubarak's political party, was hit with graft charges last year relating to the alleged laundering of government funds to offshore accounts, family accounts and reinvestment in his companies, Ezz Steel and Ezz Dekheila, which are both publicly listed.
Ahmed Heikal, the chairman of Citadel Capital, the country's largest private-equity company, was cleared in June after a travel ban was issued by prosecutors in relation to corruption charges.
There is no suggestion that Mr El Mallawany was involved in any corrupt practices.
"The corruption purge has caused an exodus of former government officials and businessmen who have fled Egypt and currently living in London," said Mahmoud Ghozlan, the spokesman for the Muslim Brotherhood, the country's leading political party.
Mr El Mallawany has travelled out of Egypt numerous times without any difficulty after the revolution that ousted Mr Mubarak, an EFG-Hermes employee said.