1:44am , Tuesday 27th July 2021

Hussein Salem Still Owns 28% of the Gas Exporting Company to Israel

21 July 2011

Delving through the national archives of the British and Swiss governments, “Al-Masry Al-Youm” was able to research databases on the internet, in search for the secret behind the mystery of the deposed Egyptian president Hosni Mubarak’s friend.  Hussein Salem was never a simple man in his thoughts.  As diverse as his investments were, he worked even harder to conceal them, as if he knew that the end to his financial myth was on an appointment with the revolution.  Hence, he is the man many Egyptians believe that he manages the former president’s money.  Until this day, he managed to hide his money in a series of companies that are hard to trace, with headquarters in tax havens like the Virgin Islands.  Managing these companies was entrusted to law firms and a management that local and international laws cannot compel it to reveal the names of the true owners of the companies they manage.  Hussein Salem became far from the eyes of any official surveillance, owning but not managing.  The story, however, has further dimensions that the investigative report reveals in the following lines.

Salem owns a network of companies inside and outside Egypt, but the first line in tracing Hussein Salem’s trail was the Public Investment Commission in Cairo, which maintains complete files on the details of establishing companies and making deals, in addition to organizational structures for each company.

Last May, “Al-Masry Al-Youm” submitted a request to the Commission to obtain a copy of the investment page for the Mediterranean Gas Company, which exports gas to Israel, and in which Hussein Salem owns a major share.  The Commission declined the request, and the newspaper found out from official sources that the Company file was held by the Public Prosecutor, and that there are no copies of it except in the Commission director’s office.  After a long journey of search, I was able to obtain a copy of the Company file, that was replete with surprises.

The pages obtained by, “Al-Masry Al-Youm” within the framework of the investigation prove that Hussein Salem established the Mediterranean Gas Company on January 29, 2001.  He committed a legal error, however, according to legal experts, that may cancel the establishment:  Salem gave ownership of the new Company shares to a fictitious British company named “East Mediterranean Gaz Lines”, which indicates that it did not exist when the Egyptian company was established.

According to documents from the Investment Commission, approving the Company licensing, the articles of association of the Gas Export Company to Israel indicated that its capital was $500 million, with a 30% share as an Egyptian participation and 70% for foreign parties.

The Egyptian share is divided between the Public Petroleum Authority, which owns 10% and Hussein Kamal Eddin Ibrahim Salem (Egyptian), who owns 20%.  The foreign shares are divided among the Panamian FORDAS company (20%), Middle East Gas Pipeline (20%), British Caltex Compay (10%) and East Mediterranean Gaz Pipeline (20).  But this company is non-existent in any British register, including the offshore companies register.

“Al-Masry Al-Youm” searched a number of British websites responsible for commercial registers to verify the presence of the company name, but without success.  The company does not exist in the British Library of commercial registers, or the National British Archives.  The result of the search was that no companies exist in this name.

Salamah Faris, the legal advisor and expert in commercial law and company establishment comments on this surprise, saying: “This is a serious violation.  There must be legal papers indicating the presence of those establishing the company.  Such papers cannot be overlooked.  Otherwise it is a blatant violation of the law.”

He adds: “When establishing an Egyptian shareholding company with foreign shareholders, the Investment Commission requests a copy of the commercial register of the foreign companies, issued by the country of origin.  But this requirement was not observed by Hussein Salem, and hence, the establishment procedures are null and void.”

Faris continues: “Violations committed in establishing Mediterranean Gas is represented in the company listing a fictitious establishing partner not present during the initial establishment, according to British records.  The violation is the responsibility of the Investment Commission and the establishment partners’ representative.”  He adds, wondering, “Is it possible to register an apartment in the name of my son before he is born?”  He answers:  “The registration would be void, and henceforth, there is a mistake in registering this company, because one of the establishing partners, who owns 20% according to documents, does not exist.”

However, Dr. Ziad Baha’uddin, the former president of the Public Investment Commission says that the establishment of the gas export company was done before he became president of the Commission.  Yet he justifies what happened by “probable mistakes, saying that perhaps the Company went bankrupt and was closed down, and hence its name was totally deleted from records, especially in cases of companies established offshore.”

Baha’uddin threw suspicion over the possibility of establishing a new company whose main establishing partners are not present, saying: “There must be a different letter in the name.”

The adventure of searching the records of the Mediterranean Gas Company obtained by “Al-Masry Al-Youm” reveals more surprises.  A new company called “Mediterranean Gas Pipeline Company Limited” surfaced.  It is a British company, owned by Hussein Salem, according to the minutes of meetings of the company in 2006.  It owned 65% until 2007.
In return, all direct ownerships of Hussein Salem, amounting to 20% disappeared at the time of establishment.  The ownerships of the Panamanian FORDAS Company disappeared as well, as did those of Middle East Gas Pipeline and British Coltex from the Company.

The basic function of the investigation we were carrying out here was to reveal the ownership of the new company, Mediterranean Gas Pipeline.  We have no information about it except that it is a British company owned by Hussein Salem, while Salem insists that he settled out of Mediterranean Gas in full in 2007.  We addressed British records, which proved that the subject company was established in the Virgin Islands as an offshore company on July 25, 2005, a few days after signing contracts for exporting gas to Israel, and its establishment was declared on January 12, 2006.

Papers reveal that the company was managed and supervised through a management office called Euro-American Trust and Management Services Ltd.  The office is actually responsible for managing the company and its investments through a woman called Yasmine Watson, who holds signatory rights.  The capital of the company established in the Virgin Islands is $30 million distributed over 50,000 shares at the value of $600 per share.  The company is not subject to any form of tax supervision.

Hussein Salem continued to declare that he sold all his shares in the Gas export company, but Al-Masry Al-Youm obtained an official document issued by the World Bank at the end of 2010, emphasizing that Mediterranean Gas Pipeline Ltd. still owns 28% of the Mediterranean Gas, and it is owned by an Egyptian.

The document reveals two serious pieces of information.  The first is that Salem still owns a share estimated at 28% in the Mediterranean Gas Company, since there are no Egyptians who own shares in the Company except Salem, which reveals that Hussein Salem did not sell this share up till the date of the document issued days before the Egyptian revolution.

The second surprise revealed by the document extracted from the database of the special partnership in infrastructure projects at the World Bank, is that Salem is considered the largest shareholder in the Mediterranean Gas Company through the British company Mediterranean Gas Pipeline Ltd, which means that he agreed to establish the gas export company by resorting to international arbitration against Egypt as a result of halting gas exports to Israel during the past period, after the explosions in the pipeline after the January revolution.

The minutes of the meetings in the Mediterranean Gas Company on September 26 2007 were full of important information on the development of the ownership structure.  The minutes mention that Mediterranean Gas Pipeline Ltd reduced its share from 65% to 53% by selling 12% to Sam Zell, then reduced its share once more to reach 28% by selling 25% to a Thai company.

The papers did not reveal the value of the deals, but it was declared in American newspapers at the time Sam Zell bought his share that the Mediterranean Gas Company value is $2.2 Billion, which means that the value of what Salem received for giving up 12% of his share is about $220 million.

Four months later, Salem sold his 25% share to the Thai PTT company for an amount of $486.9 million.  The total of what Salem received from selling a share of 37% of Mediterranean Gas Company until 2007 was $706.9 million, equivalent to 4 billion Egyptian pounds.

The same document reveals a pivotal character in Hussein Salem’s economic life; namely Andre Gillioz, who was a member in the board of directors of Mediterranean Gas.  At the same time, he manages one of the huge financial companies for Hussein Salem in Geneva, and with him starts another story of concealing Salem’s assets abroad.  They include details on Hussein Salem the man, whose assets disappeared after him in favor of companies and institutions in Switzerland.

Journalists Miranda Patrick and Paul Rado from the Anti Corruption Project – Investigations Center in Sarajevo, Bosnia assisted in completing this investigation.  The Arab Reporters for Investigative Journalism (ARIJ) assisted in networking.


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