Egypt’s parliament says abolishing imprisonment of businessmen will attract investment

The Egyptian parliament has announced that laws that imprison investors have been scratched, because they affect investment into the country. (Reuters/File Photo)
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Updated 22 February 2020

Egypt’s parliament says abolishing imprisonment of businessmen will attract investment

  • Speaker Ali Abdel-Aal said he will not allow investment to “escape” from Egypt

CAIRO: The Egyptian parliament has announced that laws that imprison investors have been scratched, stressing that imposing jail time on financial wrongdoers affects investment in Egypt.

Speaker Ali Abdel-Aal said in a public parliamentary session that he and parliament will not allow investment to “escape” from Egypt, “so the idea of replacing imprisonment with deterrent fines must be preserved”.

“I will never allow the imprisonment of businessmen involved in financial violations,” Abdel-Aal said.

Egypt’s parliament takes its cue from countries which have abolished penalties to safeguard the freedom of investors in economic legislation, in support and encouragement of investment, Chairman of the Economic Affairs Committee in parliament Ahmed Samir said.

Samir said the principle of not imprisoning investors in financial crimes was approved by parliament at the beginning of the current legislative term but is not final.

He explained that investors do not enjoy absolute immunity against imprisonment and that there are crimes in which jail is necessary, including harming public money or the interest of the state or harming the health of citizens.

“Harming public money or the health of citizens entails serving sentences. Any economic or administrative violations are punishable,” Samir told Arab News.

Mohsen Adel, former head of the Investment Authority, stressed that Egypt has taken the view of international institutions which is believed may encourage investment incentives to attract direct foreign investment, and that preventing businessmen from going to jail guarantees the protection of the investor who works in good faith and is similar to international standards.

Ahmed El-Zayat, a member of the Egyptian Businessmen’s Association, said that the abolition by parliament of imprisoning businessmen in economic legislation is aimed at encouraging investors to invest more and to provide all logistical support to help deal with global competition and attract foreign investment.

El-Zayat pointed to efforts such as solving the problems of troubled factories, refinancing, operating, reconciling with investors and providing a safe business environment that provides the factors needed to increase investments.

El-Zayat said doing away with incarceration of investors and replacing that with financial fines and providing new mechanisms to tighten control over economic business to prevent any excesses and achieve economic justice will raise the confidence of businessmen in the Egyptian economy, especially in industry. He said this will realize the state’s vision of increasing Egyptian exports $55 billion over the coming years.

Mohamed Waheed, chairman of Catalyst Company and founder of the first electronic market for trade in Egyptian products, said the state’s new initiative is a “legislative boom” which will add to the advantages and incentives guaranteed by the investment law, making Egypt the most prominent destination for investors as it enhances its competitiveness and increases demand for work and investment.

Waheed emphasized that the new investment law and its amendments, in addition to investment incentives and positive benefits for projects, organizes the file of penalties for the economic sector within the framework of a general approach from the state to develop the investment environment in a way that enhances its competitiveness and elements of its attraction to local and foreign investments.

He said this vision is a message from the state that supports serious investment and protects well-intentioned investors from the risks and fluctuations of local and global markets.

Al-Waheed added that this will guarantee the seriousness of work and strengthen the values of governance, transparency and serious competition on the basis of common interests and hard work to reap the fruits of development without measures that limit market capabilities and hinder opportunities for expansion and prosperity.


New emissions blow for VW as German court backs damages claims

Updated 26 May 2020

New emissions blow for VW as German court backs damages claims

  • Scandal has already cost firm more than €30 billion; ruling serves as template for about 60,000 cases

KARLSRUHE, Germany: Volkswagen must pay compensation to owners of vehicles with rigged diesel engines in Germany, a court ruled on Monday, dealing a fresh blow to the automaker almost 5 years after its emissions scandal erupted.

The ruling by Germany’s highest court for civil disputes, which will allow owners to return vehicles for a partial refund of the purchase price, serves as a template for about 60,000 lawsuits that are still pending with lower German courts.

Volkswagen admitted in September 2015 to cheating in emissions tests on diesel engines, a scandal which has already cost it more than €30 billion ($33 billion) in regulatory fines and vehicle refits, mostly in the US.

US authorities banned the affected cars after the cheat software was discovered, triggering claims for compensation.

But in Europe vehicles remained on the roads, leading Volkswagen to argue compensation claims there were without merit. European authorities instead forced the company to update its engine control software and fined it for fraud and administrative lapses.

Volkswagen said on Monday it would work urgently with motorists on an agreement that would see them hold on to the vehicles for a one-off compensation payment.

It did not give an estimate of how much the ruling by the German federal court, the Bundesgerichtshof (BGH), might cost it.

Volkswagen shares were 0.5 percent lower. The BGH’s presiding judge had signaled earlier this month he saw grounds for compensation.

Costs mount

“The verdict by the BGH draws a final line. It creates clarity on the BGH’s views on the underlying questions in the diesel proceedings for most of the 60,000 cases still pending,” Volkswagen said.

A lower court in the city of Koblenz had previously ruled the owner of a VW Sharan minivan had suffered pre-meditated damage, entitling him to reimbursement minus a discount for the mileage the motorist had already
benefited from.

The court at the time said he should be awarded €25,600 for the used-car purchase he made for €31,500 in 2014.

“We have in principle confirmed the verdict from the Koblenz upper regional court,” said BGH presiding federal judge Stephan Seiters.

Volkswagen had petitioned for the ruling to be quashed altogether by the higher court, while the plaintiff had appealed to have the deduction removed.

A Volkswagen spokesman said that outside Germany, more than 100,000 claims for damages were still pending, of which 90,000 cases were in Britain.

The carmaker also said it had paid out a total of €750 million to more than 200,000 separate claimants in Germany who had opted against individual claims and instead joined a class action lawsuit brought by a German consumer group.

The carmaker said last month it would set aside a total of 830 million for that deal.

In a separate court, Volkswagen agreed last week to pay €9 million to end proceedings against its chairman and chief executive, who were accused of withholding market-moving information before the emissions scandal came to light.