VZCZCXYZ0018
RR RUEHWEB

DE RUEHEG #3706/01 1650821
ZNR UUUUU ZZH
R 140821Z JUN 06
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC 9179
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC 0157

UNCLAS CAIRO 003706 
 
SIPDIS 
 
STATE FOR NEA/ELA, L/CID/EDAUGHTRY AND EB/IFD/OIA/JROSELI 
USAID FOR ANE/MEA MCCLOUD 
USTR FOR SAUMS 
TREASURY FOR NUGENT/ADKINS 
COMMERCE FOR 4520/ITA/ANESA/TALAAT 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: CASC EINV KIDE OPIC PGOV EG
SUBJECT: EGYPT: 2006 REPORT ON INVESTMENT DISPUTES AND 
EXPROPRIATION CLAIMS 
 
REF: STATE 60294 
 
Post is aware of four (4) claims of U.S. persons that may be 
outstanding against the Government of Egypt (GOE): 
 
¶1.   a.  Claimant A 
     b.  2001 
     c.  In June 2001, the Alexandria Governorate took 
approximately 6,000 square meters from Claimant A's land (on 
which a factory had been built) to widen the adjoining 
highway.  The Governorate's ensuing construction work also 
damaged a wall and some property.  As a result of this 
action, Claimant A made a request to the Governorate for 
compensation of approximately $390,000, for the sei 
zed land 
and physical damage.  The compensation case proceeded 
smoothly at first.  However, during the final stages of the 
compensation process in late 2003, the Governorate informed 
Claimant A that it did not have legal title to the entire 
property (despite documentation to the contrary), and thus 
had no right to compensation for the land taken for the 
highway. 
 
The Governorate officials further informed Claimant A that 
it had no right to expand operations, sell the land or 
engage in any legal proceedings involving the land, and that 
the Governorate would file a lawsuit against Claimant A to 
reclaim the land.  As a result of the dispute, Claimant A 
was unable to expand operations and meet growing export 
orders.  After the U.S. Embassy participated in a meeting 
with Claimant A and GAFI, the GOE investment authority, GAFI 
established a technical committee to review the issue.  In 
March 2005 GAFI officially confirmed Claimant A's ownership 
of the land and notified the Governorate, which then offered 
compensation of less than theQ90,000 requested by Claimant 
¶A.  Later in 2005, the Ministry of Housing assessed the 
value of the land based on 2003 prices.  Claimant A disputed 
the assessment, and was informed by the Governorate that the 
land could only be re-assessed after three years.  Claimant 
A's CEO met with the Governor to resolve the matter. 
Claimant A was later informed by the GovernorQ that 
negotiations could only be conducted directly between the 
Governorate and Claimant A's headquarters.  The parties are 
currently arranging to continue negotiations. 
 
¶2.   a.  Claimant B 
     b.  1992 
     c.  Claimant B was awarded a contract in 1989 to 
refurbish a GOE-owned hotel in the Ain Sokhna area. 
Claimant B had spent several million dollars by 1992 and was 
ready to inaugurate the project when the then-Ministry of 
Public Enterprise informed Claimant B that the contract was 
null and void.  Both parties agreed to arbitration, which 
resulted in a favorable ruling for Claimant B.  Nonetheless, 
the Ministry of Public Enterprises continued to demand that 
Claimant B surrender the assets and took the matter to 
court.  The court initially refused to hear the case on the 
grounds that the original contract stipulated that in case 
of legal dispute both parties would seek arbitration.  The 
Ministry appealed the decision and the appellate court 
agreed to hear the case on the grounds that the arbitration 
decision was never executed.  Claimant B petitioned against 
the appellate court's decision and no further court action 
was taken.  There has been no change in the status of this 
case over the past year, and Claimant B has reportedly 
removed operations from Egypt.  Claimant B has not contacted 
the Embassy since petitioning against the appellate court's 
decision and the Embassy considers the case closed until 
informed otherwise. 
 
¶3.   a.  Claimant C 
     b.  1998 
     c.  Claimant C secured a $6.2 million, 4-year contract 
with the then-Ministry of Trade and Supply to provide both 
technical assistance to the Egyptian Export Development 
Center and export-promotion support to Egyptian companies. 
The money was allocated fromQe Ministry of International 
Cooperation through local currency proceeds generated from a 
USAID cash transfer program.  Claimant C began providing 
training, and an initial payment of $1.6 million was due in 
March 1998.  In June 1998, Claimant C received only a 
partial payment of $560,000 and the Egyptian Export 
Development Center, under the successor Ministry of Economy 
and Foreign Trade (now the Ministry of Trade and Industry) 
subsequently cancelled the contract and all future services 
to be provided, claiminQervices already provided were of 
unsatisfactory quality.  No other payments were made, and 
the Egyptian Export Development Center was closed in 2002. 
The Embassy raised the issue numerous times with various 
officials, including the former Prime Minister but the GOE 
took no further action. 
 
The Embassy repeatedly advised Claimant C to pursue 
arbitration, but Claimant C continued to seek a political 
solution.  The Ministry of Trade and Industry has indicated 
in discussions with Embassy officials that a new export 
promotion center will open soon, Claimant C is welcome to 
submit a new proposal to provide services.  Claimant C, 
however, seeks a written response from the Ministry of Trade 
and Industry to Claimant C's contention that the previous 
contract is still valid.  Embassy officials continue to 
raise the issue with GOE officials. 
 
¶4.   a.  Claimant D 
     b.  2004 
     c.  The Egyptian National Air Navigation Services 
Company (NANSC), part of the Egyptian Ministry of Civil 
Aviation, contracted with Claimant D to supply seven 
surveillance radars to be installed in seven different 
locations across Egypt.  Prior to the final tages of the 
contract, the Egyptian authorities eized the company's $3.4 
million performance bon, claiming performance deficiencies 
in the supplyng of proper documentation, spare parts, and 
tes equipment.  The Embassy has been involved in 
dicussions between the parties and has raised the dipute 
up to the level of the Prime Minister.  In ugust 2004, a 
mediation committee was set up betwen the GOE and Claimant 
D to resolve the issue. However, NANSC terminated the 
committee before a decision was reached, and did not respond 
to solutions offered by Claimant D at the end of 2004 in the 
pursuit of a negotiated settlement.  In January 2005 the 
Minister of Civil Aviation decided to resort to official 
arbitration after meeting with the senior management of 
Claimant D.  In February 2005, Embassy officials approached 
the then-Ministry of Foreign Trade and Industry to press for 
resolution of the issue, but did not receive a response. 
The parties are currently still selecting arbitrators. 
 
¶5.    Claimant A: Colgate-Palmolive 
      Claimant B: H and H Enterprises 
      Claimant C: International Trade and Marketing (ITM) 
      Claimant D: Northrop and Grumman Electronic Systems