VZCZCXYZ0000
RR RUEHWEB

DE RUEHEG #6888 3201506
ZNR UUUUU ZZH
R 161506Z NOV 06
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC 2599
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC 0224

UNCLAS CAIRO 006888 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
STATE FOR NEA/ELA, NEA/RA, EB/IDF/OMA 
USAID FOR ANE/mea MCCLOUD AND DUNN 
USTR FOR SAUMS 
TREASURY FOR NUGENT AND HIRSON 
COMMERCE FOR 4520/ITA/ANESA/TALAAT 
 
E.O. 12958:  N/A 
TAGS: ECON EAID EFIN ETRD EINV EG
SUBJECT: CBE GOVERNOR ON BANK OF ALEXANDRIA, FINANCIAL SECTOR MOU 
 
 
Sensitive but Unclassified.  Not for Internet distribution. 
 
¶1.  (SBU) The Ambassador, USAID Mission Director Ken Ellis and 
econoff met recently with Central Bank Governor El Okdah, Deputy 
Governor Tarek Amer, Sub Governor Tarek Kandil and Minister of 
International Cooperation Fayza Aboul Naga.  El Okdah touted the 
privatization of Bank of Alexandria (BOA), stating that the winning 
bid, at 5.7 times BOA's book value, surpassed everyone's 
expectations.  He claimed that two of the six short-listed bidders - 
Commercial International Bank and Greece's EFG Eurobank - withdrew 
at the last minute after Sanpaolo's offer was announced.  The offer 
was so high that the two banks did not believe they could compete. 
The losing bidders praised the transparency of the process, however, 
according to El Okdah.  El Okdah predicted the sale would be 
complete by the end of November and confirmed that the $1.6 billion 
was already in an escrow account at National Societe Generale Bank. 
 
 
¶2.  (SBU) Turning to the Financial Sector MOU and the requirement 
for annual audits to measure progress on benchmarks, El Okdah said 
the GOE intends to amend its legislation to bring Egyptian 
accounting standards closer to International Accounting Standards 
Board (IASB) standards.  However, as is the case for all countries 
including the U.S., the amended standards will not be one hundred 
percent identical to IASB standards.  Moreover, parliament is 
unlikely to consider the amendments before 2008, due to the current 
heavy legislative agenda.  In the meantime, El Okdah proposed 
meeting the audit requirement by providing copies of the 
legally-required annual audits of the public banks conducted by the 
Central Accounting Agency using Egyptian accounting standards.  An 
international firm could then "convert" those audits to 
international standards, identifying any discrepancies between the 
two standards.  El Okdah recognized that the USG has the final say 
in determining whether or not benchmarks have been met.  If the USG 
determines that the audit information provided by the GOE is not 
sufficient to prove that benchmarks have been met, then the GOE will 
have to forego the funds, a point on which Aboul Naga agreed.  The 
Ambassador said he would convey this proposal to Washington. 
 
¶3.  (SBU) Aboul Naga sent a letter to the Ambassador November 12, 
setting out the abovementioned proposal.  Minister of Finance YBG 
also sent the Ambassador a letter endorsing El Okdah's proposal. 
Copies of both letters will be emailed to the appropriate offices in 
Washington.  Comment:  El Okdah appears to be making a good faith 
effort to address U.S. concerns about the audits of the public banks 
while remaining within the constraints of Egyptian law, pending 
amendment of the law.  Post recommends that the proposal be given 
positive consideration in Washington.  End comment. 
 
¶4.  (U) Aboul Naga also sent a letter to USAID on November 6, 
stating that the GOE has met several benchmarks and requesting 
disbursement of the funds tied to those benchmarks ($300 million). 
USAID is now taking the necessary step to verify completion of the 
benchmarks and prepare for disbursement of funds.  The text of this 
letter will also be emailed to appropriate offices in Washington. 
RICCIARDONE