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Viewing cable 07CAIRO2474, 2007 527 REPORT FOR EGYPT

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Reference ID Created Released Classification Origin
07CAIRO2474 2007-08-12 05:07 2011-08-24 16:30 UNCLASSIFIED Embassy Cairo
VZCZCXYZ0003
RR RUEHWEB

DE RUEHEG #2474/01 2240507
ZNR UUUUU ZZH
R 120507Z AUG 07
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC 6483
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC 0309
UNCLAS CAIRO 002474 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EEB/IFD/OIA HGOETHERT, L/CID SMCDONALD, 
NEA/ELA AND NEA/RA 
 
E.O. 12958:  N/A 
TAGS: ECON EINV KIDE EG
SUBJECT: 2007 527 REPORT FOR EGYPT 
 
REF:  STATE 55422 
 
The United States Government 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 seized 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 the $390,000 requested by Claimant A.  Later in 2005, the 
Ministry of Housing assessed the value of the land based on 2003 
prices.  Claimant A disputed this 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 try to resolve the 
matter.  Claimant A was informed by the Governorate that 
negotiations could only be conducted directly between the 
Governorate and Claimant A's headquarters.  The parties are 
currently working on continuing negotiations. 
 
      In December 2006, Embassy and APP staff met with the new 
Governor, appointed in 2006, to discuss the case.  The Governor 
instructed his staff to look into the case.  The Embassy advised the 
claimant of this meeting and asked the claimant to follow up 
directly with the Governor's office.  The claimant reports no 
additional progress, as the Governor referred the case to the Deputy 
Governor, who referred it to Alexandria Higher Committee for 
Evaluating the Price of Land, affiliated to the Ministry of Housing, 
for an opinion.  The opinion still has not been rendered.  In 
discussions with the claimant, post suggested the possibility of 
pursuing compensation in kind (e.g., tax concessions, etc.) rather 
than monetary compensation.  Claimant seemed agreeable to this 
approach. 
 
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 from the 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, claiming services 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, 
and that 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 stages 
of the contract, the Egyptian authorities seized the company's $3.4 
million performance bond, claiming performance deficiencies in the 
supplying of proper documentation, spare parts, and test equipment. 
The Embassy has been involved in discussions between the parties and 
has raised the dispute up to the level of the Prime Minister.  In 
August 2004, a mediation committee was set up between 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 in arbitration. 
 
4. Claimant A:  Colgate Palmolive 
 Claimant B:  H and H Enterprises 
 Claimant C:  International Trade and Marketing (ITM) 
 Claimant D:  Northrop and Grumman Electronic Systems 
RICCIARDONE