Businessmen, then and now
Not a few incidents have surface in recent years involving charges and court sentences against some of Egypt’s super-rich businessmen. A couple of months ago business tycoon Hisham Talaat Mustafa was handed a death sentence, which he is now contesting in the court, for collaborating to kill Lebanese pop singer Suzanne Tamim. A few months earlier, MP Mamdouh Ismail, the owner of the Al-Salam ferry which sank in 2006 killing some 1000 people was sentenced to seven years in prison. To say nothing of Hany Sorour, MP and owner of the medical supplies company Haydelina, who is on trial for supplying contaminated blood bags to hospitals.
All of which aroused cries against rampant corruption and the ‘unholy alliance between businessmen and authority’. But is this really new to the Egyptian scene? Watani probes the world of business during the first half of the 20th century, those who formed Egypt’s first modern-world private sector.
WATANI International
23 August 2009
Despite Egypt’s long history there are only a few economists who it might be said can be numbered in the hall of fame. One of them is Ahmed Abboud Pasha. Abboud belonged to the generation of Egyptian entrepreneurs who helped shape Egypt’s economy in the 20th century. These included the cotton lord Farghali Pasha; glass baron Sayed Yassin; Elias Andrawus, king of the stock market; and Talaat Harb, the founder of Banque Misr.
Abboud was different. While the others sprung from elite backgrounds, his family belonged to the lowly middle class: his father owned a public bath in Bab al-Shareya, Cairo. Abboud’s ambition earned him a sugar manufacturing business, and in time he monopolised this sector as well as the chemical, paper, freight and cotton industries. In its issue dated 10 January 1964, Time magazine wrote an obituary for Abboud that placed his investments at over USD100 million.
Rrags to riches
Until he graduated from engineering school, Abboud helped his father manage the public bath. He later worked in the agri-business of a large landowner in Armant, but was dismissed and went to work for a contractor in bridge and road construction in Palestine. Meanwhile he became acquainted with the military services manager of the British army and married his daughter. He started his own contracting business and, with the help of his father-in-law, was in charge of most of the British army operations in Palestine. Having accumulated a large sum of money, Abboud bought the stock of the Car Transport Company in Cairo and the Khedive Postal Shipping Company, and in 1935 he joined the Egyptian rich list.
Abboud greatly exploited the situation in WWII, making a fortune out of profits from his shipping fleet. He bought most of the stocks of the first sugar plant to produce sugar from sugarcane, which was then owned by the Belgian Henry Noss. After Noss’s death his son Hugh took over the company, but Abboud, who was a member of the board, plotted to force Hugh to join up for military service and go to war where he was eventually killed in action. Having got rid of him, Abboud became the sole manager and chairman of the company until it was nationalised in 1960.
Lord of the manor
By the end of the 1940s Abboud owned most of the stock of the Egyptian Hotel Company, in addition to a fertiliser company. Years after he was dismissed from his job there, Abboud decided to buy the agri-business of Conte de Fontars where he had worked at the beginning of his career. He also bought the count’s palace in Armant as his residence; it had been built by Khedive Ismail when he invited Empress Eugenie to open the sugar factory following the opening of the Suez Canal in 1869. Abboud thus bought up the entire place—the land, mansion, factory, and utilities—where he had begun his success journey a mere, lowly employee.
At about that period he wrote an article entitled How to become a millionaire. The introductory lines show he considered himself divinely inspired: “Success is not a secret, but it is primarily bestowed from God. A person may have all the qualifications for success but, if he were not lucky, he might still fail.”
Wielding power
Abboud and Farghali Pasha together wielded great power, enough to force Talaat Harb, founder of Banque Misr and chairman of its board, to resign in 1939, when a conflict of interest arose with him. Their plan was to withdraw half a million pounds from the bank every day to jeopardise its monetary standing. They also collaborated with the prime minister, Hussein Sirry, who was a friend of theirs, to threaten Harb that if he did not resign the government’s accounts would be withdrawn. Harb left and his seat was taken by Hafez Affifi, a paediatrician who was a common friend to the British and Abboud.
A role Abboud enjoyed for 15 years from 1946 to 1961 was head of the al-Ahly football club. These were the golden days of Ahly, but Abboud refused to take any money from the government to renovate the club. He built a swimming pool and renovated the stadium out of his own money.
Abboud built the tallest building in Sherif Street in central Cairo, the Immobilia Building. Constructed in 1939, it had 13 floors and for many years housed the Reuters and BBC offices, among other foreign press organisations. Abboud stipulated that anyone who lived in his building should be an Ahly fan. Among the people who had apartments there were Egypt’s most famous cinema and theatre stars.
Escaping nationalisation
When Abboud saw nationalisation coming in 1960, he decided to emigrate to Europe to manage his business with part of the money he had managed to smuggle to a Swiss bank account. He ordered his shipping fleet, which was out at sea when the nationalisation orders were issued, to sail to destinations other than Egypt in order to escape falling into the government’s hands. Abboud himself went to Naples where, together with his only daughter, he spent the rest of his life enjoying his accumulated wealth.
The cotton lord
There is even a word for it: cottonocracy, the ‘cotton lords as a class’ as defined by the Oxford Dictionary. That prized label ‘100 per cent pure Egyptian cotton’ does not come without a price.
Cotton baron Mohamed Ahmed Farghali Pasha was born to a wealthy family with roots in the Upper-Egyptian village of Abu-Tig. The family later moved to Alexandria where the young Mohamed was born in the street that bore the family name, Farghali.
Farghali began his education at the Jesuit School before attending Victoria College. He later travelled to London to study economics. However, his father’s illness forced him to return to Alexandria to take charge of the family business which involved a large local trade in grain and cotton.
First among exporters
Although Farghali senior had a business capital of about EGP30,000, the young Farghali had bigger ambitions. He established a pig farm, from which he made a huge profit, on land owned by his family near the Delta town of Mansoura. Upon his father’s demand he went into partnership with the family business and, in the late 1920s, persuaded his father to venture into exporting cotton, a field until then monopolised by foreigners.
The first cotton deal resulted in the huge loss of more than EGP4,000. Farghali, however, had learnt his lesson.
On the death of his father later in 1927, the ‘king of cotton’ was exporting a share of a quarter on one per cent of the total Egyptian cotton crop. Ten years later, Farghali was exporting 15 per cent of the crop. The success paved the way for other Egyptian exporters.
In 1935 Farghali was elected deputy to the head of the cotton exchange at Mina al-Bassal, the largest exchange market in Alexandria, becoming the first Egyptian to end the long monopoly of foreigners on leading positions in local business.
King Fouad bestowed on Farghali the title of ‘Bey’, and in 1941, during the cabinet of Hussein Sirry, he received the rank of ‘Pasha’.
Ups and downs
Over his career Farghali survived several financial crises, but after every setback he was soon on his feet again. He mentioned in his diaries that during these crises he sometimes resorted to bribery. Farghali even used bribery in an earlier election, which he lost to the Wafd candidate, that almost brought him to the Alexandria exchange, giving every worker who voted for him an Egyptian pound, which was then quite a sum of money.
Farghali pasha’s most severe crisis, one in which he even wept in front of his wife, was when he signed a deal to sell a quarter of a million qintar (approximately 160kg) of cotton for EGP2 million, but the exchange experts refused his cotton because it did not match the necessary specifications. When he appealed against the decision his objection was overruled. Farghali was rescued by the great fire in Cairo on 26 January 1952, when the Wafd government fell and a new ministry was formed which accepted Farghali’s cotton. Instead of a great loss, he made a huge profit.
Nationalisation
Farghali supported the 1952 Revolution, which he thought was an inevitable move away from the monarchy and which changed Egypt’s political and economic structure, out of fear that if the Muslim Brotherhood ruled Egypt “they would take society backwards,” as he told Gamal Abdel-Nasser when they first met. The revolution, however, nationalised Egypt’s thriving private sector in 1960. Farghali believed that the seizure of the acquisitions of the rich was nothing but revenge, and thus an offence to humanity.
The value of Farghali’s companies was estimated at EGP2 million, although its true value was more than eight times as much. After his capital was seized, Farghali’s first monthly salary came to no more than EGP2.5.
In the 1960s, Farghali was offered a consultancy job in an English bank in London with an annual salary of EGP25,000, as well as a car and a home, but he refused to work outside Egypt. He later agreed to work as a cotton industry consultant in Egypt, for a monthly salary of EGP100.
Abdel-Latif Abu-Rgeila (1911 – 1991)
“Before I finish my coffee”
Abdel-Latif Abu-Rgeila was born to a well-off Upper Egyptian family that was based in Sudan when he was born. He received his primary education in Sudan before attending secondary school and later university in Egypt. After graduation he landed a job with Banque Misr—the first bank founded by an Egyptian and owned by Egyptians—where he learnt the ropes from his boss, the bank founder Talaat Harb.
Restarting from zero
In an interview conducted back in 1959 by the Cairo weekly Al-Mussawwar, Abu-Rgeila said that his first year in business was not just a year of hard work but a year of struggles that he managed to overcome. After three years of hard work, he said, he realised he was finally on the right track and began to make his first million. “Submerged today in my millions,” he said, “I remember the ‘great’ capital sum with which I started my business: EGP34!” Abu-Rgeila fondly recalled.
In his Series on the Pioneers of Investment, published by the Centre for Leadership Training for Businessmen, Mustafa Bayoumi described Abu-Rgeila as “The bus emperor”. He wrote that Abu-Rgeila’s life was a series of hard work, success, achievement, bankruptcy and downfall. According to Bayoumi, at one time Abu-Rgeila’s wealth lay in huge quantities of goods in Italian ports: everything was lost during air raids in WWII. He had to restart from zero, and again he reached the top.
Abu-Rgeila lived in Italy for many years before the 1952 Revolution. He married quite late—only when he fell in love; his bride was Italian yet was almost Egyptian in outlook. They had no children. Abu-Rgeila returned to Egypt in 1949, buying up farmland, but three years later he was back in Italy.
Bus king
In 1954 Abdel Latif al-Boghdadi, then minister of civil affairs, assigned Abu-Rgeila with the responsibility for the Cairo buses which, under him reached unprecedented levels of refinement, organisation, cleanliness, control and efficiency. During his time as head of the Cairo bus company, Abu-Rgeila used to adopt a disguise and take a bus once a month to monitor how his employees treated the passengers.
When Abu-Rgeila became head of Zamalek football club in 1956, the club prospered and expanded. In 1958 he donated a large sum for the new Zamalek grounds in Mit-Uqba, but at the stage when the stadium was to be built he ran short on money and resorted to a smart solution. He talked the two companies that supplied his bus company with petrol into cutting the price per litre, thus saving tens of thousands of pounds which he made available to finish the stadium. In his day the Zamalek headquarters in Mit-Uqba was described as “heaven on earth”, built amidst a deprived neighbourhood that had no civic utilities. When Abu-Rgeila built a running water pipeline to the club, he ran the pipes to Mit-Uqba for the residents at his expense.
Bitter
On several occasions Abu-Rgeila offered financial support to the Egyptian army without hesitation. During the 1956 Suez war he made his buses available for the use of the Egyptian army, assuming all the expenses involved. Nevertheless, this did not save him from the wave of nationalisation conducted by Nasser in the early 1960s, to which he lost much of his wealth. At this point Abu-Rgeila moved back to Italy, where he lived until the mid-1970s. He then returned to Egypt and spent the rest of his days feeling bitter about the loss of his fortune and what he considered the loss of a huge opportunity for development in Egypt that had started at the outset of the 20th century at the hands of the private sector, but was lost to nationalisation. Abu-Rgeila saw the loss of the private sector as the beginning of the downfall of the Egyptian economy.
Abu-Rgeila insisted that the transport authority would never prosper unless it battled bribery, theft and nonchalance. He often bragged: “Solving the transport problem in Egypt is no big deal; it can be solved before I finish my coffee.” Given his history, one cannot readily dismiss the remark.
Cattaoui: An Egyptian-Jewish family
The roots of the Egyptian-Jewish Cattaoui family can be traced back to the village of Qata, north of Cairo. A number of members of the family distinguished themselves in political and economic activities in Egypt during the late 19th and early 20th centuries.
The family’s life in Egypt began sometime after the move of Alisha’ Hieder Cattaoui to Cairo when his son, Yacoub (1801 – 1883) received an advantage from the government to practise business activities. He was the first Egyptian Jew to be given the title of Bey, and also received the title of Baron from the Austrian Empire.
It was the reign of Khedive Abbass I (1849 – 1854), and Cattaoui was assigned the post of Treasurer, what would today be the Minister of Finance. He kept this position during the reigns of Said and Ismail. In his last days, Yacoub was president of the Cairo Jewish community.
Third generation
Following Yacoub’s death in his palatial residence in Shubra in 1883, his son Moussa Cattaoui (1850 – 1924) inherited the father’s presidency of the Jewish Community. He was chosen as a member of the Egyptian parliament, and was given the title of Pasha.
Being a great financier and one of the biggest businessmen in Egypt, Moussa contributed to the financing of railway projects in Upper Egypt and the East Delta, as well as public transport projects in Cairo.
After Moussa’s death the presidency was transferred to Yusuf Aslan Cattaoui (1861 – 1942), who jointly with Talaat Harb and Youssef Cicurel had helped establish Banque Misr in 1920. Yusuf had been a member of the Egyptian delegation who in 1915 negotiated Egypt’s independence from Britain. In 1922 he was chosen a member of the committee responsible for setting up a new Egyptian Constitution following the 1919 revolution.
Yusuf was elected MP for the Upper Egyptian constituency of Kom Ombo in 1923. He became finance minister a year later, and the year after that he was appointed minister of transport.
Lady-in-waiting
Yusuf’s wife Alice came from another distinguished Jewish family—and one which also featured prominently on the Egyptian economic scene—in Egypt, the Sawarises. In 1943 she became chief lady-in-waiting to Queen Nazli, wife of King Fouad, and later lady-in-waiting to King Farouk’s wife, Queen Farida. Yusuf was a member of the Upper House of parliament from 1927 to 1936.
After Yusuf’s death his son, Aslan, was elected to take his father’s place in the Upper House of parliament. He was deputy of the Egyptian government in the Suez Canal Company and a deputy at the Egyptian National Bank.
The second son, Rene, was elected president of the Cairo Jewish community in 1943. He was manager of several economic projects.
The Cattaoui family played a vital role in establishing the Jewish Temple in Adli Street, Cairo, in 1899, which was renovated in 1988 with a donation by Jewish Millionaire Nassim Gaoun. It was officially reopened by Shimon Peres in 1990.