Abbas halted Palestine Investment Fund telecom stock deal, says source
Palestinian Authority Chairman Mahmoud Abbas acted to halt the sale of Palestine Investment Fund (PIF) shares in two subsidiaries of Orascom Telecom Holding, Egypt's leading telecom firm, according to Palestinian business sources. A close associate of Abbas, who wished to remain anonymous, confirmed the report.
The PIF manages the Palestinian public's funds. PIF Chair and PA Finance Minister Salam Fayyad, who supports the deal, insisted Abbas was not, and should not be, involved in PIF matters. He denied the deal was dead, adding it is still being negotiated.
The PIF was to sell Orascom shares in its two subsidiaries, a 24 percent stake in Algerian Orascom and 22 percent stake in Tunisian Orascom, for $340 million. The PIF bought the shares in 2003 for $90 million and $50 million, respectively.
Orascom announced the current deal March 6. "The acquisitions are expected to be completed this month after certain third-party approvals," Orascom said then, without naming the party's identity. An Abbas associate said Monday the deal was off. Orascom did not comment on this claim.
The business sources who praised Abbas' alleged involvement, said PIF Director General Mohammed Rashid had agreed to too low a price.
According to them, the deal prompted two board members to resign last week, charging that it was not conducted by the book, and did not compare competing offers.
The Jerusalem-based newspaper al-Quds said that the reason for the resignations was differences of opinion, without further delineating. Associates of the two resigning board members said that after Rashid brought the deal to the board, they looked into the matter with other economic sources, who offered $420-$600 million for the holdings. In addition, they were disgruntled with PIF's investment policy, which directs 70 percent of its investments abroad, a percentage too high for their tastes.
Fayyad discounted these claims saying one of them cited personal reasons for the resignation. Regarding the deal, Fayyad insisted there is no base for suspicions being raised in connection to Rashid, since the entire board, not just one individual, makes all investment decisions.
Fayyad said the Orascom deal was conducted by the book, adding that good governance supersedes all profit-and-loss calculations. Responding to criticisms over the low sales price, Fayyad said there are many considerations in investment management. Many had doubted the Orascom deals when they were first made, but they have since turned out to be most profitable, he noted.
Fayyad blamed the poor economic atmosphere for low investment in Palestinian areas in recent years. However, he observed, apparent changes on the ground bode a new trend to invest in the Palestinian areas.
The Palestine Investment Fund's stated mission is to serve as a catalyst for socio-economic development in Palestinian areas.