Supermarket sweep: Why Egypt is clamping down on MB businesses

The closure of two popular supermarket chainswas part of a decision by a committee formed in late 2013 to seize the property of the Muslim Brotherhood

Sonia Farid

Published: Updated:

It started with one of Cairo’s oldest, most popular supermarket chains. All branches of Seoudi, named after its owner - alleged Muslim Brotherhood senior member Abdel Rahman al-Seoudi - were raided by police on June 15 and shut down. Zad, a relatively new, less known supermarket chain owned by Brotherhood Deputy Supreme Guide Khairat al-Shater, faced the same fate.

The closure of the two chains, estimated to comprise a total of 40 shops, was part of a decision by a committee formed in late 2013 by the Ministry of Justice to prepare a list and seize the property of the organization, now officially labeled a terrorist group. The move has proved extremely controversial in its motivations, timing and repercussions. The state has been trying to downplay the negative impact analysts said it is bound to have.

Activist and former member of the National Council for Human Rights, Negad al-Borei, said the confiscation of the supermarkets, which he called “popularly supported insanity,” is unconstitutional. “The constitution prohibits the confiscation of private property,” he said. “Plus, nothing proves that Seoudi is related to the Muslim Brotherhood in any way.”

For activist and president of the Dahaya Center for Human Rights, Haitham Abu Khalil, the confiscation increases existing tensions. “This move intensifies political polarization and reveals a great deal of injustice, since none of this was done to leading members of the National Democratic Party and [former President Hosni] Mubarak’s clique,” he said.

The latter argument was raised by activist and co-founder of the April 6 Youth Movement, Asmaa Mahfouz. “What about all the money of Mubarak’s businessmen? Why isn’t it back?” she asked.

A comparison was made between the closure of the supermarkets, and the nationalization policy adopted by late President Gamal Abdel Nasser following the 1952 revolution that toppled the monarchy. Borei said the confiscation of Seoudi and Zad is “much worse” than nationalization. “At least back then the state used to compensate nationalized corporation.”

Economics professor Mohamed al-Naggar said nationalization under Nasser was done in a way that benefits the economy. “Nasser nationalized parts of the private sector that harmed the state economy, yet left other parts like private agricultural companies,” he said. “Now, we only have a case of political conflict between the Muslim Brotherhood and the current regime.”

Ahmed Mahran, professor of law and director of the Cairo Center for Political and Legal Studies, considers the decision purely political. “The judiciary is manipulated for political purposes,” he said. “If the state feels that any private company is threatening the interests of one of its businessmen, it will confiscate this company regardless of the number of workers who would be out of jobs and the magnitude of damage to the economy.”

Mahran added that the owners of the confiscated shops will not be able to get their money back through international law: “Even if they manage to get a ruling from an international court, the Egyptian judiciary would still be the body responsible for implementing this ruling.”

Objections to the decision are not, however, confined to activists and independent analysts. Ahmed al-Wakil, president of the Federation of Egyptian Chambers of Commerce, said the Seoudi family has enjoyed a good reputation in the market since the establishment of the chain.

“If there had been suspicions of any wrongdoing, experts could’ve been assigned to monitor the administration of those supermarkets while business goes on as usual,” he said. “The stores shouldn’t have been confiscated and shut down right away.” Wakil added that Seoudi, who is claimed to have close ties with the Brotherhood, has not been the chain’s owner since 2008.

Similarly, the federation’s economic advisor Abdel Sattar Eshra said Zad is not actually all owned by Shater. This was confirmed by the latter’s son Hassan, who said: “According to the law, you can’t confiscate a person’s property without a court order, provided that the target person’s share in this property is at least 15%. Ours in Zad is only 5%.”

The secretary-general of the Cairo Chamber of Commerce threatened to resign from the board of directors in protest over the raiding of the two retailers. “The chamber’s board of directors will convene to discuss the reasons why the stores were raided, and whether there is a court order that permits the police to do so,” he said.

Judge Refaat al-Saeid, former head of the Cairo Criminal Court, said the confiscation of the supermarket chains is a precautionary measure based on the court ruling that designated the Brotherhood a terrorist organization. “Based on this ruling, a committee was formed to identify the assets of the Brotherhood, be they owned by individuals from the group or by the group itself,” he said.

“Those assets were to be confiscated so their money wouldn’t be used to destabilize Egypt’s national security,” Saeid said, adding that individuals whose assets were confiscated have the right to contest the confiscation before the committee. “The committee would then investigate whether the Brotherhood is the source of the money or not, and if it refuses the plea, this person has the right to go to court.”

Minister of Supply Khaled Hanafi denied that Seoudi and Zad would be nationalized or confiscated, saying they will instead be placed under state control. “The stores will be run by the Egyptian Company for Wholesale Trade, a subsidiary of the state-owned Food Industries Holding Company,” he said. “This will remain the case until a final court ruling is issued about their status.”

The stores, he said, will not remain closed until this takes place, and will re-open their doors to customers as soon as an inventory is completed. “That is why none of the workers, employees, or managers in those stores will be affected and they will all get their salaries,” he added. Hanafi said the two chains will operate in the same way they did before, in that Zad will continue to cater to lower-income customers.

Wahid Abdel Meguid, advisor to Al-Ahram Center for Political and Strategic Studies, said the closures were due to the state “waging a wide-ranging war against the Brotherhood on the political, economic and media levels. Closing the stores is a way of curbing the group’s influence.”

Norhan al-Sheikh, professor of political science, seconded Abdel Meguid’s opinion, saying: “The Brotherhood depends on money laundering, and that’s why its stores have to be closed as soon as possible. This happens in all countries that are in a war on terrorism like the UK and the United States.”

For economics expert Eissa Fathi, the clampdown was too late and should have taken place right after the official declaration of the Brotherhood as a terrorist group. “This delay allowed the owners to take goods out and leave the stores almost empty,” he said. “There were expired products in Zad, which shows that the raid was expected.” Closing the stores will “contribute to drying up the springs of terrorism,” he added.