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Egypt: Terrorism Laws Abused in Businessmen’s Arrests

Juhayna Owners Charged as ‘Terrorists’ after Refusing to Surrender Shares

Seif Safwan Thabet, Chief Executive Officer of Juhayna, in his office at a Juhayna factory on May 24, 2016.  © REUTERS/Mohamed Abd El Ghany

(Beirut) – Two Egyptian businessmen have been detained for months, reportedly after they refused to surrender their shares in their company to a state-owned business, Human Rights Watch said today. Egyptian authorities should immediately release the men, Safwan Thabet and his son, Seif Thabet, owners of the Juhayna Company, a major dairy producer.

Egyptian National Security Agency officers had arrested them in December 2020 and February 2021 after they refused to surrender the family’s shares in the company, according to two sources who spoke with Human Rights Watch and a legal memo that a third source shared. The Supreme State Security Prosecution has jailed them in violation of their basic due process rights on vague charges of “funding terrorism, undermining the national economy and joining an unlawful organization,” apparently without presenting any evidence to support these charges.

“The abusive and apparently arbitrary detention of Seif and Safwan Thabet exposes how the government is using Egypt’s flawed terrorism laws to punish successful businessmen who refuse to surrender their property to the state,” said Joe Stork, deputy Middle East and North Africa director at Human Rights Watch.

The sources said that Seif Thabet is kept in harsh detention conditions. Jailers do not allow him to leave his cell, which has no shower or proper bathroom, nor a bed or mattress. Prison authorities have not provided him with adequate clothing, even during the winter months.

The family initially refrained from speaking publicly. One of the sources said that the message to the family during interrogation was, “Don’t post anything or talk with journalists, otherwise you’ll join them in jail.” In October, the authorities sought to bring charges of “spreading false news” and “joining a terrorist group” against Bahira Elshawi, Safwan Thabet’s wife, after she posted complaints on social media about the abusive detention of her husband and son.

After his arrest on December 2, 2020, Safwan Thabet, 75, resigned as the company’s chairperson. Juhayna board members elected the company’s Saudi partner and shareholder, Mohamed al-Deghim, to replace him.

The sources said that Seif Thabet, 40, was arrested on February 2 when he was called to attend a meeting at a National Security Agency office, from which he did not emerge. On February 6, pro-government newspapers reported that the Supreme State Security Prosecution had ordered his detention in the same case as his father.

The sources said that Seif Thabet’s arrest followed an earlier meeting with officials from the National Security Agency and General Intelligence Service in which he refused to give up family shares in Juhayna to a “sovereign entity” that they did not name. The officials, in return, did not offer “any compensation in any form,” one of the sources said.

Since their arrests, according to the sources and family social media posts, the men have been held in solitary confinement in different prisons in Cairo’s Tora Prison complex. United Nations human rights experts have said that prolonged solitary confinement can amount to torture and ill-treatment. Family members have been able to visit the Thabets separately only a few times. The Interior Ministry “many times” rejected their visitation requests, according to Bahira Elshawi’s Facebook posts and the sources who spoke with Human Rights Watch.

The Thabets have continued to refuse to give up their shares and ownership of Juhayna.

The authorities have provided no material evidence to support the charges and refused to hand over official charges or documents to lawyers, the sources said. Safwan Thabet had a high status among leading Egyptian businessmen under former President Hosni Mubarak. His mother’s father and brother had been Muslim Brotherhood leaders in the 1960s and the 2000s but the family says Thabet was never a Brotherhood member.

In 2017 a criminal court arbitrarily added Safwan Thabet, among hundreds of others, to Egypt’s terrorist list without hearings or due process. The designation imposed a renewable five-year travel ban and asset freeze.

Mada Masr, the independent news website, reported that a few months before Safwan Thabet’s arrest, an unnamed government minister demanded that Juhayna take over two struggling state-owned food manufacturing companies, Qaha and Edfina. In April 2021 the minister of supplies and internal trade, Ali Meselhy, publicly called on businessmen to buy shares in those companies.

Mada Masr also reported that, weeks before Thabet’s arrest, a senior official made several visits to a Juhayna factory to “check how it was managed.” Mada Masr’s report and the two sources who talked with Human Rights Watch said the official told Thabet to “think about” merging Juhayna’s main factory with Silo Foods, a new military-owned dairy project that President Abdel Fattah al-Sisi later inaugurated in August 2021 as part of a “Food and Logistics City.”

Those companies are managed and run by the National Service Projects Organization (NSPO), probably the largest of the military’s opaque business arms. Silo Foods’ motto, “The World Has a New Taste,” is curiously close to Juhayna’s “The World Has a Beautiful Taste.” Before Thabet’s arrest, for months, al-Sisi had publicly instructed the government to develop government-owned dairy industry facilities.

The International Monetary Fund’s loan programs with Egypt – totaling US $20 billion between 2016 and 2021 – have failed to bring transparency to the role of military-owned companies in the economy. The European Bank of Reconstruction and Development has similarly been unable to reverse the growing political repression or the role of Egypt’s military in the economy, despite the bank’s mandate to promote democracy. 

“The IMF and other financial institutions should rethink their approach before pouring more dollars into Egypt,” Stork said. “The arrest and continued abusive detention of Safwan and Seif Thabet for refusing to hand their company over to the military make clear that efforts under previous programs to improve good governance and transparency are not working.”

Juhayna Food Industries, founded in 1983, family-owned and -operated, and publicly traded on the Egyptian stock exchange (EGX), has for years had the largest share of Egypt’s dairy market. According to the firm’s website, Juhayna currently has 4,000 employees and a capitalization of approximately 1 billion Egyptian Pounds (EGP) ($63.9 million). The company owns 4 factories, 38 distribution centers, and 900 distribution trucks.

In the middle of the night on December 2, 2020, security forces stormed the house of Safwan Thabet, 75, Juhayna’s founder and chairperson, searched his belongings, confiscated money, and took him into custody. According to the two sources who spoke with Human Rights Watch on condition of anonymity, and the memo Human Rights Watch obtained, the authorities kept Safwan Thabet in incommunicado detention for three days before taking him before Supreme State Security prosecutors, who ordered him detained in Tora al-Mazra’a Prison pending investigation.

Two months later, on February 2, the National Security Agency office in Nasr City summoned Seif Thabet, 40, then Juhayna’s acting CEO. He did not emerge for the next four days. The family did not know where he was but finally learned through unofficial sources that he was in Cairo’s Scorpion Prison. The family was only able to visit him about two months later, the sources said. Scorpion Prison, part of the Tora complex, is an abusive maximum security prison where detainees have described their conditions as “living in tombs.” Inmates are deprived of family and lawyers’ visits for months or years at a time. Human Rights Watch documented that the authorities further tightened the conditions in that prison in 2020.

Egyptian law allows State Security prosecutors to detain suspects without trial for 150 days, after which a criminal court oversees detention renewal in proceedings that usually last only a few minutes and do not allow for presenting evidence in defense. International human rights law requires governments to use pretrial detention only as a last resort and for the shortest time possible, and to bring all detainees before a judge within 48 hours to determine if there is sufficient evidence to keep them in custody.

The sources said that lawyers were not allowed to attend most detention renewal hearings before the Supreme State Security Prosecution, and that the authorities do not officially inform them about hearing dates. “We just have lawyers in the courtroom every day in case their names appear on the list of hearings,” one source said. The Supreme State Security Prosecution, a branch of Egypt’s public prosecution, oversees terrorism and political cases. It routinely rubber stamps unsubstantiated security allegations and is responsible for detaining thousands of peaceful dissidents, journalists, and critics.

After the July 2013 military coup, although security officials in December 2013 told him he could not travel abroad, Safwan Thabet appeared to be in relatively good standing with the new government. On July 13, 2014, President al-Sisi hosted a Ramadan iftar (dinner) with a group of businessmen that included Thabet, during which the businessmen pledged EGP5 billion (approximately $320 million) to the Tahya Masr Fund, a non-transparent entity that al-Sisi established in 2014, and controls outside of the state budget.

Credible media reports have said that donations to Tahya Masr were a way to express loyalty to the president. Two days after the iftar, Thabet announced Juhayna’s donation of EGP50 million (approximately 3.2 million) to the fund. The two knowledgeable sources told Human Rights Watch that Thabet announced the donations after security and intelligence officials made it clear, as they put it, that “the contributions are non-negotiable.”

Safwan Thabet’s troubles with al-Sisi’s government began in August 2015, when the Committee to Assess the Financial Assets of the Muslim Brotherhood froze his assets, but largely excluded the Juhayna company. The committee, an administrative entity the government created in 2013, is responsible for decisions that pave the way for the unlawful seizure of the assets of individuals and companies that authorities claim, regardless of evidence, were linked to the Muslim Brotherhood, which the government had designated a terrorist organization in late 2013.

The committee claimed in 2015 that Thabet was “an active Brotherhood cadre, not merely a supporter.” In February 2016, the committee, without court hearings or official charges, froze 7.2 percent of Juhayna’s shares that it said Thabet indirectly owned. The government could not seize all of Juhayna’s assets because Thabet owned the majority of his shares through Pharaoh Investments Limited, a fund incorporated in the British Virgin Islands in which Thabet, his wife, son, and two daughters held a majority of company shares. Pharaoh Investments Limited owns about 51 percent of Juhayna. Other businessmen and entities, Egyptian and non-Egyptian, hold most of the remaining 49 percent of its shares.

In January 2017 a criminal court arbitrarily, without hearings, added Safwan Thabet to a terrorist list of some 1,500 names that included other businessmen and a former football star, as well as Muslim Brotherhood leaders. The designation is based on the highly abusive Terrorist Entities Law that al-Sisi issued in 2015. Many of those arbitrarily designated were able to obtain decisions from the Cassation Court, Egypt’s highest appellate court, annulling asset freezes, but the court rejected Thabet’s appeal, one of the sources said.

To bypass these court reversals, al-Sisi approved a law in 2018 that reintroduced the committee in a new form, one that the government contended was “judicial,” not administrative, and had greater powers to seize and manage frozen assets. The terrorist designation process remained lacking in due process.

Despite the arbitrary “terrorist” designation and asset freeze, the Thabet family, according to media reports, had maintained a decent relationship with al-Sisi’s government and ministers. In 2018, Juhayna donated EGP15 million (about $1 million) again to Tahya Masr Fund.

After the 2011 Egyptian uprising that ousted Hosni Mubarak, Safwan Thabet had links to Ibda’, an association comprising a diverse group of Egyptian businessmen, some of whom had links to or were members of the Muslim Brotherhood. He resigned in 2013, along with many other members. Safwan Thabet is the grandson of a former Brotherhood Supreme Guide, Hassan al-Hudaybi. The sources said the Thabets had faced no prosecutions before al-Sisi’s tenure.

Case 865 of 2020, to which Safwan and Seif Thabet were added, also includes Sayed al-Sweirky, a businessman who owns a large chain of department stores, and Khaled al-Azhary, the manpower minister in Morsy’s government, both arrested in December 2020, around the same time as Safwan Thabet. They all remain in pretrial detention. The sources said that Thabet’s family and Juhayna had no business or other relationship to those men and that they “don’t really know each other.” A few days after al-Sweirky’s arrest, pro-government newspapers reported, he donated EGP10 million ($630,000) to Tahya Masr Fund.

In May 2021, a few months before the inauguration of the military-owned Silo Foods, Juhayna announced that traffic police had placed a checkpoint in front of the company’s main factory and undertook measures the company considered arbitrary, including revoking the licenses of dozens of Juhayna delivery truck drivers, as well as company executives and private contractors. The sources said these measures were aimed at disrupting Juhayna’s supply chains, damaging its ability to compete, and preparing the market for the entry of Silo Foods.

The newly established Food and Logistics City, into which a senior government official urged the Thabets to merge Juhayna, is part of the military’s aggressive expansion into civilian sectors such as infrastructure, imports, chemical manufacturing, food products, and household appliances under President al-Sisi. These businesses operate in near total secrecy with little or no oversight by the state anticorruption body, according to credible human rights and media reports.

On June 2, 2021, Bloomberg reported that Abu Dhabi’s sovereign wealth fund ADQ was eying a stake in Juhayna. The fund is headed by Tahnoun Bin Zayed, brother of United Arab Emirates Crown Prince Mohamed Bin Zayed.

On September 30 the Interior Ministry published a statement announcing it had arrested Yehia Mahran, whom it described as “a main arm” of Safwan Thabet. The statement said both were behind a plot to “revive the activities of the terrorist Muslim Brotherhood through raising funds.”  An unnamed Muslim Brotherhood lawyer told Mada Masr that they had “never heard” of Mahran. One of the sources who spoke with Human Rights Watch said that Mahran had been one of Juhyana’s distributors and that he is a “well-known” businessman and works with several companies. A source familiar with the matter told Human Rights Watch that Mahran’s arrest was the government’s response to public criticism of the Thabets’ detention.

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