How Will Tunisia Dispose Of Ben Ali's Valuable Assets?

The Tunisian government still holds confiscated property from the former president, Zine El Abedine Ben Ali, reportedly worth almost a quarter of Tunisia's stock market. With nationalization off the table, Nizar Bahloul proposes a plan for the companies, yachts, horses and properties that will do the least economic damage.

al-monitor The Tunisian Stock Exchange building in Tunis. Photo by REUTERS/Zoubeir Souissi.

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Aug 4, 2012

The Tunisian government has just started with the procedures of cession related to the confiscated properties of former President Zine El Abidine Ben Ali’s family a year and a half after the revolution. A decision in this period is needed to save the confiscated companies from this transitional period, during which they might default and collapse because of an absence of good management or because of a lack of clarity regarding their future. As judicial procedures require substantial time, the competent authorities have decided to disregard the laws by confiscating and selling the said companies.

This political decision is a double-edged sword. In fact, it can pave the way for nepotism and corruption if the competent authorities decide to offer the confiscated “gems” to third parties by mutual agreement (officially) and to friends (effectively). The government could have nationalized such companies and mortgaged their future.

However, it is such a relief, at least for the time being, to see how the government has dealt with this affair and has drawn up its plan of action accordingly.

Ben Ali’s confiscated companies should be saved! This was the title that Business News chose for an article last March, in which the Tunisian government was criticized for not adopting any decision to such effect. The stakes are high, mainly because the receivers in charge of the cession process of the aforesaid companies have been in power for a year and a half. This situation is only temporary as such receivers lack the required technical skills and the necessary time to ensure the good management of the aforesaid companies, which have turnovers of hundreds of millions of dinars and yield considerable profits. More time is needed, because those hundreds of confiscated companies require 300 various solutions.

Therefore, the government has taken time to make the necessary political and technical decisions. If we trust the program prepared and released by the Minister of Economy, Ridha Saidi, and Secretary of State to the Minister of Finance, Slim Besbes, we can see that the government has used the invested time wittingly.

The confiscation process affects 114 individuals, who own 550 properties, 300 companies, 223 cars, 48 boats and yachts, 40 stock portfolios, 367 bank accounts, and 83 horses.

The confiscated companies include commercial businesses (13%), real estate agencies (15%), financial institutions (11%), service providers (14%), and tourism concerns (8%).

The government’s plan aims to maintain the Tunisian industrial base, increase the government’s revenues, provide liquidity to the banking sector, improve employment rates, lengthen companies’ durability, and boost the stock market.

The government’s goals are quite clear and straightforward. They do not provide, however, a wide range of solutions. As the nationalization solution has been excluded from the beginning, the government has to show a great deal of political bravery, mainly because it is surrounded by several radical leftist parties (within or outside the Troika).

“The state is a bad administrator as we can clearly see the increasing public deficits. We cannot manage these confiscated companies like this. A good management is necessary,” stated Saidi.

As the nationalization solution is excluded, the government has set up the necessary means to achieve its goals. It has benefited from the assistance of the country’s best investment bank, “La Banque d’Affaires de Tunisie” (BAT), managed by CEO Habib Karaouli. The government has also brought in professionals who represented the major stakeholders: accountants, bankers, and stockbrokers.

There have been several negotiations and discussions that have contributed to the government’s plan of action, which aims to restructure stakes, establish a permanent management and adopt transparency when appointing technicians.

Consequently, three profiles have been considered: companies that are saleable forthwith; those which stakes were allocated to the Deposit and Trust Fund; and those which will be entrusted to a holding company.

Concerning the first profile, six companies have been selected and the cession of such companies is scheduled within the next five months. The aforesaid companies include: Ennakl (60%), Tunisiana (25%), International School of Carthage (100%), City Cars (99%), Carthage Cement (37%) and “la Banque de Tunisie” (13%).

“La Banque de Tunisie” will manage the cession of four companies out of six.

As for the companies of the second profile, a holding company will be established under the supervision of the Deposit and Trust Fund. We will know more about this plan next year.

In the third profile, a holding company named “Al Karama Holding” will be also created. We still don’t know much about this company; however, Besbes has promised to provide further details soon. The company’s services are soon to be provided according to the relevant plan of action and the solution offered to each of the 300 companies is a unique solution. Each company constitutes a separate case and each case has its own specifics and complexities.

It is impossible, in fact, to provide the same solution to Bricorama and a production company, such as Cactus; and the same solution to Carthage Cement and Zitouna Bank. Even within the same industry (the automotive industry, for instance), it is absurd to provide a unique solution to all automotive companies. For instance, it is out of the question that Ennakl allow another competitor to contribute to its capital, because Volkswagen will categorically refuse, although the latter is not a stakeholder in Ennakl. As for Alpha (Ford), City Cars (Kia), or Stafim (Peugeot), there could be a different solution to each company.

The plan is prepared according to each case and takes into consideration the current status of the company, in addition to its environment, size, human resources, and activities.

In specific cases, the solution to certain companies might not fall within the competence of Saidi and Besbes. For instance, such cases include Zitouna radio, Shems FM radio, Dar Assabah (including its three newspapers and the online paper), and Cactus production company (including Attounissia TV channel). Undoubtedly, when a media company is the object of sale, the sale terms will then depend on the political, economic, and social aspects of such company. Besbes is surely aware of this conditional reality and is keen to manage the cession dossier in coordination with the appointed receivers. Actually, he traveled to Germany last week to discuss with Volkswagen’s senior management, before deciding on a solution to Ennakl. There will be further visits and discussions about the appropriate solutions to the other big companies. The government will be open to the suggestions of the receivers, who have done a great job during this transitional period.

Such receivers know best (at least theoretically speaking) when it comes to the management of the confiscated companies that have been in the hands of receivers since months. In fact, Besbes has cited Raouf Menjour for his great job, as the latter has managed to run the companies in his custody and has been keen to keep pace with the government’s development plan. Another success story has been observed in Cactus as its manager Elhem Torjmen has also become in charge of Karthago (Cactus’ parent company) after accomplishing her first mission. 

A good political choice, a sound vision, a wise strategy, and a good coordination with professionals and experts are all key ingredients of corporate success. It seems that Saidi and Besbes have won the first bet. So, let us hope their good work will not be affected by the interference of other ministries (mainly the Troika in power), in order to move forward with the cession of the confiscated properties with a good common-sense approach and patriotism. They’ve still got a long way to go!

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