Saudi investor gets jail time for violating workers' rights

An Egyptian court on Wednesday sentenced a Saudi Arabian investor to two years in prison after he was found guilty of violating workers' rights in one of his factories in the Nile Delta city of Tanta. The ruling represents the first time for a foreign investor to be convicted by an Egyptian court since Egypt launched its privatization process in the early 1990s.

In April, the attorney-general referred Saudi investor Abdul Elah el-Kaaki, chairman of the Tanta Flax and Oils Company--along with company managing director Mohamed el-Sihi and general manager Mohsen el-Ayat--to a misdemeanors court in Tanta. The referral came after workers had reported irregularities on the part of company management.

Laborers had requested the termination of Kaaki's contract with the government, unpaid bonuses, and the reinstatement of colleagues who had been arbitrarily dismissed from the company.

According to judicial sources, the court sentenced the three men to two years in prison each and ordered them to pay LE500 to each worker, along with LE800 to every worker that had been laid off. The same sources said that the court had called for the amendment of Egypt's labor law in order to preserve the rights of workers employed by privatized companies.

"The verdict sends a strong message to businessmen who think they can violate workers' rights," said Khaled Ali, a lawyer for the workers. "The verdict represents the first time for Article 375 of the Penal Code to be applied to a businessman."

Tanta Flax and Oil, which employs some 1300 workers, was closed down one year ago by its owners. Workers first began facing problems with the management when the government sold the company in 2005 to the Saudi investor for LE83 million, to be paid in installments over three years. The real net worth of the company, however, has been estimated at LE500 million.

Trade union sources say that el-Kaaki violated the terms of his contract and had stopped paying workers their rightful bonuses and share dividends.