Mubarak ally combined business with a bit of spying

Book documents the rise of Egyptian wheeler-dealer known as the Father of Sharm El Sheikh. Bradley Hope reports

An undated photo of Hussein Salem, right, meeting with Hosni Mubarak's personal secretary, Gamal Abdel Aziz, left, and Ahmed Shafiq, centre, former minister of civil aviation and Mubarak's last prime minister.Show less

CAIRO // The "Father of Sharm El Sheikh" - Hussein Salem -started small.

He earned 18 Egyptian pounds (Dh10) a month in the 1950s, working in a government office promoting the country's textile industry, writes Karem Yahia in a biography of the multi-billionaire, The Black Box: Hussein Salem Story.

From that unremarkable beginning, he found his way to Casablanca and Baghdad, where he represented Egypt's state-owned Arab Company for External Trade.

According to Yahia, he also held another job - a spy for Egypt's intelligence service.

He milked his business contacts for information, which he passed on to Cairo, says Yahia, who interviewed former government officials for his book.

Mr Salem made his first fortune in Abu Dhabi with a food import business, later expanding into tourism and energy projects in Egypt.

Most accounts say Mr Salem and Mubarak first met around 1977, when Mr Salem returned to Egypt from the UAE. Mubarak was then vice president under Anwar Sadat.

"There was no doubt he was a wheeler-dealer and I really took pains not to be associated with him," said Karim Oweiss, the former chief of Egypt's economic mission to the United Nations who met Mr Salem in Abu Dhabi and in the United States during the 1970s.

"He knew how to meet the right people and work his way up."

In the late 1970s, Mr Salem became embroiled in a major scandal. A company he formed with several former CIA agents, Egyptian American Transport and Services Corporation, won the exclusive right to ship all arms from the US to Egypt, the US media has reported. The other main partner in the corporation was Thomas Clines, a former CIA agent.

With Egypt receiving $1.3 billion (Dh4.77bn) annually in military aid from the US after the signing of the Camp David Accords, the contract proved lucrative.

But a US government investigation found that the company had inflated shipping costs to defraud the US government out of an extra $8 million.

Mr Salem pleaded guilty to the charges, reimbursed the US government $3m and paid a $40,000 fine. Soon after, he made his way back to Egypt where he began investing in Sharm El Sheikh.

Mubarak and his two sons bought three seaside villas in Mr Salem's Jolie Ville Golf and Resort.

He also became known for his joint ventures with Israeli investors, especially the creation of a company called East Mediterranean Gas (EMG) that acted as an intermediary in a deal for Egypt to export natural gas to Israel.

Last June, a criminal court sentenced Mr Salem and several of Egypt's former top energy officials to prison and fined them a combined $2.1bn for "hurting the country's interest" and "enabling others to make financial gains" related to the EMG deal.

Those convictions were overturned last month. Prosecutors say they will retry the case.

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