Omar Effendi Case Study

Contents

I. Executive Summary II. Methodology p1 p2

Omar Effendi: Who’s to blame?

A case study in a company’s mismanagement and failure to comply with IFC standards

III. Project Information p3 IV. Background V. Company’s wrongdoings VI. IFC’s shortcomings p4 p6 p10

VII. Recommendations to the IFC p13

The Bank Information Center partners with civil society in developing and transition countries to influence the World Bank and other international financial institutions to promote social and economic justice and ecological sustainability.

Bank Information Center MENA Program April 2011

Acknowledgements The Bank Information Center credits MENA program’s Nadia Daar as the primary author of this case study. However, this study would not have been possible without the support of Amy Ekdawi, Angelina Jarrouj, and most importantly, an unnamed labor activist in Cairo who provided a vast amount of data and analysis needed for this study. We thank this person greatly and recognize that this piece would not have been possible without them.

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I. Executive Summary

In November 2007, the International Finance Corporation (IFC) invested in the then newly privatized chain of retail department stores, Omar Effendi, 90% of which had been purchased by Anwal United Trading Company Limited of Saudi Arabia (Anwal). The IFC’s investment was comprised of a $40 million loan as well as an equity investment of $6-$10 million (which gave the IFC a 5% stake in the company). The project would entail a store refurbishment and turn-around program since the once prosperous stores were in poor condition at the time of Anwal’s purchase. Already a subject of controversy as a result of a non-transparent and, what many perceived as, corrupt privatization process, this historically economic and cultural jewel in Egypt has been a focus of the Egyptian media since...