The stock exchange suspended trading of Orascom Construction Industries shares Wednesday amid allegations that the company had evaded taxes.
The Egyptian exchange made the move after the Egyptian Tax Authority requested tax forms from Orascom group president and founder Onsy Sawiris and his son OCI Executive Director Nassef Sawiris.
This is the first official action in response to accusations of financial crimes committed by several companies under ex-President Hosni Mubarak’s rule.
President Mohamed Morsy referred to tax evasion practices by several unnamed companies in his speech marking the anniversary of the 6 October War at the beginning of the week, saying the government was planning to begin investigations into some of their tax records.
“The EGX halted the stock not because they wanted an explanation to the inquiry but because they were concerned that incorrect news floating around online (that day) would harm the performance of the market and wanted us to resubmit the same disclosure we had put out a few days prior with any additional and relevant information,” Omar Darwazah, manager of corporate and investor relations at Orascom Construction Industries, wrote in a statement to Egypt Independent.
The company said in a statement issued Monday that it has been regularly paying its taxes, and that the closing of stocks trading was a preventative measure to keep the price of stocks from falling too far due to rumors.
The statement, a copy of which was sent to the stock market, Orascom said that according to Egyptian law, all capital revenues generated by the sale of stock market shares are exempted from tax and added that it does not expect any changes to the law to be implemented retrospectively
The stock market took a serious hit on Monday over news that the government was reviewing the tax records of companies registered in the market.
*Correction: This article previously stated that Orascom group president and founder Onsy Sawiris and his son Nassef Sawiris had been summoned for questioning, they have not.
This article also previously stated Nassef Sawiris’ title as OCI Executive Director of Orascom Construction. He is not, he is Chairman and Chief Executive Officer.
This story also previously stated that President Mohamed Morsy had referred to tax evasion and mentioned the names of certain companies, including Orascom Construction Industries in his speech marking the anniversary of the 6 October War at the beginning of the week. He did not specifically mention the name of any companies that were being investigated.
