Oct. 18 (Bloomberg) -- The Tunis airport’s main hall features advertisements for the country’s three cell phone companies and foreign exchange booths from its major banks.
What Tunisians passing through it may not know is that the toppling of President Zine el Abdine Ben Ali turned them into shareholders of those companies -- worth almost one-quarter of Tunisia’s stock market.
Tunisians control stakes in Orange Tunisie, Banque de Tunisie and about 100 other companies, as well as 500 houses and villas and 18 yachts, all seized by the new government after Ben Ali fled in January. Deciding whether to sell those assets will be a central task of the assembly being elected on Oct. 23 to write Tunisia’s constitution.
The body’s choice may show whether Tunisia’s new rulers will roll back the policies of Ben Ali, who supported free trade and followed International Monetary Fund-prescribed spending restrictions while alienating Tunisians with his family’s greed and corruption. Two of the major parties promise to renegotiate trade deals and use the companies for state-run investments.
“The left will push against Ben Ali’s free trade policies, though I don’t see an alternative for a small country without resources,” said Azzedine Layachi, a professor of Middle East affairs at St. John’s University in New York City. “The seized assets will eventually be sold to the private sector, but only once the political situation is settled.”
The government’s stake in the companies, which also include television production companies, tuna canneries, and radio stations, is worth about 3 billion dinars ($2.2 billion), said Mohamed Adel Ben Ismail, president of a government commission appointed to oversee the assets. That is equivalent to almost 25 percent of the value of the Tunisian stock market.
The commission is reviewing the companies’ records to see how and when they were acquired and needs another six months to complete its final report for the transitional government, Ismail said in an interview. Even if the body rules the stakes were legally acquired, many of their former owners are living in exile and have been convicted in absentia on other charges.
Selling off even some of the companies could provide a major boost to the stock market, said Slim Feriani, London-based chief executive officer of Advance Emerging Capital Ltd., which manages $750 million in frontier and developing nation stocks, including Tunisian building materials company Carthage Cement.
More Blue Chips
“The biggest issue with the Tunis stock market is its small size, limited liquidity and lack of depth,” said Feriani. “We need some more blue chips on the market.”
Tunisia’s benchmark stock index is outperforming that of Egypt, where the transition to democracy has been less smooth. The TUNINDEX is down 9.6 percent since the start of the year while Egypt’s EGX 30 has lost 40 percent.
The Tunisian election will be the first democratic test of the so-called Arab Spring, which also swept out governments in Egypt and Libya and led to promises of greater democracy in Morocco and Jordon. Tunisia’s 217-seat assembly will write the country’s constitution and be its acting government.
Ben Ali’s family accumulated its wealth by buying companies from the state at knockdown prices and luring overseas investors to do business with them. His family’s lavish lifestyle and control over large segments of the economy, detailed in U.S. State Department cables released by Wikileaks, helped spark the revolution.
Wanting and Coveting
“Whether it’s cash, services, land, property, or yes, even your yacht, President Ben Ali’s family is rumored to covet it and reportedly gets what it wants,” a June 2008 cable from the U.S. Embassy in Tunis said.
At the same time, Ben Ali’s free-trade agreement with the European Union brought growth to Tunisia. The economy grew an average of 5 percent a year in the 10 years leading up to the 2008 financial crisis, IMF data shows.
Merchandise exports have grown 150 percent since 2000, driven by apparel and car parts, according to the Geneva-based World Trade Organization. Exports account for 47 percent of the Tunisian economy, almost double Egypt’s ratio, the World Bank says.
Tunisia “has undertaken wide-ranging structural reforms aimed at enhancing its business environment and improving the competitiveness of its economy,” the IMF said in a September 2010 review that also lauded its “prudent” fiscal policies.
Two parties, Al-Watad and the Modernist Democratic Pole, an alliance built around the former communist party, favor creating a holding company to use seized companies to direct investment to distribute wealth more equally between the more developed coastal areas and the interior. The Democratic Pole favors the EU trade accord, unlike al-Watad.
The two largest parties according to polls, Islamic party Ennahdha and the Democratic Progressive Party (PDP), have said they’ll respect all international agreements inherited from the Ben Ali government, without specifying a policy on the assets.
Ettakatol, a party that says it’s similar to European Social Democrats, pledges to renegotiate the EU trade agreement to allow easier emigration of Tunisians, said Khemais Ksila, who heads a party list in Tunis. The party favors selling the seized assets.
“Long term, the government can’t be a partner of overseas private companies,” he said in an interview at his office above a satellite-television store in a working-class district of Tunis. “It will have to sell the stakes.”
When the Tunisian army put Ben Ali on a plane to Saudi Arabia on Jan. 14, the transitional government froze his family’s assets to prevent their ownership being transferred overseas. Over the next few months, courts appointed administrators for the companies to keep them running and save the 15,000 jobs of people who work for them.
The government now controls indirect stakes in Carthage Cement, as well as the country’s two largest publicly traded banks, Banque de Tunisie and Banque Internationale Arabe de Tunisie. Members of Ben Ali’s family had sat on the boards of the three companies.
It also has stakes in all three cell phone companies.
“It’s actually against the terms of the licenses for us to have all these stakes,” said Jamel Ayari, secretary of the Tunisian government’s legal office, a map of Tunisia hanging in front of him. “It was never our intention. We were catapulted into this situation.”
The government holds 65 percent of Tunisie Telecom, the former monopoly. After Ben Ali’s departure, the government also sequestered the 51 percent of Orange Tunisie held by Marouen Mabrouk, 39, the husband of one of Ben Ali’s daughters from his first marriage. And it seized 25 percent of mobile-phone company Tunisiana, which had been held by Mohamed Sakhr el-Materi, 29, the husband of a daughter from Ben Ali’s second marriage.
El-Materi’s seaside house near Tunis is decorated with bathroom sinks that had been illegally made from 2,000-year old Roman busts. He also held a farm south of Tunis with 1 million olive trees that he’d leased from the state for 30 years for 65,000 dinars, said Ayari, the legal adviser.
Ayari says he’s impatient to get some sales underway because the government can’t afford the upkeep. The Maybach luxury car owned by Ben Ali’s second wife, for instance, “requires an engineer to come from Germany to change the oil,” he said.
Foreign companies have been caught up in the seizures. Paris-based France Telecom SA owns the other 49 percent of Orange Tunisie. Mabrouk’s three seats on the six-person board are now voted by an administrator.
“It doesn’t in any way stop the normally functioning of the company, but it’s a situation we’d obviously like to be cleared up,” said Marc Renard, head of international operations for France Telecom. “If this lasted four or five years and we had to start taking strategic decisions, then it will start to be a problem.”
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