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Wena files claim for £37.5m against Egypt

01 January 2000
Wena files claim for £37.5m against Egypt

By Angela Frewin

British-based Wena Hotels has filed a $62m (£37.5m) claim against the Egyptian Government for alleged damages and loss of earnings following the seizures of Wena's two four-star Egyptian hotels, and for its continued use of the Wena logo.

The case will be heard by Washington DC-based International Centre for Settlement of Investment Disputes. Wena also warns it will sue any buyers or operators of the hotels, believed to be attracting bids from the likes of Saudi financier Prince al-Waleed bin Talal.

Wena vice-president Nael Farargy says his seven-year struggle with the Egyptian authorities has nearly bankrupted him and left him with no hotels. Litigation costs have already exceeded $4m.

Wena was the first to buy long leases from state-owned Egypt Hotel Company in a privatisation push. It took on the Luxor Wena in 1989 and the Nile Wena in Cairo in 1990, and invested some £7.5m in renovations and staff training.

But in April 1991, Farargy said the Government reclaimed the hotels by launching armed attacks (Caterer, 18 April 1991, page 18 and 1 August 1991, page 8) in which the properties were ransacked and staff and guests forcibly ejected. The move followed a wrangle over rent related to the condition of the hotels, but Farargy believes the Government wanted the hotels back to sell.

They were returned in February 1992 after diplomatic pressure, but too late to stop the sale of Wena's third hotel at Gatwick the following month. Farargy alleges the Egyptian authorities and police then launched "a campaign of harassment and intimidation". The withdrawal of the Nile Wena's operating licence prevented it from reopening, while the Luxor Wena was run on temporary permits.

Farargy disputes the Egyptian Government's claims that a local compensation award made in 1994 voided its claims, saying he received just $400,000 of the $4m award. The hotels were forcibly retaken in June 1995 and August 1997.

Nobody at the Egyptian embassy in London or at the Egyptian tourist department in Cairo was available for comment.

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