Naguib Sawiris: We will start transferring the retained earnings in North Korea
Businessman Naguib Sawiris, chairman of Orascom Investment Holding, said his company had obtained approval from the United Nations for his investments there and had no problems there at all. He said that for the profit transfer crisis, Inter-bank boycott is not with the company.
As for the volume of retained earnings for his investments in North Korea, Sawiris said for the "seventh day" that it is difficult to determine the size because of the existence of two prices of the currency there.
In 2008, Naguib Sawiris began construction of North Korea's first telecommunications network, among other investments, including a $ 250 million hotel and services, before facing several years of problems with the government's launch of a competing network and difficulties in transferring funds outside Korea. The accounting treatment of Coriolink – which owns 75% of them – on September 30, 2015, by proving it as investments in sister companies instead of subsidiaries because of its inability to control them, in view of the increasing restrictions and financial and operational difficulties facing Coriolink due to the international embargo on Korea .
A sister company is an entity in which the Group has significant influence by sharing in the financial and operating decisions of that entity but does not amount to the degree of control or joint control.
The international embargo imposed by the United States, the European Union and the United Nations on North Korea has restricted financial transactions and the export and import of goods and services, including goods and services necessary for the operation, maintenance and development of telecommunications networks as well as restrictions on the company that affect its ability to transfer profits to the company With the absence of a free currency exchange market in Korea from the Central Bank of North Korea.
Attempt to merge
On the Korean side, Naguib Sawiris made an offer that included the merger of his company Koryolink with the second local telecommunications operator, wholly owned by the North Korean government. Although there was initial approval at the time of the merger, which would have found future solutions to some of these obstacles, the Korean side did not agree to grant Group management has the right to control in the case of merger, especially as the restrictions are tightened.
It was then agreed to divide the number of users between Koryolink and the government telephone operator King SunGent and convert all local currency cash balances into euros using the parallel exchange rate of 8650 local transactions equivalent to one euro, One to 118 local currency, in addition to allowing the transfer of profits abroad.
UN sanctions
Despite the previous agreement, Naguib Sawiris faced a UN Security Council resolution on Sept. 11, 2017, obliging member states to pass laws that prohibit and prohibit participation in joint ventures or existing or future companies with the North Korean Republic unless it is approved to continue the joint venture , And Sawiris has already made an official request through Egypt to the Security Council Committee to approve the continuation of its investments, which was formally approved on December 30, but produced no results.
The outcome of the United Nations resolution
In a recent report by Orascom Investment Holding, confirmed that in the absence of a clear mechanism to implement the UN resolution, it is difficult to measure the impact of the decision on the investment value of investment.
However, according to Orascom Investment Holding's financial results for the six months ended June 30, 2018, Orascom's investments in its sister companies amounted to LE 614 million. It includes four sister companies, namely, Shiu Technology Joint Venture Company, , Direct and indirect ownership is 75%, Axis Holdings is actively engaged in information systems for financial services, operates in the United States of America, direct and indirect ownership is 23.7%, and electronic services for management services in the field of mutual funds and countries Of management services in investment funds and actively act of investment funds management services and up ownership percentage both of them to 14%, and they work in Egypt.
According to the financial statements, the total assets of Coriolink Company amounted to 27.5 billion pounds, while the total commitments amounted to 3.969 billion pounds to reach net assets of 23.6 million pounds.
During the six months ended June 30, 2018, Coriolin's total revenues reached 2.3 billion pounds compared to 3.2 billion pounds during the same period last year. The net expenses amounted to 1.2 billion pounds compared to 918 million pounds. The net profit after taxes reached 2.1 billion pounds against 2.3 Orascom's share is 1.5 billion pounds, compared to 1.7 billion pounds.
Orascom's outstanding earnings in Pyongyang are estimated at $ 540 million, so this decision could open the door to hopes of transferring those profits to its parent company, Orascom Investment Holding, listed on the Egyptian stock exchange.
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(tagsToTranslate) Economy News (t) Naguib Sawiris (t) North Korea (t) Orascom Investment (t) Naguib Sawiris
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