MARCH 1989 - VOLUME 10 - NUMBER 3
T H E F R O N T
A Savings and Loan Crisis Fundamentalist StyleOne of the trickiest problems facing the Egyptian government of President Hosni Mubarak is how to handle the phenomenon of Islamic investment companies.
These companies began to sprout in Egypt about a decade ago as Egyptian savings grew, swelled by contributions from the millions of expatriate Egyptians working in the oil-rich nations of the Arab world.
The companies promise to invest funds deposited with them in accordance with Islamic strictures against payment of interest. Instead, the companies pay "dividends" which often exceed bank interest rates, though those dividends are not necessarily out of line with real interest rates offered elsewhere, once discounted for inflation.
The primary economic effect of the Islamic investment companies was to suck savings out of banks where, as permitted by Egyptian law, about half of total deposits of more than $17 billion are already in foreign currencies.
As of mid-1988, there were more than 100 Islamic investment companies, with hundreds of thousands of small-time investors taking part in the firms' "profit-sharing" plans. There was no regulation of the firms but rumors abounded that the companies were conduits for black-marketeering, export of capital, money laundering and the skimming off of new depositors' funds to pay back old depositors-the "pyramid scheme."
Since the mid-1980s, the Islamic investment companies normally have returned up to three times the 10 percent average interest rate offered by banks. The companies' names have spread along roads and in the cities at jewelry stores, top butcher shops and alcohol-free restaurants.
Mubarak's government finally became alerted in 1987 when rumors spread about two large Islamic investment firms losing huge amounts in gold and silver speculation on Western European markets.
In August, 1988, Egypt's government made public charges of illegal activities. In November, a law was enacted, bringing the firms under the control of the Central Bank and the Economics Ministry. Now companies are expected to provide documents about their businesses if they want to continue operating in conformity with Sharia, the 1,400 year old Islamic legal system which bans interest payments.
Thirteen companies have provided documents; 23 have declared that they will liquidate and return investors' funds. More than five dozen companies are still dithering and Egyptian officials say some of them--and some individuals connected to them--may be liable for prosecution.
The largest Islamic investment company, Al-Rayyan, has come under particularly heavy attack from Egyptian Attorney General Gamal Shouman, who has detained 49 of its officers, family members and accountants, and frozen the companies assets, worth more than $1 billion. The government says the company's illegal operations jeopardized depositors' funds.
The government says it is acting to protect depositors and to try to refund them. But there is a deep suspicion among many Egyptians that the attack on the investment firms is a way of curbing the political power of Islamic fundamentalists. The government has a particular interest in stopping the growth of the Muslim Brotherhood, whose appeal has increased greatly in recent years even as it has projected a more moderate image to the Egyptian public.
The Brotherhood is no longer illegal and, indeed, has about a fifth of the representation in the national legislature. One of the Brotherhood's basic tenets is 100 percent implementation of Islamic law. Mubarak's government claims 90 percent of Egypt's legal code already conforms to Islamic law.
Many Islamic investment company depositors are worried that they will never get their money back. Those worries were compounded in November when Prime Minister Atef Sidki invoked a rarely used power to freeze Al-Rayyan's monetary transactions retroactive to April, 1988. At one point last year, the depositors even demonstrated in front of Al-Rayyan headquarters. Now it is up to Mubarak's government to straighten out the mess.
- William Steif
Unions Under FireSan Salvador - The official reports on the deaths of Miguel Angel Lazo and Carlos Rodriguez Dominguez, would not mention the bruises, knife wounds or the broken bones that the labor activists had suffered along with the bullet wounds that killed them. They would also not mention that both newspaper accounts, attributed to "military sources," and eyewitnesses reported that Lazo and Rodriguez had been captured alive on February 22 by a contingent of Salvadoran Air Force troops in Ciudad Credisa.
When labor leader Francisco Martinez charges that El Salvador's infamous "death squads" are actually part of a special unit within the Salvadoran Armed Forces, he has the history of many cases like this one to back him up.
In addition to five assassinations and several "disappearances" of union members, Salvadoran union organizers also charge the army death squads with the bombings of two union offices, machine-gunnings of four union offices and various death threats against labor leaders, in 1989 alone. Since the beginning of the year, more than 200 union members have been arrested.
Many observers trace the beginning of this new wave of oppression to January 24 when several unions announced their support for the proposal by the Farabundo Marti Front for National Liberation (FMLN) for a six-month delay in the presidential elections and reform of election laws in exchange for their peaceful participation in the electoral process.
Only two days after the FMLN proposal became public, two activists of FENASTRAS, the National Federation of Salvadoran Workers, were captured by the Treasury Police, and a third unionist was shot in the legs by police in a raid on a brigade posting union propaganda.
On February 8 a carload of armed men machine-gunned the UNTS office, located in the residential neighborhood of San Miguelito in the capital. Four nights later the downtown offices of FENESTRAS were sprayed with automatic weapons fire. Two other union offices were also machine-gunned during February.
On February 13, the UNTS responded to the violence by sending seven bus-loads of demonstrators to a meeting of the Central American presidents to deliver a letter asking them to address the FMLN peace proposal in their talks. Salvadoran President Jose Napoleon Duarte had stated the day before that the proposal would not be discussed at the meeting. The demonstrators were turned back several miles from the heavily-guarded resort.
In the early hours of February 15 a large bomb destroyed the front of the UNTS building. The blast destroyed several iron security doors, causing damages estimated at $140,000. "It's a minor miracle that no one was injured," said an American psychology student from Loyola University, who had spent the night in the building, together with a Canadian and 18 Salvadorans.
Leaflets left at the site announced a new death squad campaign against anti-government activists, including "international visitors and others who volunteer for the game of the FMLN."
UNTS spokesman Luis Antonio Chacon noted that soldiers appeared on the scene only a few minutes after the 3:45 a.m. attack.
The morning after FENASTRAS had built barricades to protect its office, a powerful bomb thrown from a car destroyed the front of their building, seriously damaging numerous shops and houses on the street. Miraculously, all of the 14 people inside the building at the time escaped injury. Costs of damages were estimated at $60,000.
That afternoon 350 FENASTRAS members held a violent march in which demonstrators burned 10 vehicles and broke into several stores. The marchers, many carrying machetes and Molotov cocktails, skirmished with police who countered with tear gas grenades, bullets and tanks. The right-leaning newspapers Diario de Hoy and Prensa Latino charged the workers with rioting and looting.
"It wasn't a riot. The use of violence was planned," said Juan Jose-Hueso, FENASTRAS's director of organizing.
Hueso said the cars burned by marchers belonged to the government and to multinational companies. He said demonstrators broke windows of a store marketing clothes of the textile firm Circa, a subsidiary of Levi Strauss, which fired more than 200 workers as a strike-breaking tactic in 1988. The marchers also broke windows of a store selling imported domestic appliances.
Although the attacks on the union movement could invoke terror and frighten workers away from the unions, they are having the opposite effect. Both Martinez and Hueso claim that their organizations have recently noted a greater radicalization of workers.
- Sandy Smith
Rollins Dumps on Baton Rouge
The air and drinking water of Alsen, La. are at risk of permanent contamination. One culprit is Rollins Environmental Services, among the country's largest hazardous waste disposal companies.
Rollins has already polluted the air and contaminated the ground water of Baton Rouge. The company is currently in the process of trying to acquire a permanent permit for the disposal of hazardous wastes. Its present interim status was granted by the federal government to all such facilities in 1981. The permanent permit will allow them to continue handling and disposing of such highly toxic materials as carbon tetra- chloride.
The situation is highlighted by the dispute between the Democratic Governor of Louisiana, Buddy Roemer, and the Environmental Protection Agency (EPA) over the disposal of the pesticide Dinoseb.
Dinoseb is now classified a toxic waste by the EPA. It was banned in October 1987 because it causes birth defects and male sterility in laboratory animals, according to the EPA. The problem now is how to dispose of it safely.
Adjudicatory hearings to deter-mine if Rollins should receive the permanent permit, though not directly connected with the Dinoseb debate, have focused on the problems of the company's Baton Rouge facility. According to Governor Roemer, "serious questions arise as to the ability of the operators of this facility to adequately and safely incinerate the product while protecting the environment."
Donald Eckerman, EPA pesticide disposal officer for the Dinoseb project, told Multinational Monitor, how-ever, that the EPA will "require that Rollins has to remain in compliance with state regulations."
The EPA used competitive bid-ding to choose Rollins. This method, according to the EPA, considers the company's past performance, the quality of the proposal and the price. In the Rollins case, past performance is a controversial issue.
Rollins was fined in 1986 for faulty burning of wastes and is currently being investigated by Louisiana's Department of Environmental Quality (DEQ) on a similar charge. Critics state euphemistically: "Rollins has not been a good corporate citizen."
The infractions at the Rollins site involve air pollution and groundwater contamination. When black smoke from the smokestack blows in their direction, people living near the plant experience nausea, watery eyes and increased instances of aggravated asthma, according to Raymond Jetson, the state representative for some of those affected. Jetson is one of six parties opposing the granting of a permanent permit to Rollins.
In 1985, then-secretary of the DEQ, Pat Norton, closed Rollins for 90 days after a surprise inspection revealed black smoke from the stack and improper monitoring at the facility.
Rollins challenged her authority to shut them down and sued both Norton and the state. At the same time, stockholders in the company were suing Rollins for decreased earnings stemming from the enforcement actions. Rollins was eventually fined $15,000 for the specific violations exposed by the surprise inspection. The company also agreed to a $1.2 million settlement with the state for various infractions pertaining to landfill dumping, and in the process dropped its suit.
The "head of DEQ was making us a political issue. We were not an environmental issue," said Frank Willis, vice president for legal and environmental issues at Rollins.
Norton's Lawyer, John DeGravelles, disagrees. Rollins' "legal theory was that they did not do anything wrong, Pat Norton is out to get us, she slandered us and caused our stock to go down," DeGravelles said. The "true gravity of Rollins' whole situation in Baton Rouge at that time is more accurately assessed by looking at the $1.2 million settlement as op-posed to the specific $15,000 fine," " he added.
Representative Jetson notes that "Rollins has had a history of violations of regulations as it relates to discharges involving the air." Jetson was wary of the company's efforts to represent themselves as reformed, and the violations a thing of the past. "I'm just not comfortable with the fact that they are going to become these safety conscious folks just over-night," he said.
The continued presence of groundwater contamination and strong fumes have not engendered confidence in the community. Representative Melvin "Kip" Holden says the company has not been responsible and that the inhabitants around the facility should not be "technological guinea pigs for this company."
In addition to being one of the opposing parties at the adjudicatory hearings, Holden vehemently objects to Rollins' disposing of Dinoseb. He faults the EPA's contracting process, suggesting that the agency did not give the company's history of failed compliance proper consideration.
Holden's criticisms point to the problems with the Resource Conservation and Recovery Act, the law dealing with the removal of hazardous wastes. For example, the EPA had to pay Uniroyal, one of the largest producers of Dinoseb, $9 million dollars for its stock of the chemical. That represents the market value of Uniroyal's Dinoseb holdings. Diposal will cost an additional $5 mil-lion to $12 million, according to the EPA.
Critics contend that cost concerns prevent the EPA from being as aggressive as it should be. "They tend to go after easy targets," said Diane Baxter, staff toxicologist for the National Coalition Against the Misuse of Pesticides.
Concern also exists about Rollins' ability to dispose of Dinoseb safely. The company plans to do a test burn, monitored by the EPA and the DEQ. The test is meant to insure that safety regulations will be met.
Holden says that the test burn is a poor indicator, and to his knowledge no test burn has ever failed."If some-one is coming to your house, and you know in advance, you make sure it's clean," he added.
The EPA argues that it has limited options in granting such contracts because only a few facilities can handle large quantities of toxic waste. And the EPA says that Rollins' record is no worse than anyone else's.
The EPA is framing a response to Governor Roemer. In the meantime it is likely that Rollins will start incinerating Dinoseb before the end of the permit hearing, which will last into the summer.
Jetson summed up the prevailing view of the skeptics. "If they were handling my neighbor's garbage I would not feel comfortable with Rollins being in charge of dumping it into the garbage truck."
If it's up to the people of Alsen La., Rollins will not handle the garbage, let alone hazardous wastes like Dinoseb.
— Stuart Gold