The Bank

Egyptian Tales—Episode 9

Warning: This episode contains ‘Adult Language’ that may offend some readers.

Part One:  Filthy Lucre

Definition:
The origins of this expression date back to the bible. It referred to wrongful profit, that is, money that is tainted by some kind of misrepresentation. In the mid-20th century it came to mean ‘dirty’ money, money obtained dishonestly. It became a slang term, still referenced today in the expression ‘filthy rich’.

For most of the 80 million Egyptians at the end of the 20th century, theirs was a cash economy. In this society it was rare to have a bank account. My Boy Racer (See Episode 1) told me how he and his relatives literally kept their savings under the mattress. It would be loaned out to family members in need, without interest of course, because usury is ‘haraam’ in Islam, that is, ‘against God’s law.’ We often saw Egyptian business men, traders and shopkeepers produce a roll of notes from a pocket for purchases, change, or bigger business transactions. At the bank, we witnessed businessmen presenting their suitcases full of money for deposit. Because it was a high cash economy, the Egyptian notes were indeed physically very dirty, a literal slant on the term, ‘filthy lucre’.

In Episode 7—Street Kids, we met Omar’s father, Sayyid. Like most owners of larger businesses, Sayyid had a ‘bag man’. When Rick worked in Australia, his employers there also had a bag man. It’s the bag man’s job to look after the undeclared income in the form of cash. Naturally, the bag man is usually big and brawny and in constant possession of the cloth, paper or gladstone bag of notes, depending on the size and success of the enterprise. Sayyid’s bag man was Ubaid. So close was the relationship of Ubaid to ‘the family’, to young Omar he was ‘Uncle Ubaid’.

Sayyid was a member of Alexandria’s social set, thanks to the success and reputation of his forebears, his own hard work and a natural ability to get along with ‘people of culture’. With his established personal status, Sayyid moved in ‘good’ circles. In Egypt people are judged by whether or not they come from ’a good family’. That is usually defined as a family of at least the appearance of middle class wealth or better.

At a party one night, Sayyid was introduced to men from a prominent Egyptian bank. They were talking away with a degree of camaraderie when one of them asked, “Now who do you bank with, Mr Sayyid?”
“I don’t have a bank account.” he responded. “I don’t need one, I’ve got Ubaid and a safe at home.”
“Oh!” said the bankers, “You’ve got to have a bank account. All successful business men have bank accounts.”
Since usury is a sin in Islam, bankers were looked upon with a measure of suspicion but of course they see themselves as modern enablers of industrial society. So, thinking these men must be ‘in the know’, Sayyid agrees to open a bank account. He goes in the very next day with a hundred Egyptian pounds. In those days, a hundred Egyptian pounds was a lot of money, equal pretty much pound for pound with England’s currency. By the time we lived in Egypt at the end of the 1990s the rate had sunk to ten Egyptian pounds for one English pound.

“That’s good,” thinks Sayyid. Now that he’s got a bank account he’s a modern, efficient business man. He carries on, buying and selling in cash, the way he always did. Come the end of the month he gets a statement from the bank and he sees, ‘Opening balance 100 Pound, closing balance, 99 pound (or whatever it was). So he rings up the bank and asks, “What is this? You’ve taken some of my money!”
“Oh those are fees.”
“Fees? What fees?.”
“The fees for looking after your money.”
“Ah! Right, I’ll be in to see you.”
So, Sayyid went into the bank and demanded his hundred pounds back. They tried to give him 99 pounds, after the fees. At this, bag man, Ubaid probably threatened to shoot them because he, naturally, had accompanied Sayyid to the bank and he carried a pistol as well as the ever present bag. So, the bank gave Sayyid his money back and Sayyid never had an account again. He said his biggest mistake in his life was introducing those bastards to his son.

Fast forward to 1998. My husband, Rick and his colleague, Gavin, (the Australian Accountant) are charged with getting Omar’s burgeoning business out of its huge debt and making a profit. Of course there were the usual local and international banking establishments in Egypt by then. Omar’s business should have been making a good deal of money. It had excellent sales, good relationships with customers, and consequently, a very good turnover. Omar had excellent personal relationships with the buyers and generally speaking, the product that was made was pretty good, certainly for the price points that were being demanded by the customers. However, the whole business was desperately short of working capital, so the bank’s day-to-day decisions had a primary impact on the business. Obviously there was a cultural background that contributed so much to Omar’s situation, and we touch on that in Part 2 of this Episode. For now, we’ll just cut to the chase and enjoy the entertainment as we give Rick the floor to tell this tale…

One day, quite early in the contract, Gavin and I were having a discussion with Omar about his relationship with the bank and he made the mistake of referring to the Bank Manager as his ‘friend’. The three of us were sitting around the board room table. Hearing Omar’s declaration of friendship with the Bank Manager, Gavin jumped up out of his chair, sending it catapulting backwards on its casters across the room to smash into the wall.
“Friend!! He’s not your friend.” Gavin screamed. ”If you want a friend, get a dog! You wanna lot of friends, get lots of dogs!!!”
Now I don’t know whether it’s coincidental but since about that time, Omar and his family have always had a dog at home. Not surprisingly, however, Omar was highly indignant about Gavin’s outburst. He’s on his high horse and dogs, as it happens, are considered ‘dirty’ in Islam..
“How can you be so rude!” Omar shouts back. “You don’t understand a bloody thing. My Bank Manager looks after me!”
“Looks after you? He’s not looking after you, he’s raping you! He’s got you over the table” and Gavin mimes bending Omar over the board room table, grabbing hold of his shoulders and there’s some fantastic pelvic thrusts going on. ”And he’s giving it to you, and you’re too f***ing stupid to realise he’s doing it! And you think he’s your friend? He’s f***ing you!”

Well I think it’s fair to say that nobody had ever spoken to Omar like that before in his life and he wasn’t quite sure what to do or how he should react. In fact I thought I detected the onset of a heart attack but he managed to get out of the room and go home. His wife rang us and claimed we’d been rude to her husband and we’d upset him because we’d been unkind about his ‘friend’.

Of course that all calmed down and then some time after that, we’re having a meeting about where all the money is going and what are we going to do?
I said, “Well of course, one of the problems is the 22% interest that the bank is charging you.”
“They’re not charging 22%!! You’ve been in the place five f***ing minutes and you think you know everything! (We’re teaching him to swear now.)
There was a temptation to say, “Well I know more than you do!”
“How the hell do you get 22% interest?” Omar demanded.
“Well it’s like this…” I said and opened my laptop and, just lucky I guess, the spreadsheet was there on the screen.“If you look down this column here, this is each week..Week one, Week two, Week three…”
“Yes,” snaps Omar.
“You’ll see there’s a rolling average of weeks. As the new one comes on, the old one drops off so there are always fifty-two weeks. The sums are always based on fifty-two weeks.”
“Oh, that’s quite good.”
“This is the overnight balance at the end of every day.” (Because we used to get a statement from the bank every day.) “Then there are 365 lines and there’s the daily balance and here are the bank charges. This column is interest. In this column is fees. In this column is commissions. In this column is cancellations. In this column is this…and this… and you add those up and if you look down here you’ll see that the average daily balance is this, which is simply that figure by…”
“Here, let me have a look!” Omar interrupts. He pushes me out of the way and he’s looking at the formula. “That’s divided by 365, that’s right and yeah that’s right, that’s the total….the interest is this!”
I said, “Yes, but if you total all the charges that the bank are giving you, because that’s what you’re paying, it comes to…oh shit, Omar, I’ve made a mistake!” and I could see the relief flood his face. Not only was he not getting screwed by the bank but that I’d made a mistake. I said, “Sorry, but look, I had it set to rounding. It’s only 21.7% per annum.”
Well, he knew I’d set him up and now he was really pissed off.
His next move was highly predictable. He picks up the phone.
“Emil!”
Emil was the accountant. Emil was the guy that had given me all these figures. I’d gathered all the data that they had in all sorts of different places in a simple, understandable manner where you could see the whole picture. I had said to Emil, “Now this is going to cause a stink, here’s a copy of my spread sheet. I want you, personally to verify that every figure on that sheet is correct.”
He said, “I know it is, because I checked it before Tony gave it to you. I checked it because I had a feeling you were up to something.”
“Well,” I said, “I’d like you to check it again.
He said, “Okay. I’ll check your formulas.” So he checked the formulas and he said, “Yes, that’s right, that’s right.” He had a big grin on his face.
So Omar rings up. “Emil! Emil! Owekdcieujgisushirea!!!” He lets forth a string of gravel-spitting Arabic, then “Sah, sah, iawa, iawa. (‘I understand’ and ‘yes’.)
He slams the phone down. “F**k! The bastards are raping me!”

Another event occurred when, his ‘friend’ from the bank came to see him and he was, in the nicest possible way, remonstrating with Omar over the fact that he wasn’t paying his bills on time and all the promises weren’t working. I was sharing Omar’s office at the time so I was in the room. The banker got a bit niggly and Omar gets on his high dudgeon because he’s being taken to task in front of me and he’s far too important for that to happen. It was very bad etiquette. Omar had his big wad of keys in his hand. It was so large that they’d use it at Mt Eden Prison. Omar’s flicking this great bunch of keys, catching them in his hand and flicking them and next thing, he hauls off like a baseball pitcher and fires the keys at the bank manager. They hit him just as he put his hand up to protect himself. So he gets smacked in the hand and it must have really hurt. Omar says, “Well you run the fucking place then! I’m out of here!”

He couldn’t handle it so he ran away, headed for the long grass, well the desert actually. He headed for Masa Matrough en route to Libya.
Half an hour later, I get a phone call from Madam T.
“Oh Rick, you’ve upset Omar.”
I said, “No, I haven’t, the Bank Manager did.”
“Oh? What happened?”
“Well, Omar threw the keys at him and told him to run the bloody place and that he was out of here and he left. Then the guy wanted to discuss with me how we could remedy the situation and I said, “Well I don’t know because technically, I’m out of a job.”
“What do you mean?”
“Well, I pointed out to him that I work for Omar and he’s quit so he, the Bank Manager, is the new Managing Director. I told him, ‘You’ve got the keys so it’s a question of, do you want to employ me and discuss the contract or remuneration or anything? Tell you what, I’ll leave you here to think about it. You’ve got the keys so lock up before you go home.'”
I left the office and went off elsewhere. I can’t remember where I went but Madam T had managed to tracked me down.
So I told her, “I’ll go out and have a look but I think he’s gone.” His car was indeed gone so I went upstairs and reported to her, “The Bank Manager has left the keys on the desk, I don’t think he’s accepted the job.”
“Well,” she said,” it’s quite serious because Omar is short of petrol and he hasn’t got his wallet.”
“Well, what do you want me to do?” I asked.
“He may get to the petrol station but if he runs out, can you sort him out?”
I said, “Well, I haven’t got a car. You’ve got a car and a driver sitting in the garage at your villa. Send him with some money, up the North Coast road.”

It turned out that Omar managed to get to the petrol station after all.
Perhaps things are never as bad as they seem.

The road to Libya.

The Bank—Part 2: The Rabbit and the Fox

Rick continues:

The Abrahamic religions have always had the most fluid interpretations and responses to the injunctions against usury. The Catholics went through a period where, in their righteousness, they wouldn’t allow usury at all. To build their cathedrals they were forced to borrow money from other members of the Abrahamic religions who weren’t Christians. So, of course the Jews ended up, particularly when they expected to be paid on time, being labelled ‘filthy usurers’. If you look at that great foundation document of British Freedom and Democracy, the Magna Carta, you will see that⎯and this is never published but it’s there in black and white for all to see at Salisbury and other places the Magna Carta is on display⎯that a substantial portion of the Magna Carta was to do with ways whereby good Christians could legally avoid their obligations to repay money that they’d borrowed from Jews to whom a whole lot of occupations were banned, so they weren’t allowed to own land and be farmers and so on and so forth. There were very few money-making enterprises open to them and if you’re in a position where you’re likely to be visited by a mob in the night, then you want to have your wealth in a form that you can pick it up and run with it pretty quickly, be that in gold draped around your wife’s neck like the Indians and the Arabs or whatever.

Now, in Egypt, maybe five or ten years before we got there in the late 1990s, as you will know, there was a resurgence of Islam and it has, unfortunately, in my opinion, been a warped view of Islam principally influenced by the Wahhabi doctrines that come out of Saudi Arabia. It has a clerical, close-minded resurgence of Islam or that’s the way it’s been channeled rather than in the golden age of Islam where there was scholarship and study, philosophy and astronomy, navigation and medicine and many other things where Islam led the world during that golden period. There was a tolerance and inclusivity that we don’t see in all the countries where there’s violence today. That view is being suppressed by fundamentalist people who, in my opinion, are not dissimilar to the Medieval Catholic clerics who were busy reinforcing their position in the power structures of the world.

In Egypt there had been a very strong movement against usury, so the banks, which were modeled on Western banks but with Islamic characteristics, were in a difficult position because they were considered to be charging interest, therefore they were usurers. It’s not allowed. So, there was a flurry of new Islamic cooperatives and self-help groups that took in people’s savings and loaned money out to people in businesses or who were wanting to establish their own business. It was along the line of a credit union, more a credit union than a bank.

It was also a consequence of the revolution of 1952. All of a sudden there were former peasants who were now land owners instead of just fellahin or serfs as part of a feudal system. So you have this whole resurgence and they didn’t want to do it the Western way, the Christian way. They wanted their own system.

These Islamic banks, let’s call them that, went through the place like the latest pyramid scheme.They were just phenomenal. Everybody was making money. Now, the net result of it was that quite a number of nouveau riche people left Egypt, with no forwarding address and there were employees wandering around in the business that they had worked in wondering where did all the money go? There were a lot of people who just picked up the cash and ran. It was a disaster, an absolute disaster. So, people lost faith with that and came back to the banks.

A lot of the banks, at about that time, got into cooperative arrangements with overseas banks. American banks, for example, are quite strongly represented as ‘partners’ in Egyptian banks. They provide expertise, knowledge, systems, training and so on and it’s quite a good system. But of course, there’s still this usury problem and that’s just as uneasy there as it is here in the West. People think that high interest rates are immoral whereas if a pair of cashmere socks sells for $200 or fancy sneakers sell for $1500, that’s not immoral that’s just what ‘the market’ says. If people want to do that for fashion, well, silly them but if a bank tries to charge extra, that’s immoral. So we’ve still got this schizophrenia about usury. Of course usury, in our minds, tends to relate to interest, so it’s the interest rate that’s in question. Now in Egypt, they were cognisant of that and the disaster that happened with all these Islamic banks, credit unions or cooperatives. So by the time we got to Egypt, there was a Central Bank and the Central Bank controls some things so that the people feel as if they are being protected from predatory behaviour but of course leopards still have spots. Even albino leopards have spots, so all these other charges appear.

The fees are a way to avoid the charge of usury because a fee is not usury, it’s ‘services rendered’. It’s a legitimate charge. Now each Trading Bank had to report to the Central Bank any and all non-performing loans. If you had a loan and you didn’t pay the interest this month, your bank was required, by law, to report that default to the Central Bank. This became Central Bank policy. They’d be looking for what industries weren’t performing and so on. Is it the housing sector? Is it the pharmaceutical? Is it transport, is it textiles…? Consequently, the banks, if they had non-performing loans, got penalised by the Central Bank because they were loaning money to people who couldn’t repay them, so those banks wouldn’t get access to Central Bank funding and they got penalties for not protecting people from themselves. This was an unconscionable situation.

Consequently, in our office at Omar’s, there was a ‘cast of thousands’. I used to wonder if there was a department down in the basement growing geese with somebody plucking the quills from the goose’s tail to make the pens to fill in these huge ledgers. They were the sort you’d probably still see in the Indian Railways Office where each page is about two and a half feet wide and you fill each transaction in with the goose quill pen in beautiful copper plate writing.

Now at Omar’s, most of these people were into Zen meditation so you’d go into their office and they’d be gazing off towards infinity. You soon got into the habit of tip toeing around so that you didn’t disturb their tranquility and unity with ‘the One’. Anyhow, one time I went in and there’s one of these meditators actually working!
I thought, Hello, “What is going on here? This is an unusual occurrence.”
“What are you doing?” I ask.
“I’m doing the loans, Mr Rick.”
“Are you?”
“Yes, I’m doing the loans.”
I fetched somebody who spoke good English and then I discovered what happened. Our bank did not want to report the fact that our interest was not being paid yet they were still loaning us money. So, at the end of every month, in the last couple of days of the month, they would loan us money to repay the loans and then convert that loan into a new, secured loan. At the end of every month, this guy, (with his goose quill pen) closed, in the journal, one hundred and fifty individual loan accounts and then opened on a new page, one hundred and fifty new loans, on call, on demand, once a month. So we never had any non-performing loans. They were all repaid at the end of the month and replaced with new loans, by this guy, a hundred and fifty of them, all on call. There were no medium term loans, no long terms loans, they were all on call. It was the sword of Damocles hanging over your head all the time. I blame the bank, not Omar, for this, although he was culpable later.

The bank had undertaken at the first meeting we had in ’98 after we did our big presentation to them, to support us. They gave their word that they would convert this amount—and we had it all set out and we negotiated it—that these loans, this amount of debt would be consolidated into one loan and that would be a medium term loan and this would be the interest rate, this proportion would go to long term loans and wouldn’t mature for five or seven years and that was the interest rate for that, the balance would be on call etc. etc. So we had all this worked out and they agreed. Their Vice Chairman agreed. They went off and had a meeting. We had a spy watching. They were making phone calls back to head office and so on and so forth. The guy that was bringing them cups of tea was reporting to us what they were saying on their phone calls to head office. They came upstairs and agreed to support us and that they would do all those things that they’d agreed to.

There were a few procedural things to sort out, but they were basically very impressed with our presentation. They told Omar, “We’ll support you but it’s conditional on the guys that put this together still maintaining a contractual relationship with your clothing company. So that relationship referred to Gavin, me and Svi’s company who employed us. The bank could see where the problem came from and they could see that our professionalism was such that they were happy to back us.

And then they didn’t. As for the timetable they’d agreed to, they just stared off into space and didn’t do it. If they had honoured their word that they gave us there and then, things would have been very different, but they didn’t. Then Omar, he started playing ducks and drakes too but we held him off for quite a while because we thought that they would honour their promise. In our naivety, we thought that the bank would come right but they didn’t so Omar and the bank ended up stealing from each other. It was an absolute tragedy because that business could have been super duper profitable. The bank would have made a shit load of money and Omar would have made a shit load of money and Svi would have done very nicely thank you and it would have been his entry into other businesses but that didn’t happen. It was sad.

◊ ◊ ◊ ◊

That ending was a long way off, so we have many more tales for your amusement and hopefully sometimes, your edification. I, Jacquelyn, am struck often, when recording these tales of our time in Egypt, by the influence of social and cultural conditioning on our thinking and behaviour. Perhaps that’s why I so enjoyed studying Anthropology at university. On completing this episode, I asked Rick if he thought it was the bank’s greed that caused the long term problems in Omar’s business.

“No,” he said, “It was nature. Nature ran out the winner. They couldn’t help themselves, either of them. It’s like the rabbit who gets to the swollen river and the fox says, “jump on my back and I’ll carry you across.”
“No, no you’ll eat me.”
“No, no, I promise. Get onto my nose to keep out of the water.”
Gulp!
“But you promised!”
“It’s in my nature.”