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Special Report

Executive commissions a report on campaign finances

by Peter Grimsditch June 16, 2005
written by Peter Grimsditch

Background

With a few notable exceptions, getting elected to Parliament in Lebanon is, and always has been, an expensive business. The half dozen or so families who between them provided most of the successful candidates in the early years of independence were not only well established and powerful. They were also immensely wealthy. However, their influence declined, especially over the period of the 75-90 war and new faces and new elites emerged as the financial balance of power shifted.

Yet the methods adopted to win – or buy votes – have remained remarkably similar. The dollar figures have risen, of course, to take account of inflation, more sophisticated and more expensive means of communication, and most significantly because of the Syrians’ locally-imposed ‘tax’ to be allowed to stand for election at all.

Composition of electoral lists

Irrespective of the size of any list, which is itself determined by the drawing of the constituency electoral boundaries, the primary elements are twofold. The vote-getter is determined by reason of traditional, local, confessional and political following, such as the leader of the mainly Druze Progressive Socialist Party, Walid Jumblatt, and the principal financier or financiers. Former Prime Minister, the late Rafic Hariri, was exceptional in that he embodied both functions. In his case, the base of voter support, Sunni or otherwise, was built up by the judicious use of his wealth over decades. Hariri had no natural grassroots support built up by his family over generations.

The two other ingredients to a list are those who bring some money, a degree of popular following and marketability potential, or any combination of these, plus the candidates on any list imposed by the Lebanese-based representatives of the Syrian government.

List financing

Since the size of lists varies just as the number of potential voters in a constituency can range from around 60,000 to as many as 300,000-400,000, there is no headline figure attributable to the cost of running a list. One yardstick used is to have a visible (i.e. for wholly legal use) $100 available for every vote that is needed to win the election. Experienced campaign insiders add, with a wry smile, that victory is virtually guaranteed with the presence of another $200 per voter for spending in a variety of “suitable’ ways (see below).

The total bill for a large list can easily run to several million dollars. The expenses include handing over up to $1 million to Syrian political intelligence officials for authorizing, in practice though not officially, the list’s participation.

The Syrian list-existence tax has also prompted the need for raising the entry fee to be able to get onto a particular list. Local market forces sometimes determine that the price of joining an electoral ticket can be heavily influenced the buyer’s ability to pay. Thus the price for a rich newcomer with little previous history of helping the alliance he is trying to join may reach the million-dollar mark. Elsewhere, the figure might be much more ‘reasonable’ although it is still frequently prohibitive for all but the wealthy.

In the 2000 parliamentary elections, one potential candidate in his early 30s is said to have been asked for $100,000 to join up with Omar Karami in Tripoli, the same figure being sought in Beirut from a lawyer who sought entry into an electoral list favored by the President, General Emile Lahoud.

Though neither was eventually elected, their routes to failure took different paths. The northern potential candidate bowed out entering the race alongside Karami because he didn’t have the money. The lawyer secured an understanding that arrangements could be made to make such a contribution, possibly in stages, provided that he were elected. Even with the implicit backing of Baabda Palace, he attracted only a fraction of the 28,000 votes needed to secure a seat in the 128-seat exclusive Nijmeh Square Club.

What the law says

  1. Campaign contributions

Although proposals have been made to limit campaign spending – the latest is to put a $100,000 ceiling on the permissible amount – there is, and never has been, a maximum figure set by law. In any case there is no mechanism for checking on candidates’ spending. The notion of filing returns on campaign expenses as required by democracies in Western Europe, for example, is unknown.

There is also no regulation on campaign contributions. In practice fund-raising is a rarity. The midterm election of Ghassan Moukhaiber in 2002 was an exception. His campaign in the Metn, which cost a modest $45,000, was largely financed through small contributions made by friends and supporters.

The bulk of the money spent comes from a relatively small number of mega-wealthy people. Of those, some may seek to use the status of MP as a stepping-stone toward a seat in the Cabinet where they would have the opportunity to recoup their outlay from under-the-table commissions on government contracts. In other cases, campaign expenses are seen simply as the cost for attaining the status conferred by becoming a Deputy. Satisfying the ego has its price.

  • Media spending

Direct advertisements of the kind that swallows up hundreds of millions of dollars in United States elections are prohibited by law. Yet the existence of privately owned TV stations, newspapers and magazines, owned or heavily influenced by leading political figures, helps to circumvent this rule. NBN television, nicknamed Nabih Berri News, is seen as an asset to the Speaker of Parliament’s candidates every bit as valuable as Mostaqbal TV and newspaper were to Hariri. State-owned television and radio is supposed to be neutral and allow equal and fair coverage to all candidates. In 2000, it campaigned heavily and virulently against the Hariri camp.

If political adverts were allowed in TV they would quickly eat up millions of dollars. The average rate card cost of a 30 second spot at prime time (including the associated freebies of very early morning repeats etc) is around $3,000, to which has to be added production expenses of anything from $5,000 to $50,000+.

While the cost of straightforward television advertising is not a current issue, coverage by the audiovisual media is not always determined by balanced and fair editorial decisions. The growing habit of being able to buy an appearance on TV, either through money or influence, adds a dimension to campaign costs that is impossible to measure.

In fairness, the idea of ‘placing’ favorable articles in the print media and arranging friendly interviews on television is not solely a Lebanese disease, nor is it confined to election time. Faced with a world of low-salaried journalists, one enterprising public relations company in Beirut drew up a price list for getting major articles in papers. Most prized and therefore most expensive was An Nahar at $500, with As Safir following at $300 and The Daily Star coming in at $200.

  • Bribery

Given the overtly blatant and wholesale bribery that besets elections, it almost seems fatuous to point out that it is a felony. Details of common practices that constitute a reasonable person’s definition of bribery are given below.

  • Misuse of public funds

It is also a felony to misuse public money and assets in pursuit of private gain. In a country where the police are as guilty as anyone of committing the relatively minor offense of driving down one-way streets in the wrong direction, sanctions against the misuse of public funds have rarely been a threat.

The real contributions to campaigns in this area come not from stealing the state’s money directly and handing it out but in other, scarcely less blatant, ways. Public works projects, especially small local ones, increase substantially just before an election; favors, such as having a prosecution dropped, also go up; and underemployed employees in various ministries suddenly find themselves working flat out on campaign organization at the behest of their master’s voice.

Another way in which votes are assured by state institutions was the practice by the Ministry of the Interior in sending its agents to tell 11,000 recently naturalized citizens living in the Metn that their citizenship would be taken away if they failed to vote in the way they were told. To make sure, most were collected in cars, driven to polling stations and accompanied into the booths to make sure they did as they were told. The value of this exercise was not only that it delivered the votes but also that carrying it out didn’t bite into the campaign treasure chest.

Yet one more tactic in the Ministry of Interior’s highly efficient vote-getting repertoire has been to dispatch agents to businesses to remind the owners of the value of permits they need to operate. Vote for our men and you keep the permit. If not…

Where it goes

a. Posters

The printing industry receives a considerable boost at election time, not only from candidates and entire lists but also from some publicity-seekers who spend a few hundred dollars having posters of their faces stuck up alongside those of genuine candidates. Most of the cost of the poster blitz on Beirut of candidates on the Hariri lists in 2000 was borne internally and directly by the campaign itself. According to election insiders, only around $150,000 was spent outside at Saatchi & Saatchi on design work and printing.

The advantage of using direct labor to put up the posters, rather than outside contractors, is that it encourages those paid to do the work also to vote for the candidates whose posters they are sticking up. The costs are further inflated by hiring other labor to remove posters of rivals and replacing a campaign’s own posters that have suffered the same fate.

Extensive use of billboards is in vogue and Metn has the highest density in the country. Several hundred of them are controlled by a close relative of President Lahoud, a factor that has clearly influenced who may use them and how much is paid.

b. Other campaign literature

Leaflets and flyers are printed mainly to be distributed through the local election offices opened throughout a constituency although one aspect of promotional literature that always figures in European elections – a detailed manifesto of the political program promised – is missing. This document is superfluous because none of the candidates is inclined to reveal what they will do if returned to power.

The amount of the printing bills belongs firmly in that widespread category of “the higher the better” and usually they are settled on delivery of the order since losing candidates might be less inclined to pay.

Caps, t-shirts, badges, car bumper stickers also boost local industry – and potential electoral support.

c. Local offices

The renting of local campaign offices serves not only to generate extra publicity for the candidates but also provides an opportunity to encourage more support by carefully picking and overpaying for temporary premises from owners who can deliver votes.

Renting chairs, tables, telephones and, in some cases, computer equipment is a relatively small proportion of the expense. Even bigger than the rent is the bill for paying supporters to spend their days making it appear there is a hive of activity. In practice, the biggest use of local offices is on polling day when they become useful as administrative centers for making sure that known supporters have actually voted.

They also function as checks on whether supporters are included on the electoral lists and whether they have the correct documentation to be able to vote.

  • Meals

A part of the reward for spending entire days in local offices – and often for other campaign workers too – is to have meals provided. The choice of culinary fare is influenced more by currying favor with the suppliers than by the taste buds of the campaign workers. Even at a level of only a few dollars a day, when multiplied by the number of workers and the weeks of campaigning the total bill for food for a well-funded list runs into several thousand dollars.

  • Transport

Supplementing the allowances for gas given to supporters who use their own vehicles for campaign work is a new practice of hiring the vehicles of entire taxi companies, whether they are used or not. Monopolizing the available transport has the added advantage of depriving rivals off those facilities.

  • Keys

So called because they open the door to bringing in votes, the role of local ‘key’ people is to distribute the largesse on offer to families well-known to them. The lump sums of cash, goods or allowances for services are allocated according to the number of voters they can persuade.

The ballpark figure of $100 per voter can rise to as much as three times that amount in tight races. Just as those Syrian construction workers who stayed in Lebanon after the murderous bombing of February 14 found themselves in a sellers’ market where they were able to negotiate their daily rates upwards, so voters, as for example in Achrafieh in 2000, were able to bump up the price of their support.

Other inducements included the mass distribution of fridges and cookers in Beirut in the 2000 elections and the offer of paying school fees and medical expenses, as well as the provision of musical instruments for a band.

Some electoral lists, especially in the Metn, still contain the names of significant numbers of dead people. Though ‘bribing the dead’ is somewhat cheaper than the amount needed for the living the use of their votes depends upon whether old-style identity cards will be considered valid for voting.

Where do the candidates come from

According to a study of all the elections up to 1972, the vast majority of the 359 total number of Deputies up to that point had inherited their seats from family members. Since the end of the war the make-up has changed. Despite the apparent majority allegiance to Syria, informed sources say that without the local presence of Syrian intelligence, the outgoing Parliament splits into three roughly equal parts – the opposition, pro-Syrians, and those who did support Syria but who will change once the Damascus security network is known to have disappeared.

With money such a deciding factor in standing to become a Deputy, no wholesale changes are seen for this year. However, more supporters of former Prime Minister Michel Aoun are likely to become candidates in Baabda and Aley, Batroun and Jbeil will see faces from the ranks of Lebanese Forces.

Hizbullah

Almost uniquely among candidates and parties the Party of God does not directly bribe its voters. Critics say that the permanent provision of social services, health and education facilities, road and house repair amount to the same thing.

As the political organization also noted for having the tightest control of its supports, the party sees its discipline paying off.  Hizbullah supporters are noted for following their instructions exactly. If told to vote for an entire list, that is precisely what happens. Amal partisans are said to act more independently.

Conclusion

The absence of Syrian influence and the requirement to pay commission to its intelligence services could cut the cost of fielding a list by anything up to 50 percent, thus either saving money or freeing more funds for other purposes. It would also mean that those current deputies who gained their seats after being imposed on a likely-to-be successful list will have to find another way – and other funds – to stay in Nijmeh Square.

The absence of laws regulating expenditure and, more particularly, the absence of enforcement of the laws on bribery and misuse of power will ensure the absence of real change.

Although abuses of the process in the United States and the European Union are frequently – and sometimes justifiably – alleged, they are less blatant than those seen locally. The 2005 parliamentary elections in Lebanon are likely to produce another example of ‘local democracy’ and that’s without even considering the artificial equal allocation of seats to two confessional groups.

Peter Grimsditch is a former editor of The Daily Star and Middle East correspondent for the London Daily Express

June 16, 2005 0 comments
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Special Section

Remains of the day

by Peter Speetjens June 16, 2005
written by Peter Speetjens

The March 26 bomb blast that ripped through the Sid el Bouchrieh industrial district destroyed at least six furniture manufacturers and reduced an already struggling business zone to a row of burnt out shells and rubble. By mid-April, one of the main thoroughfares was still blocked, as soldiers in yellow plastic helmets erected scaffolding to begin the rebuilding of the area.

In and around Beirut, three other blasts occurred, that, while small by comparison to the explosion that killed former prime minister Rafic Hariri, hit both small businesses and individuals hard, causing damage worth an estimated $10 million.

The explosions highlighted not only the fact that war and terrorism related damage generally fall outside insurance coverage, but also shows that while Lebanese business owners generally have health and accident insurances, many are reluctant to buy fire and property packages. According to expert estimates some 50% of Lebanese businesses, especially those small and medium-sized, are insured.

Part of the municipality of New Jdeideh, the Sid el Bouchrieh industrial zone covers some 8 km2 and is home to dozens of car mechanics, garages, metal and wood workers. Most companies are small family businesses that employ three to ten people, yet there are a few larger companies, most notably the Gemayel and Arab Printing Presses, each employing more than 25 staff.

Sami Debs, owner of Sim Kitchens, situated on the top floor of the building adjacent to the explosion in Sid el Bouchrieh held up a clock. “Look,” he said, pointing to the hands frozen at 9.20. “This is the time the bomb exploded. The fire didn’t reach the third floor. Most of my damage is from the shock of the blast, smoke and flooding.”

Sim Kitchens has no windows, the iron door has been blown off its hinges and his machines are warped by the blast. Debs estimates his damage to be around $50,000.

On the first and second floors of the building the situation is worse. Arguably hardest hit was Massoud Furniture. It is a world painted pitch black. Material, furniture and machines have been burnt to the ground. To make matters worse, George Massoud had just finished an order awaiting shipment. It was all burnt and Massoud estimates total damages to be at least $300,000. On the second floor, Sauma Furniture lost a significant quantity of material as well as most of the machines, with damage totaling some $250,000.

Both Massoud and Sauma were insured against fire but were ineligible for compensation as the damage fell under the war and terrorism category. In fact, the Phoenicia InterContinental Hotel was probably the only Lebanese business to have an insurance policy that covered a terror attack.

Debs was only able to afford personal accident insurance for his business but is aware that even if he could have afforded the extra cover, it would not have saved him. “I have two types of insurance against accidents, for which I pay some $900 a year. I don’t have theft insurance, because there’s simply nothing to steal and I don’t have a fire insurance, because it’s too expensive as I would have to pay an annual 2% of total value of my assets.”

Debs and his brother, who founded the company in 1982, are no strangers to violence. By the end 1980s it had already been bombed in the Aoun-Geagea war. Today, despite a bullish period in the 90s, the business is struggling once again. “If I make as a chair for $40, the Syrians do it for $20. Their labor is cheaper and they use Russian instead of Italian wood.”

The total cost to the area has been estimated at roughly $3 million. Saudi Prince Waleed bin Talal has already pledged $2.5 million while Blom Bank has donated $1 million. (see page ?) Even though this should cover the damage with some to spare, many remain unconvinced about the transparency of any disbursement. “We’ll see what we get and if no one fills his pockets,” said one owner.

A week earlier, on March 19, New Jdeideh, located a few kilometers north from Sid el Bouchrieh, suffered the first in the spate of bomb attacks. Hidden under a parked car, the bomb ripped through the area’s main shopping street, damaging an apartment block and dozens of cars. Eleven people were injured.

Owner, civil engineer Joseph Najm, is currently restoring the apartment block. He too was insured but not covered for terror outrages. “The municipality promised to pay $25,000 to help repair the concrete structure,” he said. “However, the total damage is will come to $150,000, which I will have to pay, as the people in the building are my tenants.”

Maroun Latouf, owner of a car rental company situated on the parking lot where the bomb was planted, is also out of pocket, also to the tune of $150,000. As in the case of Sid el Bouchrieh, it was the army that estimated damages and collected claims, and, according to Najm, the government has promised to reimburse part of the losses, based on the data collected. In an attempt to unravel the bureaucratic paper trail and ascertain why the army was handling claims, EXECUTIVE contact the Ministry of Defense but no one was available for comment

While Najm and Latouf suffered the biggest losses in the area, a large number of inhabitants and shopkeepers were hit with smaller bills. “We had to pay some $600 just to replace the window,” said the Tony G, owner of a men’s fashion store, who recalled the night of the blast

“We live above the shop,” he said. “Me and my wife woke up under kilos of glass, as the bed was in front of the window. Fortunately we suffered only minor injuries, but of course the windows had to be replaced, the bed was broken and we have a huge crack in the wall. All in all I paid some $4,000 and neither municipality nor the insurance is paying for that.”

Again, Tony G’s “regular” insurance did not cover these extraordinary attacks but a week after the attack however, an insurance broker went from door to door in New Jdeideh’s high street asking if retailers would be interested in an insurance covering bomb attacks in future.

“But that was very expensive,” Tony G said. “You had too insure everything separately. So, if you have the glass insured, the glass would be covered, but nothing that got damaged by falling glass. Only for the clothes we had to pay 2% a year over the total value of the collection. So, if you’d insure everything you end up paying some $10,000 a year, just in case a bomb may explode. We cannot pay that kind of money.”

The situation is similar in Kaslik and Broumana. On March 23, a bomb explosion hit the up market Altavista shopping center in the heart of Kaslik killing 3 immigrant workers, damaging shops, a bank and insurance company. The center itself is currently being refurbished. Total damages in and around the center amount to an estimated $1,5 million. The municipality has promised to pay for the clear-up operation, while the army once again moved in to estimate damages and collect claims.

One of the most severely damaged shops is Ets Nahkle fashion for men. “I had just expanded by taking over the shop next door,” said storeowner Hani Dagher. “I invested some $300,000 in the new interior, an estimated 70% of which is gone.” Dagher also lost a storage room inside the center. “I was insured,” said Dagher who also has stores in Hamra, downtown Beirut and Broumana, “but I didn’t even bother to hand in a claim. I know they wouldn’t pay this time.”

June 16, 2005 0 comments
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LibanCell akes the cake

by Executive Editors June 10, 2005
written by Executive Editors

Deja vu was strong in another telecommunications matter last month, that of the old disputes between the previous operators and the Lebanese government.  

First, the LibanCell company, former operator of one of Lebanon’s mobile communications network under a Build-Operate-Transfer (BOT) contract, told the public that the international arbitration over the premature termination of these contracts had gone good for the operators and bad for the Lebanese state.

Instead of $1.45 billion demanded by the government for alleged contract violations in 16 cases, the arbiters had ruled in favor of the state in a single point, for a meager award of $1.5 million, or one per 1000, LibanCell claimed in its ad campaign. On top of that, for having been wronged through the early termination of the original contracts and other violations of the agreement through the state, the international arbitration had awarded it compensation amounting to a total of nearly $267 million, LibanCell trumped up.

The dispute originated in 2000/2001 when the ministry of telecommunications had began accusing both BOT operators, LibanCell and French-Lebanese Cellis, of numerous contract violations centering around an alleged act of exceeding subscriber ceilings of 125,000 customers per network. The companies had argued in return that no such ceilings had been agreed upon in their somewhat ambiguous contracts. Especially LibanCell was indignant and tried with large, number-driven ad and PR campaigns at the peak of the confrontation to convince public opinion of its viewpoint.

However, impeded by their high (and government mandated) per minute charges, the companies couldn’t shake off the allegations in the public mind and the confrontation between state and operators brought development of mobile telephony in Lebanon to a screeching halt that impedes communication until today. The BOT contracts were terminated in 2002 but attempts to auction off operator licenses under the label of privatization failed. Network management remained for an extended period with the old companies until the current operators MTC and Faldete were brought in last year.         

As LibanCell now played the cards of having been vindicated in arbitration, Beirut rumor mills alleged that the company could have ambitions to come back as network operator when the sector gets fully privatized, while former telecommunications minister Jean-Louis Qordahi hastened to accuse the company of not having paid all its dues owed to the government, which LibanCell angrily refuted.

In the meanwhile, the honeymoon between MoT and the new operators seemed over, as the ministry announced fines against the firms for not doing their job perfectly. The caretaker companies responded in saying that they were fulfilling their obligations and were committed to the welfare of the sector.

What consumers and economy continue to wait for, is an end to tiresome telco affairs, reduction of insanely high mobile phone charges and fulfillment of some long-promised side benefits, such as network upgrades, implementation of new regulatory frameworks, and introduction of a third operator. The state is in charge.

June 10, 2005 0 comments
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Up in smoke

by Executive Editors June 10, 2005
written by Executive Editors

Phoenicia Trading Group, the sole agent for Cuban cigars in Lebanon, has launched a media awareness campaign in local newspapers to bring the problem of counterfeited products to the attention of the Lebanese public.

The campaign was organized following a hike in fake Cuban cigars smuggled into the country over the course of the past six months.

“A lot of fake cigars with Cohiba rings were being circulated in the market and mostly used for gifts,” says Walid Saleh, managing director of the Phoenicia Group. “The customers who were receiving these gifts came to our shops to exchange them or complain about their quality. As a company our role is to draw the attention of cigar smokers to what’s happening in the market and guide them, so as to help them get value for their money when they are purchasing the goods.”

An estimated 400,000 fake cigars are being brought into the country annually according to the Regie Libanaise des Tabacs et Tombacs, representing some 10% of total imports, at a value of approximately $500,000.

“It’s not a tremendous problem when you look at the percentage it of the market,” notes a Regie employee, speaking on condition of anonymity. “These products are not [any more of] a health hazard, they contain plain tobacco, but they are feeding off the well-established Cuban brands. More than anything, the latter are the ones that are most affected by this.”

Yet Phoenicia-Beirut begs to differ, arguing that the counterfeiting is hurting the country as a whole.

“Falsified products are not only damaging the image of Havana cigars but also the reputation of Lebanon as a center of commercialization of Cuban cigars for the whole region,” says Saleh. “This is an image that took years to build, through the efforts of Phoenicia Trading and the support of the Regie.”

The bulk of the counterfeited products are being produced in Latin American countries, but a few also come from Europe. Locally printed rings are subsequently added to the cigars, which are then repackaged in nylon or recycled Cuban cigar boxes.

The products are sold door-to-door, but can also be found in shops and restaurants, both of which are liable for prosecution if caught.

June 10, 2005 0 comments
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A final masterpiece

by Executive Editors June 10, 2005
written by Executive Editors

Renowned Italian architect Giancarlo Di Carlo may have passed away on June 4 of this year, but his influence will forever be felt in Beirut, where the real estate project Beirut Village was the last chef d’oevre of his life.

Set around the 2,500 m2 Alliance Garden in Wadi Abu Jamil in the heart of downtown, offering over 27,000 m2 of apartment space, the Beirut Village is the brainchild of Beirut Trade, a combined Emirati Lebanese real estate company. The development consists of two clusters of 6-floor apartment blocks. Di Carlo himself said to be inspired by the traditional architecture of areas such as Gemayzeh and Kantari in introducing the seven red-roofed, low rise buildings, characterized by balconies, large windows and earthy colors. Each of the 92 apartments has its own individual look and the top floors will house 10 luxury penthouses, each with a large terrace and private pool.

It is also further proof of the attraction of Beirut as a location for investment in high-end real estate. Demand for luxury apartments is still strong despite Lebanon’s turbulent year. “We aim for ‘class A clients,’ the top of Lebanese society and Arab investors,” said a Beirut Trade Spokesman.

Sales started on October 1 and construction will begin at the end of this year to be completed by mid 2008. “Solidere is currently asking some $1,300 per square meter of BUA and often offers some discount,” said Raja Makarem of Ramco Real Estate Advisers, “so I think a price of $1,200 is likely. As far as sales are concerned, I don’t think anything in Wadi Abu Jamil is sold for less than $3,500 m/2.”

Last June, an honorary exhibition in Rome on Di Carlo’s life and work already included the Beirut Village as one of masterpieces of the 86-year-old architect, who in 1993 was the winner of the Gold Medal of the Royal Institute of British Architects.

June 10, 2005 0 comments
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Storage Space

by Executive Editors June 10, 2005
written by Executive Editors

Filovault, a business to business venture created last year to cater to those companies, institutions and foundations to outsource their records management due to space and resource constraints, hopes to cash in on the growing need for better corporate governance.

 “As companies and institutions become more compliant with document retention periods and abide by international standards, their volume of stored documents will tend to swell,” said managing director Nael Zantout. “Since managing archives properly involves a great deal of resources, fire prevention, 24 hour security, software, and manpower, most international companies are looking to outsource this function to a specialized company, which can ensure two key things: safety and availability of files when needed.  Loss of files can mean litigation/audit risks”

The archiving business model, already popular in the West and more recently in Egypt and the UAE, rests on the concept that non-core activities such as record keeping /archiving are being outsourced for cost savings and removal of strains on internal resources.  Filovault has rehabilitated a warehouse facility just 15 minutes from BCD, employing climate control, security and fire detection and prevention. Filovault also has a strategic software partnership with US based O’Neil, arguably the global leader in the field.

According to Zantout, a large percentage of multinational companies worldwide use outsourcing for their archiving and this process is viewed favorably by auditors and compliance heads as it lessens the risks and costs especially since most accounting and administration documents need to be maintained for ten years or more. Clients who sign up, get a number of bar coded boxes along with a cd-rom to catalogue the contents of each box, enabling file searches at a later point.  Filovault allows clients to consult their inventory or order boxes at any time using their online feature.

“The whole system operates solely on barcodes ensuring confidentiality at all times,” said Zantout, who cites a large US multinational as well as top insurance and financial institutions as clients, along with several smaller foundations, law firms and schools. “We guarantee rapid retrieval of documents when needed along with an array of services such as digitization, destruction, and an onsite audit/conference room.”

June 10, 2005 0 comments
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Almaza dominates festival

by Executive Editors June 10, 2005
written by Executive Editors

Revenues were up by around 30% at last month’s 14th Schtroumpf Beer Festival, according to the restaurant chain’s operations manager, Maroun Daou. But anyone heading to the festival in the hopes of sampling a wide array of beers would have been disappointed. This year, only Almaza, the sponsor, was present at the event, making it rather bizarrely a one-beer, beer festival. At least Almaza was happy. Sales at the event rose by 50% compared to last year, thanks also in part to a LL12,000 drink-all-you-can offer, according to Almaza Brand Manager Naji Nacouzi.

“The beer festival should invite all the other players in the market,” said Nacouzi. “However for two years now Almaza has been sponsoring the festival without the presence of other players. Maybe they don’t like the prominence and visibility of our brand.”

The absence of other beers might be a reflected of the local dominance of Almaza, which was bought by Heineken in 2003. “We used to have a lot of brands. A few years ago we had about eight beers, but now they believe there is no competition anymore. They see only Heineken and Almaza. So they are no longer spending money on such festivals,” said Daou.

Abdou Younes, marketing director of Abi Ramigh Bros., the company that imports Effes, Fosters and Budweiser, said the company ceased participating in the festival two years ago with Budweiser because Schtroumpf only embraced the brand during the festival and shunned it for the rest of the year.

“They don’t contact us until the festival. But outside the festival, they don’t want to put our brand or any other brands on their premises. They only contact us when they need something.,” Younes complained.

In an attempt to chip away at the Almaza/Heineken market share Abi Ramigh Bros. Spends around $375,000 on marketing and while it did not take part in the beer festival, it does sponsor motor sport events.

June 10, 2005 0 comments
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That show goes on

by Executive Editors June 10, 2005
written by Executive Editors

Taking place in early September instead of late spring, the Project Lebanon construction fair run with considerable delay this year, marking the event a victim of the turbulences that rocked the Lebanese exhibition and fairs industry in the aftermath of the assassination of Lebanon’s former prime minister Rafik Hariri.

In its 11th year, the show appeared slightly smaller than in some previous editions and presence of exhibitors from some countries was down, but other countries were well represented and entries for some 250 exhibitors filled the show catalogue of organizers IFP in a respectable mix, confirming Project Lebanon as stable fixture on the country’s exhibition scene.

Looking out over Beirut from the exhibition grounds, visitors could take heart in seeing construction cranes dotting the downtown silhouette in quite some larger numbers than a few years ago, supporting the notion that the Lebanese real estate market has been more resilient in withstanding the troubles of 2005 than other sectors of the economy.

That did not mean, however, that moods inside the exhibition halls would vibrate. Attendees were treated to some information important to the sector, such as a seminar by insurers Arope on new insurance requirements for construction projects and international examples for such decennial insurance. But a sizeable number of exhibitors on the main floor of Project Lebanon admitted that 2005 had turned out different than hoped for.

Even stalwarts in the domestic construction supplies industry such as paint manufacturers Tinol and tile makers Uniceramic conceded that the market has not been kind until now. “We had a difficult first portion of 1005. The market is going up now but I am not sure if we will be able to make up for losses from the first half in the remainder of the year,” said Chaker Saab, Tinol’s business development manager. Uniceramic on their part had been hurt by the trade problems with Syria, which is the company’s main export market, said general manager, Nabil Ghorra.

Both managers saw better times ahead, albeit under slightly different accents. “I am optimistic for the future,” said Saab. “The boom will come, but I am not sure how long we can wait,” said Ghorra.

June 10, 2005 0 comments
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Fudging numbers

by Executive Editors June 10, 2005
written by Executive Editors

The main event in telecommunications last month was the one that did not take place: the switch from the 03 cellular prefix to the new code, 71. Less than two weeks before the changeover on September 18, the ministry of telecommunications told the nation’s phone users that the old numbers would remain valid for the time being.

The reason given by the MoT for reversing its decision to change cellular prefixes now was a sensible assessment that further adjustments in the national phone numbering plan would mandate another switch in landline prefixes, most likely next year. A two-phased switch would have caused extra costs to businesses and individuals, by forcing them to print new business cards, stationery, brochures, and so forth not once but twice.

While the decision gave consumers and companies a reprieve in having to visit the printers and commission their communications agencies for producing new corporate materials, it came a bit late for the communications planning of the parties directly involved, MoT/Ogero and network operators MTC Touch and Alfa. According to industry insiders, they had made bookings for extensive billboard campaigns that could not be cancelled.

Thus, the Lebanese public in mid September was treated to extensive telecommunications advertising of apparently somewhat unplanned nature and cost that media industry sources estimated at some $50 per day and billboard, or about $75,000 a day. The advertising budget for the originally planned campaign to introduce the new cellular prefixes had been signed for to equal parts by the ministry and operators.

Given that expenses for such a measure can run to substantial amounts, local companies weary of having to renew their corporate materials should be able to breathe easier for the moment. While the general manager of a major PR agency in Beirut said one could not provide a general cost figure for changing all of a client’s corporate materials to the new phone numbers, he estimated that just for his own firm of 25 employees, changing everything involved could cost as much as $10,000.

It has been known for years that Lebanon’s six-digit phone numbering is no longer sufficient and as network managers at Ogero confirmed, the system-wide change of the prefixes will have to take place eventually. Compared to the inestimable total cost that the nation’s phone users would have been forced to bear due to the September switch, the sudden cancellation of the public awareness campaign last month was certainly a minor problem. What remains is the question why the decision for a two-phased changeover had been taken in the first place.

June 10, 2005 0 comments
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Pushing those grades

by Executive Editors June 10, 2005
written by Executive Editors

Marketing US-based higher education to Lebanese students became an executive matter for ambassador Jeffrey Feltman when a tandem of private sector college road shows converged on Beirut last month. Held consecutively at the Moevenpick and the InterContinental Phoenicia Hotels, the two road shows represented 37 US colleges between them, all vying to draw Middle Eastern students to their campuses.

As he praised the virtues of US colleges and the quality of degrees they offer at an opening press conference, Feltman also intimated that American ambassadors worldwide have received a “directive from the State Department to assist in promoting US education to international students”.

While US diplomacy banks on the cultural good will that they expect visiting students to develop towards America despite not really resolved obstacles Middle Eastern youngsters face in obtaining US student visa, American colleges also have a substantial financial interest in attracting international students. “On average, 600,000 foreign students are enrolled every year in US, spending $13 billion annually. International education has become an industry in the United States,” said Tarek Elshayeb, associate director for international student services at Plattsburgh, a college affiliated with the State University of New York.

The colleges self-financed their participation in the road shows, said the managers of US Education Group and Linden Educational Services, the two competing companies which organized the events. Each school participating in her fair had paid $11,500 for going to five Middle Eastern cities, said Linden’s president, Linda Heaney.

Annual costs of undergraduate studies at universities in the Linden fair were predominantly in the medium $20,000 to $40,000 bracket, as the biggest names in the education business usually stage their own shows. “We do small programs for select universities that are very committed to international students,” Heaney said.

As for return on their investment, admission officers at the fair emphasized that they were looking at their promotion work as “sowing seeds” without strict recruitment targets for each stop on the trip, but some were avidly goal-oriented. “We want to increase enrollment and I want to find at least five students from Lebanon that would enroll. If we can register 25 students during this entire tour, I will be a happy camper,” said Ashraf Al Zawaideh, assistant director for international admissions at the University of Bridgeport.

June 10, 2005 0 comments
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Since its first edition emerged on the newsstands in 1999, Executive Magazine has been dedicated to providing its readers with the most up-to-date local and regional business news. Executive is a monthly business magazine that offers readers in-depth analyses on the Lebanese world of commerce, covering all the major sectors – from banking, finance, and insurance to technology, tourism, hospitality, media, and retail.

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