SOON AFTER the assassination of Egyptian President Anwar Sadat in October 1981, Cairo moviegoers were briefly titillated by a film about a business tycoon who used his political connections to keep his son from going to prison for recklessly injuring a woman in a traffic accident. In a tasteless finale, the tycoon was gunned down under circumstances closely resembling Sadat's murder.
Authorities ordered the movie withdrawn after several weeks. But the fact that it ran as long as it did had many foreign diplomats, Egyptian officials and businessmen speculating that the film was some kind of macabre warning to Osman Ahmed Osman, Egypt's richest and most influential private citizen.
Osman does not, to anyone's knowledge, have a son who injured a woman in a traffic accident. But he was an intimate of Sadat and his vast commercial empire had become a highly visible symbol of the great personal wealth that a few accumulated during the late leader's rule. Some wondered whether Osman, "builder of the Aswan High Dam," creator of a business empire of 60 companies throughout the Middle East, employer of more than 100,000, and friend to Egyptian presidents, had finally fallen out of official favor.
Three years later, Osman has come through a government crackdown on Sadat-era corruption and influence- peddling unscathed. Not only is he on good terms with President Hosni Mubarak's government, but he has strengthened his ties to the major opposition party and the Moslem Brotherhood, an influential, fundamentalist religious society.
Osman's status in Egypt has significance that goes far beyond his own country. At 66, he is a prototype of a new Third World class: that of the fabulously wealthy entrepreneur who has grown rich and influential to a degree that has not been seen since the larger-than-life robber barons strode the stage in 19th century America, Germany and England.
In Egypt, billboards everywhere immodestly proclaim, "Built by the Arab Contractors Company," and below, in large letters, "Osman Ahmed Osman." His nephew and associate, Ismail Osman, who consented to an interview in place of his uncle, says that all the companies founded by Osman have assets of between $1.5 and $1.6 billion.
This wealth is a phenomenon with political as well as economic importance. It naturally attracts attention, and gives opponents of regimes with close ties to such people convenient targets. The exorbitant wealth of a small elite played a role in the downfall of the Shah of Iran, and of President Anastasio Somoza in Nicaragua, and it is a factor in the current opposition to Philippine President Ferdinand Marcos.
Yet individuals such as Osman play a crucial role in developing societies. They can get things done. They have the capital -- and the connections. Often the best young engineers and technocrats work for them. Too often they seem the only men capable of cutting through the sluggish bureaucracy and bringing a project to fruition.
Visit the Philippines, Nigeria, Brazil, Indonesia, India, even avowedly socialist countries such as Syria, and invariably there is one man, or perhaps two or three, who have accumulated immense wealth.
In the Philippines, there is Eduardo Cojuangco, known as the "coconut king," owner of the San Miguel beer fortune; in Bangkok one finds Chin Sophonpanich, co- founder and chairman of Bangkok Bank, the largest bank in Southeast Asia and biggest private institution in Thailand. Abdul Aziz Sy, in Senegal, controls tens of millions of dollars through real estate, trading and cement manufacture. Brazil has Abilio Dos Santos Diniz, director of Latin America's largest supermarket chain, which last year had sales of over $1.2 billion dollars. In India, the Birlas and Tatas control even larger fortunes. Both families are said to be worth billions of dollars, with holdings in textiles, autos, steel and commercial airlines.
Their consumption is often conspicuous. At the New Delhi wedding of a member of the Birla family (owner of the Ambassador automobile company) several years ago, the bride was unforgettable. Not only was she beautiful, she was literally covered with diamonds. There were diamonds draping her hair and forehead, a diamond in her nose, around her neck, and she wore diamond gloves.
In the pantheon of Third World moguls, Osman is one of the most fascinating. A medium-sized, balding man who often wears plain brown suits, and who is driven around Cairo in a dusty, green Peugeot, Osman is remarkably unpretentious. With Americans, for whom he has a particular liking, he exudes an almost Reaganesque geniality. A lover of sports, he fields his own national soccer team, and is seen at soccer matches with President Mubarak.
Osman's origins are humble. His family comes originally from a small town in the northern Sinai, but settled in the Suez Canal city of Ismailia. From what is known, the Osmans were small-town traders, not peasants. But even today Osman has the leathery, rough hands of a workingman.
After earning a degree in engineering from Cairo University in 1940, Osman wasted little time becoming an independent businessman. He boasts that his first contract was to build a friend's garage -- at a profit of $33.60. By 1949 he had put together enough capital to found Arab Contractors Company. The firm grew slowly at first, building private homes and only gradually winning government road-building contracts.
In the mid-1950's, when President Gamal Abdel Nasser announced that he intended to build the Aswan High Dam, Osman declined to participate in a joint bid for the government contract with other Egyptian firms. Instead, he submitted a bid to do the earth-moving for the huge project entirely on his own. Competing against several major foreign firms, the Arab Contractors Company underbid everyone and got the contract. It was Osman's major break. His outstanding work on the project won him a Soviet medal as "Hero of Socialist Labor."
No one knows his real wealth. His nephew, Ismail Osman, says that his uncle "does not control anything himself directly," adding that his personal fortune does not surpass "the $10 million figure." However, observers outside the family believe Osman's assets and his control over them is considerably greater.
At the heart of the family empire is the original and largest entity, the Arab Contractors Company, which alone employs more than 60,000 workers. It is eight times the size of its nearest competitor in the building business, El Nasr Construction. Other Osman companies in banking, insurance, wood and aluminum products, food processing, and real estate employ another 40,000.
Osman's companies thrived during Nasser's 17-year experiment in "Arab Socialism." Along with his hard work early in life, came a knack for publicity. Osman saw to it that billboards were erected across the country, and soon he was known as the "Builder of the High Dam," even though many other private and public firms were involved in the $600 million construction project.
In 1961, Nasser nationalized the bulk of Egypt's banks and industry. But in the case of the Arab Contractors Company, several provisions of the nationalization law were quietly ignored; today the Arab Contractors Company has a board of 16, of which five or six are Osman relatives. Currently, Salah Hassabalah, a nephew, is chairman of the public part of the company. "And those who are not related," says Ismail Osman, a member of the board for corporate planning, "are more like sons to him than those who are related to him . . . They are part of the family."
When Nasser "nationalized" Osman's domestic operations, he still allowed him to retain the foreign operations of the Arab Contractors Company as his own private concern. In the 1960s, the company's contracts in Saudi Arabia, Kuwait, Jordan, Libya, and Iraq became extremely lucrative, with such building contracts as a Saudi officer's school and the multi-million dollar Dhahran International Airport, designed by the famed architect, I.M. Pei.
These activities provided a commercial arm for Nasser's pan-Arab political efforts, which sought to unify Arab states. And Nasser may have had other reasons for promoting Egyptian companies abroad, according to some accounts provided by members of his government.
His intelligence chief up until the Six Day War of 1967 war was Salah Nasr. Before he died a couple of years ago, Nasr hired Abdullah Imam, a reporter for the weekly Cairo magazine Rose al-Youssef, to help write his memoirs. Imam spent months with Nasr finishing the manuscript before the former intelligence chief died. The manuscript remains unpublished, but based on his iterviews of Nasr, Imam says, "Osman employed Egyptian agents in his companies' operations throughout Africa, Saudi Arabia, Libya, Jordan, the Emirates, and Iraq."
To that, Ismail Osman responds: "These things happen . . . Sometimes we hire 10,000 carpenters, and then we cannot possibly know the backgrounds of each and every one. But this may be one of the reasons why our tenders abroad shrunk under Nasser."
Osman's relationship with Nasser was not always smooth, however. In his memoirs, Osman complains that Nasser harrassed him, and on one occasion wrongly imprisoned him for two days on suspicion of spying for Israel. Subsequently, one of Osman's nephews confessed to spying for the Israelis and was executed.
But when Sadat succeeded Nasser in 1970, he turned to Osman, who became a friend and companion. Sadat's wife, Jihan, once complained to a journalist that her husband spent more time with Osman than with her. Later, a son of Osman was married to Sadat's 14-year-old daughter. In 1974, Osman was appointed Minister of Reconstruction and Housing.
The Arab Contractors Company flourished under Sadat's "infitah" (opening) economic policies. Import restrictions were relaxed, and foreign investors were once again allowed to send their profits home. Many Egyptian businessmen made fortunes importing luxury goods for a middle class starved of consumer goods during the Nasser regime.
As a Cabinet minister, Osman cancelled a Nasser-era statute that prohibited any single private firm from receiving more than $100,000 in government contracts annually.
By 1976, however, Osman was encountering opposition from some members of parliament. The cabinet proposed that a controversial tariff exemption be withdrawn just as reconstruction work was finishing on cities along the Suez Canal. Osman launched a fight to preserve the exemption, which enabled Egyptian companies working in the "national interest" to import goods duty free. He argued that it stimulated the private sector and encouraged foreign investment. But to the surprise of all, he lost. Sadat reshuffled the cabinet and Osman was out.
Or so it seemed to the Egyptian public at the time. In retrospect, Osman seems only to have simply adopted a lower profile. As his closest adviser, Osman accompanied Sadat to Jerusalem in 1977.
Milad Hanna, an engineer and one of 1,500 writers, intellectuals and technocrats arrested by Sadat in 1981, said in an interview that he believes the only reason he and several members of the national assembly were arrested was their role in seeking to unseat Osman from the cabinet. Ismail Osman, however, denies that his uncle had anything to do with the arrests."Mr. Osman was a bit distant from President Sadat at that time. Sadat said there were some things in Osman's memoirs which should not have been published . . . Osman read about the arrests in the newspapers like everyone else."
Mohammed Heikal, Egypt's most prominent journalist, makes numerous charges against Osman in his 1982 book, "Autumn of Fury." Among other things, Heikal says Osman billed Sadat less than $150 for extensive renovations on the late president's home on Pyramid Road in Cairo. Ismail Osman, denying this, said that "a subcontractor, not our company, did the work." Osman's nephew attributes much of the criticism of Osman to those unhappy with Sadat's "open door" economic policies.
As Egypt under Mubarak enters a period of cautious political liberalization, Osman has rapidly adapted. In early 1982 he won 80 percent of the vote after a campaign to have himself re-elected chief of the Engineers' Syndicate, a prestigious job that gives him a platform from which to comment on policy.
Osman has also maintained close ties to the Moslem Brotherhood, the conservative religious organization. Last year, he married his second son to the daughter of Abdel Azim Loukma, a prominent leader of the Brotherhood who was imprisoned for many years by Nasser.
Short of a return to the socialist austerity of Nasser's time, Egypt is dependent on Osman and others like him. Employes of the Arab Contractors Company are the highest paid in the country. They have their own company hospital, their own recreation club, educational scholarships for their children, medical insurance and a pension fund. Osman evokes fierce loyalty from his employees' for at least two other reasons. One is that in a society notorious for bureaucracy and the fatalism of the incessant phrase, "in'shallah" ("God willing"), Osman's employees achieve their goals. Also, they have long worked on an incentive basis. Ismail Osman explains: "If our estimate was $1 million, and the employees can do it for $900,000, they get to divide among themselves a percentage of the savings."
Osman, in particular, is associated with Egypt's return to a market economy -- a development that was heartily endorsed not only by local businessmen but also by the U.S. government and the International Monetary Fund. Any attempt to restrict Osman might be interpreted as a turning away from the liberal economic policies favored by Egypt's foreign financial supporters.
Moreover, it must be understood that capitalists such as Osman grow out of a culture that is very different from those of modern industrial societies. Institutions that regulate and check excesses by companies and capitalists are weak or non-existent -- just as they were weak in Europe and America in the early phases of development.
The business mores of huge enterprises such as Osman's still tend to be those of the small towns and villages from which the new generation of tycoons have only recently sprung. What is seen as influence peddling, corruption and ruthless practices in the West are often regarded differently in the Third World. Business deals are seldom sealed on the basis of fair, competitive bidding, but on the hoary principle of whom you know.
But this does not relieve Third World governments of their dilemma. Many of the modern titans must bear some blame for the economic and political difficulties in which their countries currently find themselves. This is true of Iran before the Shah's overthrow. And it is true now in Egypt.
Egypt's foreign debt is about $15 billion. At least some of it can be attributed to expensive public works projects that have incurred enormous cost overruns. According to Heikal's book and to a foreign aid consultant, Osman's company billed the Egyptian government for triple the original $41 million agreed on to build a tunnel underneath the Suez Canal. Similar cost overruns have plagued the 150,000-acre Salhiya Desert Reclamation Project, contracted to Osman's company. Some $270 million has already been spent.
Essential as Third World tycoons have made themselves, they can themselves become impediments to development. Osman made himself the only alternative to the inefficiencies everyone would like to see eliminated in the Egyptian economy: red tape, poverty wages, low productivity and wasteful spending. Yet as his companies have grown, there has been less room for smaller entrepreneurs to emulate him, even as Osman's own enterprises became bigger, more bureaucratic and less efficient.
A classified State Department cable, written on the eve of the Iranian revolution, suggests the dilemma.
"Just as there was little incentive in the United States to do something about the 19th century robber barons while the popular myth that anyone could become a robber baron had currency, most Iranians, hardly immune to the lure of a fast rial, were for long undisturbed by the questionable fortunes that were being made around them . . . Many Iranians took a kind of chauvinistic pride in some of their countrymen's ability to get rich overnight."
On the other hand in a society with as few real economic success stories as Egypt, capitalists such as Osman become a natural target for the disgruntled -- small businessmen, intellectuals, Moslem fundamentalists and the man on the street.
Such was the case, as well, in the gilded age of the robber barons in the United States, when unbridled capitalism unleashed "gale(s) of creative destruction," as the late economist Joseph Schumpeter put it. But Third World societies are far more fragile than turn-of-the-century America. Institutions are less developed; disparities between rich and poor are greater; and the social problems are not remotely comparable. In such a situation, the possibility exists that revolution rather than evolution will ultimately be society's response to excess.