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Identifier
Created
Classification
Origin
06CASABLANCA637
2006-06-12 09:08:00
CONFIDENTIAL
Consulate Casablanca
Cable title:  

THE PALACE AND MOROCCO'S BUSINESS ASSOCIATION:

Tags:   ECON  EFIN  EIND  ELAB  ENIV  ETRD  MO  PGOV 
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VZCZCXYZ0000
RR RUEHWEB

DE RUEHCL #0637/01 1630908
ZNY CCCCC ZZH
R 120908Z JUN 06
FM AMCONSUL CASABLANCA
TO RUEHC/SECSTATE WASHDC 6784
INFO RUEHAS/AMEMBASSY ALGIERS 2807
RUEHRB/AMEMBASSY RABAT 7613
RUEHTU/AMEMBASSY TUNIS 1933
						C O N F I D E N T I A L CASABLANCA 000637 

SIPDIS

SIPDIS

STATE FOR NEA/MAG AND NEA/PI

E.O. 12958: DECL: 06/05/2016
TAGS: ECON EFIN EIND ELAB ENIV ETRD MO PGOV
SUBJECT: THE PALACE AND MOROCCO'S BUSINESS ASSOCIATION:
FREE ELECTIONS, BUT....

REF: CASABLANCA 00142

Classified By: Principal Officer Douglas Greene
for reasons 1.4 (b) and (d)



1. (C) Summary: In demonstration of the palace's reach in
business affairs, Morocco's oldest and largest professional
business association will soon inaugurate a new president
after an ostensibly free election. Since only one candidate,
Moulay Hafid Elalamy, registered in time to run he is assured
the presidency of the Confederation General des Entreprises
du Maroc (CGEM) when the formal election takes place as
scheduled later this month. Elalamy is well known in
Casablanca business circles for his close connections to the
royal palace, as well as his role in the "Agma Affair", a
questionable financial deal in the late 90's that earned him
a small fortune, but also resulted in his temporary "exile"
to Canada before returning to Morocco this past year.
Business contacts question his ability to advocate
effectively for the business community, especially for the
interests of small and medium-sized enterprises. End Summary.



2. (C) After months of speculation and anticipation, many
Casablanca-based business contacts reacted with dismay to the
news that Elalamy would become the next president of CGEM by
default. Business contacts tell us the absence of a "true
election" is unfortunate, coming at a time when debate is
sorely needed on how best to improve Morocco's burgeoning
business and investment climate. Elalamy was widely seen
among Casablanca business professionals as the palace choice
for the CGEM presidency, thus discouraging other candidates
from throwing their hats into the ring. As one contact
explained, "At best you might be a sacrificial lamb, at worst
you might actually win and have all your companies audited by
the government." (Many business contacts believe that the
continuing audits of current CGEM president Hassan Chami's
various companies are in direct retaliation for upsetting the
Palace -- reftel.)



3. (C) Elalamy himself is a controversial figure in the
business community. Rumors persist among business contacts
that Elalamy made much of his fortune in 1999 through insider
dealing facilitated by his palace connections. The specific
deal is referred to as the "Agma Affair", after the insurance
company he profited from through a widely questioned
stock-exchange transaction. Elalamy subsequently spent
several years living in Canada in "voluntary exile" before
recently reemerging on the Casablanca business scene. As one
prominent banking contact confided, "The fact that he
disappeared for a while after Agma and then can come back and
be president (of CGEM) makes me question if I should stay in
this country."



4. (C) Elalamy's star began to rise when he was recruited to
work at Omnium Norde Africain (ONA), the royally controlled
conglomerate. During his tenure at ONA, Elalamy grew
increasingly close to Fouad Filali, son of former Moroccan
Foreign Affairs Minister Abdellatif Filali and husband of
Princess Lalla Mereyem, daughter of former King Hassan II and
sister of King Mohammed VI. Elalamy rose in ONA to Secretary
General, before parting ways and dabbling in the insurance
industry, leading to his profitable transaction with Agma
Insurance. Elalamy's current holding company "Saham",
(allegedly financed by his profits from the Agma Affair),
invests primarily in retail businesses (Bigdil, Best
Mountain,and Sergeant Major) and the information technology
sector (Cap'Info and Orsys). Just this month however, Saham
purchased 67% interest in CNIA, a Moroccan insurance company,
from the Bahraini Arab Insurance Group (ARIG). This purchase
heightens Elalamy's profile on the business scene and returns
him to the sector of his earlier fortune. Nonetheless, one
business contact insisted to Econoff that Elalamy's
investment in CNIA and role as Chairman is only as proxy;
CNIA affairs will actually be run by the King's brother,
Moulay Rachid. If true, it suggests that Elalamy's intricate
ties to the Palace have not withered much during his Canadian
sojourn.



5. (C) COMMENT: Elalamy's ascendency to the presidency of
CGEM reinforces for many the image of a Moroccan business
climate closely monitored and managed by the Royal Palace.
The result also suggests the continued power and influence of
the "the Makzhen", referring to the domination of the
political and economic spheres by an elite few connected to
the Palace. That said, if business leaders demur when the
palace favorite runs, they share in the blame. Conspiracy
theorist fears of audits and other tactics are completely
unverifiable. In any event, the results of the election

disappoint reform-oriented Casablanca-based business
professionals who want to see CGEM take a more aggressive
role in advocating for the interests of Small and
Medium-Sized Enterprises (SMEs). SMEs make up more than 90%
of Moroccan enterprises and represent between 60 and 70% of
the labor force.

GREENE