Seller’s remorse: Opposition to sales of state holdings several decades ago continues to be an issue in parliament

A large number of privatisations were undertaken in Jordan between the mid-1990s and mid-2000s, includ-ing the sale of several large stakes in major industrial firms, notably in the phosphates and potash sectors. Many years after their completion, such sell-offs remain controversial, facing ongoing opposition from employ-ees of some of the companies in question and also from many members of parliament (MPs), who have made charges such as claiming that the deals were corrupt or represented poor value for money, and some who simply oppose privatisation outright.

Critics have gone so far as to call for major deals to be cancelled on grounds of illegality or for the author-ities to repurchase the stakes it sold. The government has on occasion hinted that it might consider such options, and in early 2013 announced the formation of a committee to look into and evaluate all privatisa-tions that have occurred in the kingdom. Yet, support-ers of the sell-offs argue that the firms in question have performed significantly better under new man-agement since they were privatised, leading to higher government revenues. As well, there remains wide-spread doubt that the government is in a financial posi-tion to repurchase significant stakes in the companies.

BACKGROUND CHECK: The bulk of Jordan’s major pri-vatisations took place over the course of a decade between the mid-1990s and mid-2000s. Most major state holdings were sold, with government ownership of major firms now largely limited to several minority stakes in a handful of segments, although the paras-tatal Social Security Corporation has remained an impor-tant investor in the country.

Major sales that have been particularly controver-sial in recent years include those of a 33% stake in Jor-dan Cement Factories in 1998 (to French company Lafarge, which has since increased its holding in the firm); a 40% stake in Jordan Telecommunications Com-pany in 2000 (to Orange of France) and then a further 15% to Orange in 2002; half the government’s 54% stake in Arab Potash Company (APC) in 2003 to Potash Corp; and a 37% stake in Jordan Phosphate Mines Com-pany (JPMC) in 2006 to Kamil Holdings, which repre-sents the Brunei Investment Agency. While all have faced opposition to varying extents, the privatisations of JPMC and APC have been especially contentious due to the involvement of Jordanian natural resources, despite the facts that neither were wholly state-owned firms before the sales and that the government retains direct and indirect stakes (the latter via the Social Secu-rity Corporation) in both companies.

OPPOSITION: Opposition to privatisation has been par-ticularly strong in parliament. In December 2011 a group of 60 MPs – representing half of the lower house of parliament – requested the formation of a parlia-mentary committee to investigate several of the deals, following a parliamentary debate on the topic.

In March 2012 MPs endorsed the recommendations of a parliamentary investigative committee into the privatisation of JPMC that the sale be overturned on the grounds of violating the constitution and that oth-er concessions for phosphate mining in other parts of the kingdom be allowed; however, the MPs rejected the committee’s call for former Prime Minister Marouf Bahkit and four of his cabinet ministers to be referred to the judiciary for their roles in the deal. In May 2012, however, the Higher Council for the Interpretation of the Constitution rejected the MPs’ claims that the sale violated the constitution.

REVIEW UNDER WAY: Still, the government has tak-en some concrete actions in regards to criticisms of the privatisations. In January 2013 then Prime Minister Abdullah Ensour, under directions from the king, announced the formation of a committee to “assess the privatisation policies and process” implemented in the kingdom since 1989. The panel, which will have six months to conduct research on the topic, will evaluate eight aspects of Jordanian privatisations, including the procedural soundness of the transactions, the fairness of asset pricing, the socioeconomic impact of the deals and consequences for privatised company workers.