Binding Reasons

The reasons behind the government’s draft law issued by virtue of decree No. 1273 included the following:

• Whereas legislative decree No. 16/85, which postulates the amendment of certain provisions of legislative decree No. 5, dated January 31, 1977, gives the Council for Development and Reconstruction (CDR) the authority to carry out any project assigned by the Cabinet,
• Whereas Article 21 of the Urban Planning law grants the CDR the right to turn to real estate companies to execute projects by authority of the Cabinet in war-torn areas or those that have suffered a natural disaster or represent a threat to public safety,
• And with the aim of enabling the CDR to execute the projects through the above mentioned companies, the government deems it fit to enter the following amendments to legislative decree No. 16/85 to balance it and help it achieve the goals behind its issuance.
• Highlighting the role of real estate companies in the reconstruction of war-torn areas or those that have suffered a natural disaster or represent a threat to public safety. Whereas reconstruction entails the combination of the capabilities of the Lebanese in particular, and the Arabs at large, in response to their historical responsibility during this significantly delicate phase, and given that real estate companies include, according to the laws in force, both property owners and right holders, proper legal amendments shall be introduced to allow the participation of purely Lebanese individuals and corporate shareholders as well as other Arab nationals representing official and quasi-official Arab institutions in property or cash contributions to the capital. Such companies shall also be exempt from the legal restrictions on foreign property ownership in Lebanon and shall be granted the right to hold their capital in foreign currencies.

Session proceedings

Former Speaker Mr. Hussein Al Husseini

“This draft law has consumed much of your time. Therefore, we will discuss it in a general session and whoever has comments to make will be given three minutes to do it, before moving to legislation.”

Jean Obeid

“This draft law is vital as it aims to revive and reunite the city center, which is the heart of Lebanon. It is closely tied to three important requirements, the first of which is the generalization of the experience that yielded the formation of the company and expanding the law to cover all the Lebanese regions. Beirut is not heading towards reconstruction, but returning to it. The second is the need to ensure the success of the project, especially after you have introduced, through a committee of experts, pivotal and indispensable amendments that took into account the rights of all rightful holders, i.e. the state, the landlords, the tenants, the investors and the shareholders. Finally, attention must be given to the rule of law. Lebanon, in this project particularly, needs to alienate itself from being an entryway to provoking or blackmailing any party, for we back our businessmen, all of them.”

Mikhael Daher

“You said repeatedly that you will not allow this draft law to pass unless unanimously or with an overwhelming majority. This is why you might want us to stop at what we believe are general deficiencies or gaps in the draft law, provided that we come back to studying the draft law article by article later. The draft law stipulates the formation of a real-estate company for each of the affected regions in Lebanon. There is one for Beirut, one for a certain Mount Lebanon region and so on…

Our first comment is about having only one real estate company take charge of the works in Beirut. We would have certainly preferred, Mr. Speaker, to see multiple companies compete in light of explicit terms laying down the tasks, goals and acts and detailing the prices and costs included in the process far from any monopoly.”

Former Speaker Mr. Hussein Al Husseini

“I would appreciate it if our colleague could show us where he found a provision allowing one company to monopolize Beirut or any other region before jumping to conclusions. No legal texts prevent the government from establishing several companies, as the demarcation of the region is down to the government solely. Thus, these types of companies are aimed to serve the public interest.

Mikhael Daher

“Mr. Speaker, what we say today is being recorded and thus considered binding. I would like to ask whether several companies will have equal chances to take charge of the works in whichever demarked area in the city center or will they be outsourced to a single one? This is my question.”

Former Speaker Mr. Hussein Al Husseini

“There comes first the technical limitation of the area, which is not our subject of discussion right now. The plots would be numbered in conformity with this technical outline. Then, primal and supreme appraisal committees are appointed to assess the value of the rights in-kind, then the door will be opened for subscriptions to form the company.”

Mikhael Daher

“Mr. Speaker, the text does not reflect the explanation you just offered. Thus, I am inclined to stick to my own understanding of the subject and I insist that a certain company is monopolizing a certain region, which is at glaring odds with the constitution.

Second, the company is given the right to landfill as much of the sea as it can lay its hands on, and the CDR is to distribute the reclaimed area in an agreement he sets between the state and the company.

What I am saying is that nobody may relinquish public property, neither the Cabinet nor the CDR. How can we give away our property in favor of a private company when the law stipulates that “public property in the state of Greater Lebanon includes all that, in its nature, is appropriate for public use or for serving public interest,” and that “ownership over such property may not be sold or acquired with time.”

The 1959 legislative decree suggests “the state-owned property shall only be sold by means of a public tender according to the principles set in the Public Accountability Act.”

Based on the above, we may not sell private property to the company unless in accordance with the provisions in force. My point is, areas of public property will be lost in the process, and I refuse to relinquish them as this would violate the legal text governing the public and private property of the state. Besides, the company is exempt from all taxes, including stamp duties and income taxes… Why are we freeing the company from its financial obligations, Mr. Speaker? We denied the Lebanese exemptions from taxes only yesterday. By which constitution do we distinguish the company from regular citizens!? The company is to handle the public roads and areas as well as the infrastructure including electricity, water and sewage networks… All these projects shall be executed at the expense of the government and we ought to pay the company in cash. What do cash payments imply? This means that we are granting the company authorization, in contrast with Article 85 of the Lebanese Constitution especially that the draft law does not specify the amount that shall be paid to the company.”

Chafik Bdeir

“I was the first to object to the government’s first draft law for reasons related to its violation of certain constitutional clauses. However, I believe that this one outlines a structure for the typical real estate company and this is what we seek and support and vote for.”

Elias Saba

“If this project hadn’t had a public interest character, it wouldn’t have been possible to exempt the company from taxes or to bind right owners to have shares in the company, nor would it have been possible to convert the property from immovable to movable.

The state should be part of such companies, either through its public property which should be treated as that of individuals, or through cash contributions. On a relevant note, some of the regions that might be arranged by real-estate companies include Waqf properties (religious endowments), Mr. Speaker, and certain religious systems prohibit the replacement of their immovable properties by movable ones. According to the draft law in hand, all shares, including non-bearer ones, may be transferred within minutes to non-Lebanese persons. Therefore, I propose the addition of a new legal text that grants the Lebanese 51% of the total shares.”

Pierre Helo

“We are here today to discuss the construction of the city center. The eagerness I exhibit for this project is no less than my eagerness to reconstruct the rest of Lebanon. However, I have certain points to raise:

I fear that the public might think, as the apparent signs suggest, that the state would handle the tasks, the property owners and tenants would suffer the lawsuits, and the subscribers would reap the profits. However, what I fail to understand is why would we sacrifice the income tax? No matter how much property owners receive, they will continue to feel aggrieved, and so will the tenants. What matters is to keep the largest proportion possible of the project in the hands of those to dispel their fears of the subscribers dominating 50% or more of the shares. My concern, Mr. Speaker, is that the project might end up with the hands of subscribers instead of property owners, not to mention the worries arising from exempting the company from taxes for 10 consecutive years, which leaves me wondering why the duration is so long.”

Former Speaker Mr. Hussein Al Husseini

“This is the time span of the project.”

Pierre Helo

“ But profits may be registered during this exemption period. As for the 50% split, studies are supposed to estimate the cost of the project. Why shall we pump into our capital cash contributions that exceed our need, so that subscribers can control over 50% of the shares? The infrastructure cost stands at USD 200 or 300 million. Let them provide this amount, which is only 10% of the project, and we will be most grateful.”

Salim Saadeh

“This draft law defames Beirut’s reputation in legislation as it grants others seizure over what’s for us and for right owners, at an irrevocable price determined by the real estate company and without of which, as the pretense runs, reconstruction would be halted. However, today, as the zero hour has arrived and as people stand poised for the 21st deal, it is imperative to stop at certain instances. Say, a property owner has in the area subjected to reconstruction, a sound property or a damaged one which does not interfere with the reconstruction master plan, and which he pledges to repair or rebuild within five years pursuant to an issued bank guarantee. What justification do we have to appropriate his property in favor of the company? The pretense of reconstruction wouldn’t work, as the owner has vowed to repair his property by virtue of a binding bank guarantee, and holding the design as excuse wouldn’t avail either as the property does not run against the master plan. What’s the justification we can offer, Mr. Speaker, other than having so blatantly encroached upon people’s rights? I warn every member in this house that adopting this plan will not ensure the reconstruction of the city center in 10, 20 or even 30 years. This is a trivial plan and an impulsive idea with no connection to reality.”

Wajih Baareeni

“The reconstruction of Beirut City Center, by Lebanese and Arab capital, is a necessity to revive the economy and set development at a faster pace at the heart of the capital.

The Beirut City Center, in its previous form and with all its owners and tenants, embodied our national interaction and provided employment for thousands of workers and middle-class Lebanese.

Those rights, properties and investments shall be kept protected, so as not to put the city center at the mercy of a greedy capital, and displace those who have always been part of it.”

Albert Moukhaiber

“I can infer that this draft law would lavish endless blessings on this company. I have never conceived the emergence of a draft law that would strip the government and the people of their rights and properties in such a flagrant manner, and I very much fail to envisage the weight of a company, which, according to these laws, would stand on par with the government and the state together. I am fearful that the property ownership will go to foreign countries, and who knows, the shares might all end up in Tel Aviv. This company is overwhelmed with blessings. It will gain free ownership over the non-built public property, which makes no part of the new public properties, yet will be subjected to the provisions of this legislative decree. This is something that is beyond reason.

In addition, “the decisions of the supreme appraisal committee(s) shall be final and irrevocable, subjected to neither regular nor exceptional forms of appeal.”

It might be common to see dictatorship in certain political aspects, but to exercise economic tyranny, this is something we will not accept and we will continue to fight until its elimination. I am pleased to utter my final words as to this draft law. In your absence, Mr. Speaker, I said that the shares will be sold and land eventually in Tel Aviv, similar to what happened in Palestine.”

Akram Chehayeb

“This concept might be the only formula that would lift us from this steep abyss. There won’t be any economic growth or return to normal life, without reconstructing the city center. Any attempt to thwart this mission is equivalent to obstruct the restoration of the country. This project, Mr. Speaker, brings back confidence to Muslim and Christian capital.”

Edmond Rizk

“It seems, Mr. Speaker, that all of us, including me in particular, support this draft law. As for the details, I deem it wise to discuss each article separately, and therefore demand, with the utmost urgency and sincerity, not to ratify the draft law in a single article. After all, Parliament cannot but lay it for vote article by article after having heard all the remarks raised.”

Rafiq Shahine

“We have objected to this draft law in the beginning as it included unconstitutional articles at odds with the existing laws. However, the elaborate discussions we have held tackled every detail, paying meticulous attention to all the particulars and correcting all the defects. Hereby, the draft law must be ratified in a single article, as all the colleagues have participated in the discussions of the Parliamentary Committees and the house and it is pointless to delay the endorsement of a draft law of vital importance to Lebanon.”

Omar Msayke

“A total of over 15 parliamentary sessions has been dedicated to this issue. I strictly reject the opinion suggesting that this draft law encourages monopoly as I believe that it primarily aims to bring property owners, investors and tenants together with other cash subscribers in order to establish a company that will benefit all parties.

The Arab Reinsurance Company was exempted for six consecutive years from legal and fiscal obligations and upon expiry of the exemption, another law emerged to renew it. In addition, Article 24 of the 1978 budget law stipulated tax exemption for several loans. Thus, the company is not the first to be accorded such a privilege, as there were several similar instances in the past.”

Elie Ferzli

“There shall be no unity in Lebanon, nor survival of the nation, if Beirut wasn’t reconstructed. However, we must, Mr. Speaker, take into account the need of Parliament’s oversight of the extent to which the government allows foreign acquisition of property, while exploring the draft law article by article.”

Nayla Mouawad

Should there be an increase in the capital, I believe that three quarters of the right holders must be present to approve it, in order to preserve the human aspect of the city center.

Mouneer El-Hajj

“I am against voting on this draft law in a single article for several reasons.”

Elias Saba

“I find myself compelled to object to the proposition suggesting the vote on the draft law with a single article.”

Auguste Bakhos

“I don’t see any reason to overdo it today. Can’t we just adjourn it to the next session and take two or three hours to explore it fully, rather than engaging ourselves into the burden of ratifying it in a single article?”

Mahmoud Ammar

“Let us call a spade a spade, Mr. Speaker. There are obviously dissenting stances on this draft law. Let us face it. We adopt a parliamentary system with the decision in the hands of the majority. We presented this proposition, Mr. Speaker, and this is not the first time Parliament votes on a single-article draft law. We have voted as such on the major acquisition law.”

Former Speaker Mr. Hussein Al Husseini

“It is advantageous to nobody to interfere with the prime goal of this draft law: initiating the reconstruction of Lebanon. There is a unanimous agreement that things have been pending for quite some time now, and all the economists and experts, nationwide and beyond, are laying emphasis on the urgency to approve this draft law.

Parliament cannot but exert maximum effort and take all the time necessary before reaching the zero hour, and when we do, Parliament must comply with its by-law and with the responsibility imposed upon it. Before us lays a proposition suggesting the approval of the draft law in question by a single article. Some have voiced objection to this proposition and my job forces me to submit their counter-proposition to vote.

Who opposes the vote on the draft law with a single article?”

-A minority-

“Who approves the vote on the draft law with a single article?”

-A majority-

Former Speaker Mr. Hussein Al Husseini:

“Parliament approves the proposition. Let the single article be read.

“The draft law issued by Decree No. 1273, which aims to amend certain provisions of the Legislative Decree No. 5, dated January, 31, 1977 and its amendments made by the joint parliamentary committees, has been endorsed.”

This law shall be published in the Official Gazette.”

Former Speaker Mr. Hussein Al Husseini

“Who agrees to the single article as read?”

-Majority-

Former Speaker Mr. Hussein Al Husseini

“Article approved. MPs are called by their full names to vote on the law.”

-Majority votes for-

Former Speaker Mr. Hussein Al Husseini:

“Law approved by majority vote.”

The opposing MPs were: Pierre Helou, Salim Saadeh, Mikhael Daher, Albert Moukhaiber, Elias Saba, Suleiman Frangieh.

Reading minutes.

The minutes of the session were approved as recorded in the following summary:

17th legislative round

2nd regular session

3rd hearing summary:

Parliament has convened its 3rd hearing of its 2nd regular session on Tuesday, November 19, 1991 at 11:00 am, headed by Speaker Mr. Hussein Al Husseini.

Absentees were: Farid Joubran, Saeb Salam, Antranik Manoukian, Najah Wakim, Kamel Asaad, Raef Samara, Farid Serhal, Adel Ousseiran, Raymond Eddeh, Ahmad Asbar, Edward Hounein, Pierre Dakash, Salem Abdul Nour, Fouad Nafaa, Abdullah Rassi, Hachem Husseini, Abdul Majid Rafei, Maurice Fadel, Ali Hamad Jaafar, Tarek Habshi, Sobhi Yaghi.

Members who apologized from attending were: Rashed Khoury and Anwar Khalil

Attendees were: PM Omar Karami and the following ministers: Michel Sassine, Mohsen Dalloul, Marwan Hamadeh, Chawqi Fakhoury, Abdullah Al-Amin, Hagop Jokhadrian, Suleiman Frangieh, Ali Khalil, Mohammad Youssef Baydoun, Jamil Kebbeh, Sami Khateeb, Mohammad Jaroudi, Mohammad Baydoun, George Saadeh, Fares Boueiz and Michel Murr.

Notes worth attention

• The 10-year tax exemption subject dominated the discussions and ended up being approved.
• Despite the significance of the draft law in question, only 17 MPs intervened
• The draft law strips individuals of their property in favor of a private company, not public interest, an item which was also on the table but to no avail.
• MPs objected to the final and irrevocable decisions of the appraisal committees, but their objections fell on deaf ears.
• MPs called for the ratification of the draft law article by article, but their demand wasn’t met as the majority voted for its approval in a single article only for unknown reasons.

Birth of the company

Law No. 117 was issued on December 7, 1991 thus setting the legal frame for the establishment of real estate companies responsible for the reconstruction of one region or more among those that sustained damage due to security incidents, according to a duly endorsed master plan.

As many MPs have assumed, the reconstruction was restricted to only one company, whether in Beirut’s city center or other war-torn areas.

Subsequently, the “Lebanese Company for the Development and Reconstruction of Beirut Central District” (SOLIDERE) was formed under Decree No. 2537 on July 22, 1992, as a joint company between land and right owners in Beirut on the one hand and cash subscribers on the other. SOLIDERE’s lifespan was set at 25 years starting from the final date of establishment i.e. until 2017, but subjected to extension even before its expiration date.

Thus, Decree No. 15909 was issued on December 9, 2005 stretching the company’s lifetime from 25 to 35 years, i.e. from May 10, 1994 to May 10, 2029.

SOLIDERE was also given the right to undertake projects overseas by virtue of effective Decree No. 207, dated March 26, 2007.

The master plan has been amended tens of times in conformity with the company’s will, giving SOLIDERE increased ability for investment from 4.3 to 5 an evidence that the state has been at the service of the company all the way down, especially that the legal path, whether in Parliament or the Cabinet, and despite the shifting policies over the successive terms, has always supported SOLIDERE, under the pretense of encouraging investment.

SOLIDERE

The SOLIDERE project covers a total area of 1.9 million m2, of which 1.2 million m2 is the traditional downtown area and 700 000 m2 is the newly reclaimed area.

SOLIDERE’s capital stands at USD 1650 million divided into two classes of shares:

• Class A shares: 100 million (right owners)
• Class B shares: 65 million (subscribers)

However, many shareholders in Class A sold their shares to Class B subscribers or to family and friends.

Since its establishment in 1994 until the end of 2011, SOLIDERE’s profits have reached USD 1545 million (Table 1). The one loss it registered throughout its history was in 2000 and stood at around USD 32 million. SOLIDERE’s profits hit a record high estimated at USD 231.7 million in 2010.

Source: Financial statements issued by SOLIDERE in the respective years

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