Damascus Cham Holding Company: Legal cover for businesspersons’ investments

Meeting of members of Damascus Cham Holding Company in Marota City project - 10 December 2018 (Damascus Cham Holding Company Facebook page)

Meeting of members of Damascus Cham Holding Company in Marota City project - 10 December 2018 (Damascus Cham Holding Company Facebook page)


During the previous months, Damascus Cham Holding Company has become a common name in Syrian media outlets despite their different political inclinations, especially in connection with Marota City project behind al-Razi area in the capital Damascus.

The company has raised many questions about the nature of its work, its financial affiliation and economic alliances, especially after announcing the establishment of its subsidiary or contributing companies, in addition to its acquisition of ownership of some areas of Damascus Governorate, such as al-Talae Garden in Mezzeh Highway, as announced by the governorate in December this year, as well as the ancient neighborhood of al-Hamraoui in old Damascus, in May.

A decree by Al-Assad paves the way for his businesspersons

This has started in 2012 when the Syrian regime’s president, Bashar al-Assad, issued Legislative Decree No. 66 to establish two organizational zones, the first behind al-Razi area and the random gardens of Mezzeh, under the name of Marota City (meaning sovereignty and homeland in Syria), and the second extending from the south of Almotahalik Aljanobi St, up to al-Kadam, al-Asali and al-Thalateen Street, under the name of Basilia City (meaning Eden).

Since Damascus Governorate does not have the capacity and a large budget for the reconstruction and investment in the aforementioned areas, which it owns and has their assets, it is forced to sell some of their shares in public auctions to private companies, a well-informed economic source about the work of the company and its mechanisms of forming partnerships, who asked not to be named, told Enab Baladi.

The source pointed out that the private companies (affiliated and close to the regime and its businesspersons), which will start investment in these areas through the public auction, will suffer from imposed “duties, taxes, laws, transfer of property and other procedures,” in addition to the lack of legal cover. These companies will also be subject to a conflict with any legal material and judicial provisions, as well as the exposure of the investments of businesspersons, close to the regime, to the public. Therefore, the solution was to establish a “holding company.”

In preparation for this, al-Assad promulgated in April 2014 the Legislative Decree No. 19, which authorizes, “the issuance of a decision by the Minister of Local Administration based on the proposal of the Governorate Council or the City Council to establish a Syrian private holding joint-stock company (…) to manage and invest the properties of the administrative unit or part of them.”

“The Holding Company is a company that exercises administrative and financial control over its subsidiary companies and monopolizes the authority of making strategic decisions and identifying the major trends of its companies.”

Legal Advisor Mustafa al-Qassim considered that the authority to grant the license and permit the work in the decree has been mainly granted for the Minister of Local Administration, who is fully subject to the dictates of the political, security and financial authorities that direct him as they wish and dictate on him their decisions.

Al-Qassim told Enab Baladi that the decree grants the holding companies, under which they are established, wide powers that exempts them from surveillance, accountability and auditing. The legal advisor explained that these companies’ affiliation to the local administration is a limited administrative affiliation in terms of establishment and coordination. This is rather an external affiliation, as the actual powers of owners of these companies outweigh those of the public bodies, because of their actual unlimited ability to form these bodies. These powers can even reach the appointment of ministers and managers and protecting them in the event of satisfaction or their dismissal and accountability in in the event of dissatisfaction.

Based on the decree, Damascus Governorate announced on December 17, 2016, the establishment of Damascus Cham Holding Company with a capital of 60 billion Syrian liras. In accordance with the Decree, the company’s General Assembly is composed of the Chairman and members of the Administrative Unit Council (Damascus Governorate), and its board of directors is headed by the Governor of Damascus, Adel al-Olabi, after he was appointed in November, replacing Bishr al-Sabban, who had been in this position for 12 years.

The decree has granted the company the authority to establish or contribute in the subsidiary or shareholding companies and manage them. In addition, the decree exempts the properties, transferred to the holding company or from the holding company to its subsidiaries or shareholders,  from all types of taxes and fees.


Companies founded by Damascus Cham Holding

The establishment of Damascus Cham Holding Company paved the way for the emergence of a consortium of companies investing in Marota City project. According to a report issued by the company last April, the number of merger contracts signed between companies reached six, with a total capital of 380 billion Syrian pounds.

One of the most prominent names involved in the establishment of these companies is the Syrian businessman Rami Makhlouf, who is the maternal cousin of the Syrian regime’s head, Bashar al-Assad. Makhlouf started Rawafed Company through investing a total of 25.9 billion Syrian pounds, jointly consecrated by Damascus Cham Holding and other four companies, including Ramak TP, also owned by the businessman.

The name of the mysterious businessman Samer Fawz has emerged when Aman Holding, a joint stock company, was established with a capital of $18.9 million. The company was co-established by three companies, which are, respectively, Damascus Cham Holding Company and Aman Holding, which was established in May 2017 with a capital of 600 million Syrian pounds, co-owned equally by Samer, Zuhair and Amer Fawz, along with Fawz Commercial Company, owned by businessman Samer Fawz and established in 1988.

The third name is Mazen al-Tarazi, who signed a contract with Damascus Cham Holding to invest in the central mall of the Marota City project.  The 108 billion Syrian pound mall will be built on a terrain of ​​120.000 square meters. Thus, the project will also include the establishment of six additional buildings with an area of ​​26.000 square meters. Besides, al-Tarazi has sold five terrains in the city with the value of $70 million for each.


Towards the privatization of projects

Damascus Cham Holding Company was delegated by the governorate to entrust one of its management companies with the tasks of administering the regulatory areas, granting building permits, supervising the construction work, and collecting all fees and fines related to its work for the governorate (the administrative unit), in addition to monitoring recently established funds for the regulatory areas, following up the repayment of loans and benefits directly or through banks, as well as creating and managing citizen service centres.

Eng. Mohamed Mazhar Sharbaji, former head of the engineering division in the countryside of Damascus, told Enab Baladi that the issuance of the decree No. 19 aims to give legal cover to the companies that have started operating through signing contracts with Damascus Cham Holding, in order to authorize and market projects founded by businessmen who are close to the regime or affiliated to political and international actors. Sharbaji noted that the owner of the newly established company, who may be close to the governor or one of his  relatives, is likely to be granted a legal cover to facilitate the affairs of the public sector (the province’s public properties) through a private company.

For his part, the legal adviser Mustafa al-Qassim stated that the decree gave absolute powers to capitals looked after by the authority, including tax exemptions, and the ability to execute forced acquisition and seizure of citizen’s properties against their will. Al-Qassim pointed out that these joint stock companies, which take advantage of broad range of powers legalized by the decree, contribute in the implementation of suspicious projects in the areas covered by the Legislative Decree No. 66 of 2012. Accordingly, Iran is trying to implement these questionable projects in the areas surrounding the Iranian embassy in Damascus.

Al-Qassim said that the risks of Decree No. 19 lie in the practices of the authorities, which consist of briefing investors who are allied with the Syrian regime about all the details of the operations, starting with allowing them to select the most profitable projects, regardless of the alleged economic and social development plans as well as the general budget of the state, in addition to granting them activity permits exclusively.

Moreover, the Syrian authorities are granting these businessmen wide powers in determining the areas in which the projects will be held, seizing the properties based in the chosen terrain, and benefiting from the administrative authorities’ privileges, in addition to, enjoying tax and fees exemptions, and having immunity regarding control and accountability protocols. Such violations are bluntly practiced in light of the regime’s hegemonic domination over the government and the absence of the judicial power as well as exceptional legislative regulations to ensure protection against such breaches.

Al-Qassim believed that the projects that will be established under this decree will support the wave of privatization, which the regime is trying to realize without drawing much attention. This trend will enable the limited group of the regime’s businessmen to exert greater control over the country’s resources. Nonetheless,  these projects will take advantage the services offered by the  sectors of real estate, housing, health, communications, and transportation at the expense of the displaced, the homeless, and the poor in Syria.

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