The Ministry of Internal Trade and Consumer Protection recently retook the Al-Thawra Consumer Complex building in downtown Damascus from the Damascus Consumers Cooperative Society. As a result, many shopping halls were closed despite objections from the tenants.
The Al-Thawra Complex and the Consumers Cooperative Society
The Al-Thawra Consumer Complex building is a mall located along Al-Thawra Street, one of downtown Damascus’s busiest streets. It is one of the city’s largest commercial complexes, standing ten-storey tall with more than 3,000 square metres. It also includes a three-storey, 45-room hotel and a rooftop restaurant. It opened in 1985.
The complex and some buildings near it were built on land in the Sarouja neighbourhood. One of the reasons for constructing it was to replace the old Al-Khuja Souk, which was demolished during a project to dig up the western side of the historic wall around the Citadel of Damascus.
The complex was allocated to the Ministry of Supply (now called the Ministry of Internal Trade and Consumer Protection). However, the government gave the Damascus Consumers Cooperative Society the right to invest in it. However, with time, the Society converted much of the shopping complex into carpet showrooms and turned many sales shops into warehouses, leasing them out to other parties.
The Society was established in 1956 under Cooperatives Law No. 317 of that same year. The organisation aimed to import consumer goods to sell at cost to members and, at reduced market prices, to everyday consumers. Law No. 317 was later amended by Private Societies and Associations Law No. 93 of 1958. The then-Ministry of Supply also issued a set of decrees, instructions and circulars to regulate the work of such entities, as well as Decree No. 743 of 1995, which included a unified internal system for consumer cooperative societies.
In theory, cooperative societies are meant to operate as independent civil entities. However, a series of government decrees effectively limited their independence and placed them under the supervision of the Ministry of Supply’s Consumer Cooperatives Directorate.
Latest Ministry of Internal Trade procedures
Minister of Internal Trade Amro Salem issued Decision No. 3073 on October 24, 2022, dissolving the board of directors for Damascus Consumers Cooperative Society based on a decision by the Central Commission for Monitoring and Inspection. Just two months before, on August 17, the Ministry of Finance issued Decision No. 17, which placed precautionary seizures on the assets of three Damascus Consumers Cooperative Society board members as a guarantee for payment of SYP 107 million. The origin of this sum remains unclear.
The Ministry of Internal Trade also decided to form an interim board of directors for the Damascus Consumers Cooperative Society. This new board was tasked with regulating the Society’s financial, administrative, and legal work system and setting up an election session within a three-month deadline. The board would also run a physical inventory of the Al-Thawra complex’s warehouses. At the time, the minister accused the Society of stealing goods from the complex and “converting it into a home for rats, in very poor condition.”
However, the existing board of directors rejected those decisions. It refused to cede administrative control to the interim board because theirs was an elected board that the ministry had no right to dissolve. Acting on orders from the ministry, police – including judicial police – broke down the doors of the Al-Thawra complex, raided it, and sealed it with red wax.
Indeed, Decision No. 3073 contradicts the various laws regulating cooperative societies, under which the power to dissolve a society’s board of directors lies with that society’s general assembly or the judiciary. The Minister of Internal Trade had indicated that there was a court ruling to dissolve the board of directors for the Damascus Consumers Cooperative Society and that investigations were ongoing into some violations. The Syria Report was not able to confirm that such a ruling exists.
According to statements by the Minister of Internal Trade at a press conference on November 14, 2022, the Consumers Cooperative Society had acted as an investor, granting other parties advantages in investing and working in the Al-Thawra complex. It leased out many of the shopping halls, according to contracts to supply items in trust; that is, sourcing goods and placing them under the Society’s trust to sell them in exchange for the Society benefiting from a cut of the profits. These profits are estimated and paid in advance.
During the November press conference, representatives of the closed sales halls tenants said they had signed five-year, official supply and trust contracts with the Consumers Cooperative Society, which they had recently renewed. The business owners had remodelled their storefronts and brought in new goods, “carpets”, totalling hundreds of millions of Syrian pounds based on those renewed contracts.
The minister responded that those contracts were not with the Ministry of Internal Trade and were not investment contracts but supply contracts for the Society to secure goods. He added that the contract holders had acted as investors renting out sales halls and converting them to direct sales, which is illegal. He explained that the Society is not an investor and the contract holders are not tenants, so they are not entitled to invest in the sales halls.
The head of the interim board of directors told the state-run Tishreen newspaper that all the carpet sales hall investors’ contracts are, in fact, trust contracts rather than investment or lease contracts. However, the contract holders engaged purely in investment work, which contradicted the terms of their contracts with the consumer cooperative. He added that the trust contracts were not made via public auction, suggesting signs of corruption in granting them.
State-run newspapers reported that the minister vowed to remove the red wax seals from the Al-Thawra complex and offered investors the option to sign temporary contracts with the Ministry of Internal Trade for several months. This would allow them to sell their goods in the complex until they could find another location to conduct business. He also indicated that the Council of Ministers would offer the Al-Thawra complex for investment via the Investment Commission and that a new draft law on consumer cooperative societies was under study.