By Osama Diab
Since the ‘Mubarak mafia' were not outlaws but were the law, proving that Egypt's lost billions were ill-gotten is an elusively difficult challenge.
Monday 17 September 2012
“Tell us Mubarak, how could a pilot make 70 billion?” protesters chanted during the 18-day revolution which ousted former Egyptian President Hosni Mubarak in February of last year. The chant was a reaction to reports that Mubarak's family fortune could be as high as $70 billion.
I was part of a BBC investigation team that was formed to reveal unexposed facts about “Egypt's Stolen Billions”. The team produced a documentary on unfrozen assets in the UK related to the Mubarak regime which was aired recently on BBC Arabic.
Decades of authoritarian corruption helped Mubarak and his family and friends accumulate tens of billions of pounds, leaving millions of Egyptians living in dire poverty. It is impossible to measure accurately the economic cost of Mubarak's rule, but figures from the World Bank suggest that $134.4 billion (817 billion Egyptian pounds) worth of public assets went missing over the past 30 years.
So far Switzerland has frozen $800 million and the the UK about $120 million in assets related to the Mubarak regime, but Egypt hasn't yet seen a penny of it returned. To do so, Egypt must prove that the money was “ill-gotten” first.
“It is crucial that the recovery and return of stolen assets is lawful,” Alistair Burt, UK Minister for the Middle East and North Africa, said in an official statement published on the website of the British embassy in Cairo last week. “It is simply not possible for the UK to deprive a person of their assets and return them to an overseas country in the absence of a criminal conviction and confiscation order.”
However, this statement, even though it sounds reasonable, ignores the legal challenges involved in proving the wrongdoings of the Mubarak regime.
To identify the truth amid the many rumours surrounding this sensational issue, it was necessary for the team to find solid and documented evidence of the systematic impoverishment of Egypt at the hands of its former rulers, who received the official status of being a network of organised crime from the Swiss government in May, as the BBC team has discovered.
During my quest in Cairo, I sipped tea and ate liver sandwiches on street cafes with dissident government officials. We spoke to economists, lawyers, activists, members of parliament and bankers over more than six months. Their reactions to our investigation ranged from daily calls to offer assistance to suspicion I was a spy working for the Mubaraks.
They were all trying relentlessly to expose facts about the Mubarak regime's corruption. The problem is that they were trying to prove it according to existing laws which were put in place by the Mubarak institutions.
The parliament – which is responsible for drafting and passing legislation – was completely dominated by Mubarak's National Democratic Party through vote-buying, rigging and political intimidation.The cabinet was also dominated by businessmen belonging to the ruling party. Since 2004, the Council of Ministers was unofficially known as the “businessmen's cabinet”.
Reda Eissa, an independent economic researcher, shows through his research how certain companies benefited from tax laws and breaks introduced by these institutions for their own benefit. Companies owned by figures close to the regime ended up paying almost no to very little taxes. The Six of October Development and Investment Company (SODIC), a real-estate giant by Mubarak's in-law Magdy Rasekh, was paying about 0.5% in tax, according to Eissa's study.
I found out from my sources that in Mubarak's Egypt, the laws allowed some banks, such as the Arab International Bank (AIB), to escape the monitoring of the Central Bank of Egypt (CBE) or any other local authority. This meant that some Egyptian banks could transfer any sums of ill-gotten gains without the knowledge of the CBE. The transactions simply did not appear on any records accessible to the authorities as stated by the law.
The founding charter of the AIB, which was established as a joint project in 1974 between the governments of Egypt, Libya, Qatar, Oman and the United Arab Emirates, states that the bank falls outside the authority of local governments and is therefore exempt from taxation, exchange controls and the CBE's auditing regulations.
The bank was the subject of many allegations for being a channel for suspicious money transfers before, during and after the revolution. More than a year after the revolution, the bank finally responded by stating on its website that it falls under the jurisdiction and supervision of the Central Bank.
The team was also able to meet many dissident bureaucrats who have gathered hundreds of documents and are still struggling with them in the Egyptian courts. These dissident bureaucrats provided the BBC with proof of another “legal” practice which allowed for the exploitation of the country's wealth. The government, namely the ministries of tourism and housing, had the legal authority to allocate land by direct order at prices they decided to whomever they chose without recourse to any proper tendering process.
The bureaucrats gave us evidence that in many cases the land was gravely undervalued and given to either Mubarak's in-laws or close friends. The documents, of which some are official government reports, show that due to this undervaluation Egypt has lost tens, if not hundreds, of billions of pounds in revenues – even though the practice was perfectly “legal”.
“We talk about $200 billion that were stolen illegally, but if you discuss the lawful mechanism that was unethical, we are talking about a trillion dollars,” says Mohamed Mahsoub, the current Minister of Legal Affairs in the recently-appointed cabinet.
When a mafia-like group ‘owns' a state with its legislative, judicial and executive powers, corruption no longer becomes illegal. This ‘organised crime' network, fostered by the family of Egypt's ousted dictator, was not operating outside the law, because they were the law – in fact, they were everything.
Laws were simply drafted by them for their benefit. Law enforcement institutions were also their own private property. Accordingly, any effort to prove the Mubarak regime money was ill-gotten should not focus on whether they brok laws of their own making. What is acquired on illegitimate grounds should, by extension, also be illegal. The focus instead should be on the much easier task of proving the regime was an unelected dictatorship which benefited financially from being in power, even if on paper, it was all “legal”.