Wednesday,26 September, 2018
Current issue | Issue 1133, 31 Jan - 6 Feb 2013
Wednesday,26 September, 2018
Issue 1133, 31 Jan - 6 Feb 2013

Ahram Weekly

Safely tucked away?

Two years after the 25 January Revolution, not enough has been done to recover the assets of corrupt figures from the former regime, writes Niveen Wahish

Al-Ahram Weekly

“Where is all the money they told us about,” asks Umm Mohamed, referring to the fortunes she has heard members of the former Mubarak regime had stashed away in foreign banks.
Rumours put such fortunes at billions of dollars. “If we had that money, we would not be begging for foreign assistance from left and right,” she said. Others have dreamt that every Egyptian would get a portion of the money and all would live like kings.
However, dreams do not always come true, and the story of the fortunes belonging to former members of the Mubarak regime has been one of the disappointments of the transitional period.
What the Egyptian government has to show for its efforts is the freezing of less than $1 billion in Switzerland, Britain and Spain combined, mostly thanks to initiatives from the foreign governments themselves. To date, no exact figures of the size of the missing fortunes exist.
Nadeem Mansour, head of the Egyptian Centre for Economic and Social Rights, blames the state for not taking the issue seriously. The Egyptian judiciary, diplomatic service and post-revolutionary governments have been reluctant to represent the revolution whole-heartedly, he said.
Prosecutors in Egypt were not doing enough to fight corruption, Mansour said, and the charges levelled against figures from the former regime had been weak and not well supported. “Most of the figures have not had strong cases built against them and financial misdoings have not been proven.”
As time goes by, “it is becoming more and more difficult to retrieve such assets.”
However, deputy spokesman for the Foreign Ministry Nazih Al-Nagari said that much had been done to freeze the assets of former regime figures. The ministry had submitted 15 requests for freezing assets to 80 countries, each of which had included the assets of up to 120 former regime figures.
Al-Nagari said that he did not believe that foreign countries were reluctant to return the assets, and that they wanted to make sure that corruption did not go unpunished. However, they wanted to make sure that correct procedures were followed and that any requests for freezing assets were processed following correct legal guidelines.
Many foreign countries were extending technical assistance to Egypt, Al-Nagari said, in order that the necessary paperwork would be in formats acceptable to the countries concerned.
In November 2012, the European Union took steps to facilitate the return of misappropriated funds to the Egyptian and Tunisian authorities, with a press statement saying that a new legislative framework authorised EU member states to release frozen assets on the basis of judicial decisions recognised in other EU member states.
Once the necessary judicial steps had been taken, this would enable the release to the Egyptian and Tunisian authorities of funds frozen under EU sanctions against the former Mubarak and Bin Ali regimes, the statement said.
 In addition, the amended legislation would facilitate the exchange of information between EU member states and the authorities in Tunisia and Egypt, in order to assist in the recovery of misappropriated funds.
Nevertheless, many observers believe that not enough is being done, and to address the issue a seminar was held at the European Parliament earlier this week.
Nienke Palstra of the NGO Transparency International’s EU office said that two main messages had come out of the event. The division of competencies between EU member states and EU institutions should not be used as an excuse for failing to tackle the issue, she said, since much more needed to be done.
Moreover, civil society needed to be a part of the equation in addressing the stolen assets, which Palstra put at some $190 billion if the assets of the former leaders of Tunisia, Egypt and Libya were included.
According to British Home Office Minister Jeremy Browne, speaking at a recent press conference in Cairo, the UK is committed to the recovery of stolen assets by Mubarak-era officials and is doing its best to respect both the rule of law and the rights of the Egyptian people.
The British government has been accused of not doing enough to return the assets and only around 85 million pounds sterling have been frozen in the UK, with tangible assets such as property being left untouched.
“Freezing assets such as property is much more difficult,” commented one source who preferred to remain anonymous.
Meanwhile, Switzerland, which froze $700 million of suspect assets immediately following the 25 January Revolution in Egypt, has recently pressed charges against members of the former regime, accusing them of money laundering, according to an anonymous source.
The Egyptian government has associated itself with the cases, but lawyers acting for the defendants have thus far successfully prevented the Egyptian authorities from viewing case documents because of the lack of clarity regarding the political situation in Egypt, though Egypt remains a party to the claims.
“The situation in Egypt and the pressure on the court system is making it easier for the lawyers of the defendants to build a case in their favour,” the source said, adding that Switzerland would be ready to restitute frozen assets if there were court rulings against the figures in question proving that they had acquired their fortunes in a corrupt fashion.
Should such court rulings be unavailable because the post-revolutionary situation did not allow for them, assets could also be restituted in special cases. In the case of Haiti, for example, assets were returned, though not in the form of cash to prevent their falling into corrupt hands.
In the Egyptian case, the source said that no final court rulings had yet been issued, and even the charges of financial infractions against some of the defendants had been dropped owing to the age of the charges.
“If Egypt’s courts have dropped the charges, then we do not have a case in the first place,” he said.
Waleed Nassar, an international disputes resolution lawyer at Lewis Baach PLLC who specialises in international asset-tracing and recovery and member of the Egyptian American Rule of Law Association, attributed the delay in recouping Egypt’s assets partially to the response from the international community.
“While countries like Switzerland have exhibited a deep commitment to assisting Egypt, others have appeared only to go through the motions, apparently to project an appearance of good faith and to comply with their treaty obligations,” he said.
The delays could also be attributed to a lack of the will to do what was necessary from the Egyptian side, he said, adding that he did not believe that the Egyptian authorities had made recovery a high priority.  
“Asset recovery is very complicated, especially when funds have been allowed to move for years unimpeded into the far corners of the globe. The task will require a sophisticated global strategy, and much more effort and time than has been exhibited to date. The government’s failure to put in the effort and resources necessary to recover the assets can only be explained by a lack of the political will to do so.”
Nassar said that the political situation in Egypt and the lack of clarity over the transitional period had affected the process. The country had been in turmoil, and the international community had taken notice and raised the alarm.
“Egypt needs to hasten the process of stability to assist in this process,” he said, adding that “the government has yet to obtain a fraction of the information necessary to allow them to recover the frozen assets from the parties concerned, and they have not orchestrated an international strategy to go after the bulk of the assets that have yet to be frozen.”
He added that there were many legal tools that would allow the government to obtain the necessary information, as well as to exert pressure on institutions rumoured to have assisted individuals in bilking the Egyptian people out of their money, “yet it has not appeared interested in pursuing any of those maneuvers.”
Nassar said that he had personally suggested recovery strategies, including the government’s using tools allowing rapid access to bank records, eliminating the need for compliance by uncooperative parties.  
The government should have obtained the records of international banks, Egyptian banks and banks doing business with the Mubarak regime through recognised international legal procedures, he said. It should also have identified and interviewed all Mubarak-era financial advisers in Egypt and elsewhere, in addition to entering into cooperation and tolling agreements with international banks to preserve all possible claims.
Nassar pointed out that, as is the case with many sophisticated legal investigations, deals may need to be made with unsavoury individuals if these serve the interests of justice.
“Information is absolutely essential for proper recovery, and if deals can be made to obtain key documents and information then they ought to be made, especially considering the fact that it is very hard to pierce bank secrecy laws in many of the countries in which these people have hidden funds.”
However, he stressed that this needed to be done in conjunction with a proper legal strategy. Businessman Hussein Salem, who now resides in Spain and is viewed as one of Mubarak’s inner circle, has recently proposed a reconciliation agreement whereby he will return half of his property and disclose all assets inside and outside Egypt, for example.
Nassar warned that time could be running out in certain countries that have a limited window for asset freezing and recovery. “There may be diplomatic solutions to this, but oftentimes the statutes of limitations are there by statute, so the foreign government’s hands may be tied.”
There were many legal difficulties involved, Nassar said, explaining that the Egyptian government would need to make a case in each of the countries possessing such frozen assets to the effect that the funds in question were the proceeds of corruption.  
This would require following the money trail from Egypt all the way to the funds parked abroad. “This is difficult, as the individuals involved may well have opened multiple sham accounts and companies, oftentimes moving the money between several countries, each with their own rules and legal systems,” Nassar said, adding that this would require waiving various foreign countries’ secrecy laws.
The authorities would have to coordinate an effective strategy to go after the vast majority of the money that had not been frozen, as well as the companies and individuals who may have assisted the figures involved.
“This process is too complicated for government bureaucrats to implement. Experienced asset-recovery experts and forensic accountants know what to look for, how to look for it, and the red flags that are present when examining such detailed and complicated files. Inexperienced officials, no matter how sincere or intelligent, will simply not be able to see these,” he said.
While international lawyers have been appointed to take care of such tasks, a government source who preferred to remain anonymous said that not enough follow-up was being done with these lawyers.
Mohamed Al-Fiki, chair of the Shura Council’s financial and economic affairs committee, said that there had been shortcomings over the past two years as far as retrieving the assets was concerned, adding that the Asset Recovery Committee formed after the revolution, wholly made up of members of the judiciary, should have included civil society representatives and parliamentarians.
Nonetheless, he said, there was now a new seriousness about the task. A new draft law was in the making to expedite the retrieval of stolen assets abroad and to ensure that when such money was repatriated it was returned either to government coffers or to a sovereign fund where it would be used on national projects such as housing for the poor, he said.
Although Nassar commented that Egypt had certainly not helped prospects for the recovery of the assets by its delay, the moment had not yet passed.
However, “it will take a significant amount of time and resources to satisfy the necessary evidentiary requirements to recoup the funds in the countries that have frozen assets, not to mention the effort it will take to freeze and repatriate assets that have yet to be located,” he said.
There was a lot of international goodwill towards the country soon after the revolution, but “with the recent unrest and instability, the momentum is certainly not in Egypt’s favour.”

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