Thursday,19 October, 2017
Current issue | Issue 1279, (21 - 27 January 2016)
Thursday,19 October, 2017
Issue 1279, (21 - 27 January 2016)

Ahram Weekly

Still-frozen funds

Hopes of retrieving funds embezzled by ousted president Hosni Mubarak and his family received a further blow this week, writes Hayat Hussein

Mubarak and his sons
Mubarak and his sons
Al-Ahram Weekly

Swiss Attorney-General Michael Lauber ended a visit to Egypt this week, one week after the final ruling in the trial of ousted former president Hosni Mubarak and his sons Gamal and Alaa. The three were charged with embezzling funds totalling LE125 million from the state in what has become known as the “presidential mansions case.”

In an initial verdict in May 2014, the defendants were fined a total of LE125 million and required to pay an additional LE21 million to the state. Mubarak is the first Egyptian president to stand trial and to be convicted on charges of corruption. Following this week’s ruling, the guilty verdict cannot now be further challenged.

However, there may still be problems in recovering the stolen money from the Swiss banks where it was stashed. According to initial estimates by the Swiss government, the total amount of assets held by Mubarak in Swiss banks is around CHF 650 million, or nearly $698 million (LE5 billion); these funds having been frozen since 2011.

In June 2015, Valentin Zellweger, director of the taskforce on asset recovery at the Swiss Federal Department of Foreign Affairs (FDFA), said that in order for the frozen money to be returned to Egypt the Swiss government would require evidence from an Egyptian court proving that the funds deposited in the Swiss banks were obtained through illicit means, whether by corruption, embezzlement or money laundering.

The Swiss Embassy in Cairo issued a statement before Lauber’s visit last week saying that he would attempt to form channels of cooperation between Egypt and Switzerland to restore the looted funds. At a press conference on Saturday, however, Lauber said that the funds can be returned to Egypt only if they are proven to have been gained illicitly.

“Switzerland cannot start the retrieval process from the Swiss banks for the frozen assets of Egyptian ex-president Hosni Mubarak without verifying that they were obtained through embezzling public funds,” Lauber said.

“We are currently analyzing the recently issued sentences, and if we do not find a direct correlation between the verdict and the funds in Switzerland we cannot return the money,” Lauber said after talks on the issue with his Egyptian counterpart, Nabil Sadiq.

“The whole issue is really complicated, and I do not have an estimate of when we can give our final say on the matter,” he told the MBC Masr TV channel.

“Switzerland has been shunning Egypt, and it will not return the funds easily or quickly,” an official source from the Egyptian Ministry of Justice, who spoke on condition of anonymity, told Al-Ahram Weekly.

The Swiss attorney-general had asked Egypt to reconcile itself with Mubarak and his sons, he said, adding that “everyone is looking to benefit”, without explaining how Switzerland would benefit if Egypt did not do so.

Some months ago, Law 62 of 1975 on illicit earnings was amended to allow for amicable settlements between the state and figures who had embezzled public funds.

Another source from the ministry who asked to remain anonymous told the Weekly, “Around $400 million of the total sum in the Swiss banks belong to Mubarak’s two sons, Alaa and Gamal.” The balance was related to ten figures from the former Mubarak regime, including former minister of industry Rasheed Mohamed Rasheed and Hussein Salem, a businessman who organised the sale of Egypt’s natural gas to Israel, he added.

This means that the bulk of the frozen funds will be restored if the government decides to settle the matter amicably with Gamal and Alaa Mubarak, he said. The amendments to Law 62 state that the accused can at any moment reach a settlement with the authorities by returning illicitly gained funds.

Should such a settlement be reached, the investigations are stopped and penal proceedings against the accused are halted, although he is obliged to pay any legal costs.

The second source said that the final court ruling would not support Egypt’s attempts to regain the stolen funds because it would not be considered as evidence that the frozen funds were stolen. “The final ruling said that Mubarak and his sons had embezzled LE125 million in public funds to upgrade family properties,” he said, adding that this may not satisfy the Swiss authorities.

Kamel Girgis, director of international cooperation in the Egyptian prosecutor-general’s office, told the Weekly three years ago that Switzerland was about to issue a new law that could help many countries, including Egypt, get back stolen money. According to some legal sources, this law still needs amendments before it can be considered helpful to Egypt.

After the 25 January Revolution, stories circulated about the corruption of the former regime and the funds smuggled out of the country before and after the revolution. In 2011, a committee formed to retrieve Mubarak regime assets put the value of the assets in the EU alone at LE1.1 billion.

Thus far, Egypt has not been able to retrieve even a penny of these funds, though it has identified the value of the assets frozen in the Swiss banks. While Lauber’s visit this week renewed hopes that Egypt might still eventually regain the funds, commentators claim that the visit was part of plans to calm the mood before the fifth anniversary of the 25 January Revolution in one week’s time.

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