Egypt's renaissance bank account raises doubts

Egypt's renaissance bank account raises doubts

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Wed, 28/11/2012 - 18:09

During his visit to Assiut early this month, President Mohamed Morsy announced the opening of Egypt’s renaissance bank account, number 333/333, and called upon “repentant” businessmen to donate some of the money they acquired through illegal means into this account.  

“Anyone who wants to cleanse himself of corruption can put their money in this account,” he said.

Days later, Finance Minister Momtaz al-Saeed also called upon citizens to support the Egyptian economy by donating to the Central Bank of Egypt account number 333/333.

The bank account is an unusual technique for reconciliation, absolution and repatriation of stolen funds.

It has been the subject of mockery since Morsy’s announcement, with many saying it demonstrated the hollowness of a real economic recovery strategy in the Nahda Project that Morsy campaigned on, which, like the bank account, is named after the Arabic word for renaissance.

But according to experts, the fund is not only based on the naïve principle that corrupt businessmen and officials will return stolen money, and therefore likely to be ineffective, but could also present opportunities for further corruption.

Saeed said in a press statement that the bank account is set to receive donations by Egyptian citizens and will also be used to deposit illicit funds retrieved locally and from abroad.  

He said the account will meet the desires of many expatriate Egyptians and businessmen to support the Egyptian economy.

Early in October, rumors circulated that the Muslim Brotherhood had opened a bank account after consultation with the governor of the Central Bank of Egypt, Farouk al-Oqda, to gather funds for the Nahda project.

Anonymous sources said then that the group was keeping the news about the account secret until they finished procedures.

Brotherhood leaders then denied the rumors, saying that no leaders in the group had met with Oqda, adding that people who spread such rumors seek to stir up sedition and demonstrate the inability of the government to implement the Renaissance project.

Around the same time, journalist Wael al-Ibrashy said in his daily talk show, 10 Masaa, the Central Bank was distributing letters to citizens, urging them to make a donation to the Muslim Brotherhood renaissance projects fund, which was adopted by the Freedom and Justice Party.

On air, he held up a letter, addressed to Egyptians working abroad, asking them to donate to the project account through remittances from overseas.

Suspicious reconciliation

The new account has also been the subject of legal action.

Samir Sabry, a lawyer, filed a lawsuit at the Administrative Court against the Central Bank governor to stop the decision of President Morsy to open an account number 333/333 for penitent businessmen to donate money they collected illegally.

The Administrative Court of the State Council set the session for 15 January to consider the first hearing in the lawsuit filed by Sabry.

The lawsuit stated that President Morsy had taken the decision without careful study or discussion, and said it is absurd to believe that corrupt businessmen will just put their money in the account; as doing so would be an admission of corruption that could later be used against them.

“The president said that the purpose of opening this account is to recover assets that have been stolen and to be an initiative for reconciliations that will not be above penalty; it also means that anyone who wants to cleanse corrupt money puts it in this account, and ‘God accepts repentance’ as Morsy said,” the lawsuit stated.

The lawsuit described the account as “suspicious.”

“Will this decision to open the account lead to Morsy bestowing forgiveness on those corrupt people, despite the existence of laws regulating both the mechanisms of recovering public funds and reconciliation?” Sabry asked.

Reda Issa, an independent economic analyst, also criticized the renaissance bank account, saying that the government must be more straightforward in its prosecution of corruption and in its approach to recovering stolen funds. He said leaders should decide whether or not they want to reach a settlement with businessmen and other members of the former regime who are currently in jail.

“Morsy surprised us again by announcing he had opened an account named ‘Egypt’s Renaissance’ and was urging citizens and expat Egyptians to donate to boost the economy,” Issa said.

Issa, who is personally against reconciliation with corrupt former regime members, said the least the government could do is determine the amount of money looted before making any offers of forgiveness.

He mentioned that a court ordered Ahmed Ezz, a dissolved National Democratic Party member and steel mogul, to pay LE19 billion. Ezz had initially offered LE1 billion in reconciliation.

There is no point to such “repentant bank accounts,” he said.

The country’s economic problems can’t be solved by means of donations, contributions and offerings, he added, which cannot realistically lessen its huge budget deficit.

A similar initiative at the beginning of the 1980s during the reign of former President Hosni Mubarak, he recalled, failed to achieve its aim.

“I approve of the concept of social participation to handle the current crisis,” said Issa. “But we need to know how such accounts can help the troubled economy. It is very vague.

Morsy has said he thinks of the bank account as a way through which the old regime members can easily return looted funds, explaining the door of Tawba (the idea of expressing remorse in Islam) is always open.

Although the idea may be foreign to Egyptians, Morsy said, having such bank accounts to cleanse corrupt funds from remorseful businessmen has been employed in other countries, such as Saudi Arabia, where the last such account collected 219 million riyals deposited by 22,513 people. It is a culturally related idea, he explained, through which penitent people can clear their conscience.

Mohamed al-Beltagy, head of Egyptian Islamic Finance Association, said that the opening of the bank account is a good idea in theory, but that it requires the government to also announce how such assets would be allocated to avoid corruption.

“It is very good if anyone wants to donate to such account,” he said. “But citizens need to know how such funds will be used and in what projects exactly. Otherwise, it is questionable.”

Beltagy said the government must have an agenda for the fund, and that leaders should also conduct a feasibility study for the intended projects.

This account reflects another governmental measure that will likely soon be forgotten; it is not the first plan of its kind.

In March 2011, the government of Essam Sharaf created an account to accept deposits and donations from citizens for the purpose of supporting the Egyptian economy in the aftermath of the 25 January uprising. The number of the account was 2512011, the date of the first day of protest. The account allegedly succeeded in collecting LE40 million, though it is unclear how it was allocated.  

Another similar idea was when the government attempted to sell land to expatriate Egyptians. That plan was expected to pump US$2.5 billion into Egypt’s treasury and alleviate pressures on the currency, but the initiative has since disappeared from the public eye and officials have announced no news of it.

Money recovered

Former Prosecutor General Abdel Meguid Mahmoud announced on 10 November that the prosecutor’s office had succeeded in restoring LE11billion (US$1.8 billion) of domestic funds that were looted during Mubarak’s rule.

Efforts remain underway to restore another LE50 billion, awaiting convictions of some ex-regime members, Assistant Prosecutor General Adel al-Saeed said. He confirmed that the LE11 billion is the result of an investigation which was conducted from in February 2011 until the end of last month.

Since Mubarak stepped down, the public prosecution has conducted a number of investigations, which resulted in referring a number of former regime officials to the judiciary.

The assets of the Mubarak family and other figures of the former regime have been frozen in the UK, Switzerland and Spain. The precise value of total stolen assets in Egypt and abroad is unknown.

In September, British Prime Minister David Cameron assured Morsy that he would unfreeze US$160 million of Egyptian assets.

In October, the Swiss Foreign Minister, Didier Burkhalter, pledged to return an estimated US$700 million worth of assets. Regaining these assets, he said, depends on the results of the trials of former regime associates.