Two years on, Mubarak money abroad remains unattainable

Two years on, Mubarak money abroad remains unattainable

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Fri, 25/01/2013 - 19:23

Nearly two years after demonstrators first started trickling into Tahrir Square, chanting against corrupt government practices and calling for former President Hosni Mubarak to step down, officials say not one cent of allegedly stolen funds held abroad by Mubarak, his family or other regime members has been returned to Egyptian soil.

Instead, the government has found itself waylaid by bureaucratic hurdles, untraceable ownership of assets, weak institutions, ongoing political turmoil and international legal quandaries that none of the protesters who mocked Mubarak’s millions would have imagined.

In the face of these obstacles, the government has hired expensive foreign law firms to represent their case abroad, putting them in the embarrassing situation of spending money on investigations that have not yet borne fruit.

Though asset recovery efforts are ongoing, experts say the chances of any substantial sums being returned look increasingly slim.

“The process is moving forward very, very slow,” said Hussein Hassan, anti-corruption project manager at the regional office for the United Nations Office on Drugs and Crime. “Not because Egypt is not doing its job, but because we cannot overcome the obstacles we face.”

Outside a meeting held this week between local officials working on asset recovery and their foreign legal representatives, Hassan listed the efforts UNODC is helping lead, despite the bleak prospects.

The office has hosted trainings on forensic accounting, liaisons between foreign experts and local officials working on the recovery, and meetings like this week’s, where foreign lawyers come to Cairo to tell local officials what needs to happen for the money to come back.

The pervading corruption is also deeply rooted in many institutions, he said, sometimes making it difficult for Egyptians to know the difference between corrupt practices and run-of-the mill politics.

“During the past 60 years, corruption became the principle and integrity the exception,” Hassan said.

Hassan is also helping the Justice Ministry draft harsher laws against corruption, in the hope that it will at least be more difficult for the next generation in Egypt to get away with graft and embezzling. He hopes that by giving Egypt’s anti-corruption agencies legal teeth, they can act as a better defense against future crimes.

In meeting with Egypt’s foreign counterparts, Hassan said he’s noticed they are also struggling with how to enforce cross-border financial justice.

“Asset recovery is new to almost everyone,” Hassan said. He adds that Switzerland, formerly the stronghold of financial secrecy, is the exception, having revamped its laws in the past 10 years to make hiding stolen funds in the country more difficult.

It’s gotten to the point where most government officials would rather focus on domestically embezzled or illicitly gained assets, which yield better results and make them more popular with voters.

In the past months, Egypt has launched reconciliation efforts with companies that bought and sold land from the former regime at lower-than-market prices. The judiciary has also been busy settling accounts with regime members who received lavish gifts from state-run newspaper Al-Ahram.

So far, millions of dollars in gifts has been returned, and reconciliation has brought a bit of badly needed cash for the government. Foreign-located assets, though, are a different story.

“Because there have been no concrete results up till now, it’s very frustrating for officials,” Hassan said. “They are afraid they will be blamed by voters if no money is returned.”

Swiss freeze

On 13 January, Swiss officials — who had been the most proactive in freezing assets of 19 figures related to the former regime — announced that they  had decided to suspend mutual legal assistance proceedings for the time being,  pending until a new assessment of the situation, a spokesperson from the Swiss Embassy in Cairo wrote in an email to Egypt Independent.

 Among other things, the suspension means a delay in the eventual return of 700 million Swiss francs, or US$767 million, in funds smuggled out of Egypt by members of the former regime that had been frozen after the revolution. This decision is based on the decision of the Swiss Federal Criminal Court of 12 December 2012, the spokesperson said.

"The Swiss Federal Criminal Court ruled that Egypt’s access to the files of the criminal prosecution in Switzerland had to be suspended due to the institutional instability in the country," the spokesperson wrote.  "The access to the criminal files has only been suspended by the Court’s decision, not denied as such. Egypt may renew its request to access files as soon as the institutional situation can be considered more stable."

According to the court's considerations, the events of the past few months have made clear that Egypt, despite having an elected president, is still in the throes of an unpredictable transition.

"Regardless of the issue of respect for human rights in the country, the Arab Republic of Egypt is currently facing an internal transition characterized by uncertain instability of institutions and organizational changes unannounced," Article 1.6.4 of the Swiss court's considerations read. "The state does not have, to date, a parliament, and the draft constitution, submitted to referendum, is yet to-be-implemented, leaving many open questions."

But what’s really causing the holdup? It’s difficult to tell, according to Hassan.

Like many countries, the return of an overthrown ruler’s money holds serious political weight.

Some Egyptian judges, Hassan said, speculate that the ruling was a product of the Swiss judge’s disapproval of President Mohamed Morsy, the Muslim Brotherhood and Morsy’s November constitutional declaration and temporary expansion of powers.

But there are other hindrances — the Swiss have a legal definition of stolen funds different from Egypt’s.

In Egypt, a public official can be convicted of illicit gains if he cannot provide a credible reason for the discrepancy between his official salary and his actual income.

A similar law does not exist in most European countries or the US. Rather, in these places, the burden of proof of corruption is on the prosecutor, not the defendant.

For Mubarak money to be returned from Great Britain, Switzerland or the US, Egyptian officials would need to present evidence of a particular crime and link it to a specific amount of money.

In the Mubaraks’ modern financial world of nameless trust funds, offshore accounts and friends in high places, this task is nearly impossible.

London stalling

A delegation of high-level UK officials came to Cairo last week to discuss the return of assets obtained illegally by figures associated with the former Mubarak regime.

The UK delegation was led by Jeremy Browne, minister of state for crime prevention, who sought to reassure reporters at a press conference Monday afternoon that his government was doing all it could to identify, freeze and return to Egypt assets obtained illicitly under Mubarak’s government.

Browne oversees the UK Task Force on Asset Recovery, which was set up in September last year, shortly after BBC Arabic broadcast a documentary titled “Egypt’s Stolen Billions,” which criticized the role of the UK and Egyptian governments in the asset recovery process.

Browne said the lack of results so far is due in part to the political tumult in Egypt, which had produced a succession of “different ministers and different officials” over the past two years. The UK has consistently complained that Egypt has not provided it with sufficient information to take further steps.

“We are trying to make sure that the information provided by authorities in Egypt is the information we need,” said Browne, who added that a UK official would soon be appointed to take up office in Cairo to liaise with the Egyptian government on asset recovery.

The UK Treasury maintains that it has acted properly and does not have enough evidence to proceed with asset freeze in the cases documented by the BBC. In the BBC documentary, broadcast last year, evidence was provided that suggested that in Britain, not all such assets have been frozen.

Responding to a question from Egypt Independent, Jeremy Rawlins of the UK Crown Prosecution Service refused to comment on allegations concerning specific companies, but appeared to say it was the UK Treasury, not visibly represented on the delegation, which held the “lead,” or responsibility, for asset freezing.

Rawlins also said it “has to be clear that the assets that were frozen clearly are those belonging to or controlled by” the 19 individuals concerned.

The delegation abstained from any estimate of either how long it would take for assets to be returned or how much the eventual sum might be, although it was said that it would be “significant.”

Officer Jonathan Benton, who is responsible for the case at the London Metropolitan Police, also stressed the delicacy and difficulty of identifying illicitly gained funds.

“The information that comes from the Egyptian authorities is being passed on to the private sector — banking and finance institutions,” he said. “We must be cautious in how we do that ... and must be satisfied that the release of that information will not unduly prejudice somebody in the action that may then follow.”

Not giving up

If other countries prove too intractable, Egypt can take them to court, which could bring results. Egypt Independent learned that one such case is in the works.

“Leigh Day has been asked to investigate a potential challenge to the failure by the UK authorities to take all necessary steps to identify and freeze the assets of former members of the Mubarak regime,” Rosa Curling of Leigh Day, a prominent law firm in London, told Egypt Independent.

“Such a case would result in the UK courts investigating and considering whether the steps taken by the UK authorities to freeze the assets of those listed in the EC Council Decision are sufficient,” Curling said.

Curling said Leigh Day would be challenging the UK’s failure to extradite a former member of Mubarak’s regime who has been convicted in absentia and who has not been returned to Egypt to face the sentence and fine imposed.

Egypt Independent is not naming the man in question in order to not jeopardize the case.

Even employing all possible efforts and high-profile lawyers, Hassan said he doesn’t expect all the efforts to recover more than $1 billion.

“To be honest, I am not very hopeful we will recover very much,” he said.

That does not mean of course, he added, that he is going to stop trying.

This piece was originally published in Egypt Independent's weekly print edition.