Probing the Mubarak Family's Fortunes ($US 70 Billion?)

The Associated Press
Probe sought in Egypt of Mubarak family finances

Thurs. Feb.17, 2011

By TAREK EL-TABLAWY and KARIN LAUB
Associated Press

Anti-corruption campaigners pressed Egypt's chief prosecutor Thursday for an investigation into the assets of Hosni Mubarak and his family, handing over documents that they say spotlight the kind of potentially improper financial dealings that may have allowed the former ruler and his relatives to amass a large fortune.

The family's wealth - speculation has put it at anywhere from $1 billion to $70 billion - has come under growing scrutiny since Mubarak's Feb. 11 ouster opened the floodgates to three decades of pent-up anger at the regime.

Watchdog groups allege that under Mubarak, top officials and tycoons were given preferential treatment in land contracts, allowed to buy state industries at a fraction of their value during Egypt's privatization process launched in the early 1990s, and got other perks that enabled them to increase their wealth exponentially. The perks came at a price - and the Mubaraks were major beneficiaries, the activists say.

"This is the single largest plot against Egypt's wealth by one family," said Mamdouh Hamza, a participant in Thursday's meeting with the chief prosecutor.

Since his ouster, Mubarak has remained secluded in a gated villa in the Red Sea resort of Sharm el-Sheikh, according to a government official who dismissed rumors that Egypt's ruler of 30 years has left for exile.

The Mubaraks have not commented publicly on the issue and do not have a spokesman. No evidence has been published to back up claims that Mubarak and his sons hold a vast fortune.

The chief prosecutor has imposed travel bans and frozen assets of several former senior officials and leading businessmen, but has not taken steps against the Mubaraks. The prosecutor does not have a spokesman.

At the center of the activists' complaint are records that raise questions about offshore companies and funds based or registered in Cyprus, the Bahamas, the British Virgin Islands and the Cayman Islands, Hamza said.

The most prominent of these is Bullion Co. Ltd., a Cyprus-registered firm in which both Alaa and Gamal Mubarak are listed as board members, according to documents filed with the Registrar's Office in the island nation. Bullion, meanwhile, also owns the London-based Medinvest Associates, which was set up by Gamal Mubarak in 1996.

Appearing on the board of both companies or in the funds are individuals who serve on the board, or in top executive positions, of EFG-Hermes, the Cairo-based Mideast investment bank. EFG Hermes has said Gamal Mubarak holds an 18 percent share in a subsidiary, EFG Hermes Private Equity, and that his link to the bank was made public before his political career.

The investment bank denied Thursday that it or any of the funds it manages has received any special treatment from the former regime.

EFG Hermes also said in a statement that it "does not manage any funds or portfolios for the family of the former president of Egypt." It stressed that it "received a statement from its executives confirming that they have no direct or indirect personal or financial ties" to Mubarak or his family, either locally or globally.

One of Bullion's board members, Izzet Ziwar Jarrah, told the AP: "I'm not involved, I'm not active on this."

Asked how he was on the board and not involved, he replied: "I'm on the board, like that. I'm not concerned at all."

Efforts to contact other Bullion's board members were unsuccessful.

None of the documents presented to the prosecutor - and previously reviewed by The Associated Press - necessarily indicate illegality in business dealings.

Hamza's group has been doing its own research, downloading bank documents and reviewing what has been published on the Mubaraks so far. The prosecutor must now take over, appointing lawyers and finance experts to the job, Hamza said.

He said the prosecutor did not say what his next step would be, but is likely to meet with the activists again next week.

Many of the top officials and army generals running Egypt in the transition period had close ties to the former regime, raising concerns by opposition activists that the interim rulers might shy away from investigating the Mubaraks.

Hamza said he believed the prosecutor is open to pursuing the case.

A delegation from the Egyptian Lawyers' Union met separately with the prosecutor Monday to press for an investigation. The group asked the prosecutor to request records from the Central Bank of Egypt and obtain information on properties the family owns.

Mubarak's salary as president was set by law, as stipulated under the constitution. A report published by the Cairo-based Ahram Center for Strategic and International Studies said that in fiscal 2007-08, Mubarak's salary, including stipends and various allowances, amounted to 4,500 Egyptian pounds ($765). Activists say the salary is now closer to 20,000 Egyptian pounds ($3,400).

The former president "was from a very modest family and didn't inherit wealth from his father," said Mohammed al-Damati, a member of the group. "Since the constitution prevents the president from using his position to do any business, any other wealth he has outside of his salary is considered acquired illegally."

Unlike other Arab leaders, particularly those in the oil rich Gulf nations, Mubarak was far from ostentatious. Whatever wealth he and his family may have had was rarely - if ever - flaunted.

The most prominent symbol of their presumed fortune that has surfaced was a townhouse in London's exclusive Knightsbridge district, which is listed to Gamal Mubarak and where he was said to have lived while working as an investment banker in the early 1990s.

The townhouse has become a focal point for many in Egypt as foreign governments begin to either enact, or consider imposing freezes on their assets.

Switzerland was the first to say it was moving to identify and freeze assets of Mubarak and his family.

The European Union said Tuesday it was considering a request from Egypt to freeze the assets of Mubarak's top aides. The EU said, however, that no such request had been submitted about Mubarak or his family.

On Thursday, the U.S. office in charge of preventing money laundering said it was ordering banks to apply greater scrutiny to accounts and transactions linked to Egypt political leaders.

Egypt has so far asked for asset freezes for one top Egyptian businessman and former ruling party official, as well as four former Cabinet ministers, according to Foreign Ministry spokesman Hossam Zaki. The request was made to "almost to all countries in the world, pre-emptively," he said. "It is mentioned that it is pre-emptive because there is no specific information of assets here or there."

Pressing the claims poses risks for Egypt's economy, with no clear consensus emerging yet on the part of anti-corruption campaigners and others on how far to push a potential case against the Mubaraks. The concerns stem from the way that many of the country's largest companies reached their size, say economists and experts.

"The businessmen you see today are the product of the regime," said John Sfakianakis, chief economist with the Riyadh, Saudi Arabia-based Banque Saudi Fransi. "Everybody who made money in Mubarak's times is part of this."

The risk the country faces in this process is that the names of well-funded and reputable companies in which investors have pumped billions of dollars could be sullied by the association with businessmen or officials who either founded them or had direct dealings with them.

These companies could be "sidelined and excluded from potential foreign investors who might see them as a liability," he said.

*Associated Press correspondents Raphael Satter in London and Menelaos Hadjicostis in Nicosia, Cyprus, contributed reporting.