The Crooks Return to Cairo

Egypt's government is happily letting exiled billionaires and convicted Mubarak cronies buy their way back home.


• FEBRUARY 7, 2014

CAIRO — As crowds packed streets throughout Egypt during the2011 uprising that overthrew autocrat Hosni u!arak" it wasn#t on$y the po$iticians and genera$s in Cairo who were scra%!$ing to protect their interests& 'ith the o$d regi%e teetering" !usiness tycoons connected to the regi%e packed up their !ags — and their !i$$ions — and ($ed the country&

One o( the% was Hussein )a$e%" who was nickna%ed the *+ather o( )har% e$,)heikh(or his ownership o( %u$tip$e hote$s in the coasta$ resort city& )a$e% %ade !i$$ions o( do$$ars in the energy" ar%s" and hospita$ity industry in u!arak#s Egypt — he was so c$ose to the (or%er president that the two even invested together" according to docu%ents o!tained !y +oreign .o$icy& It was a $ucrative a$$iance (or )a$e%/ In the ear$y 2000s" u!arak granted hi% a %onopo$y over gas e0ports to 1ordan" Israe$" and )pain& )a$e% used this dea$ to se$$ gas at !e$ow,%arket rates (or years" according to an Egyptian court ru$ing" costing the country %ore than 2300 %i$$ion& )a$e% hasn#t !een !ack to Egypt since u!arak#s (a$$ — and (or good reason& As post, uprising Egypt $ooked to recoup the %i$$ions sto$en !y u!arak and his cronies" a series o( court cases (ocused on the corrupt !usiness practices o( )a$e% and his (a%i$y& In Octo!er 2011" )a$e% — a$ong with his son" 4ha$ed" and daughter" agda — were (ound gui$ty o( %aking i$$icit gains on their gas sa$es" and sentenced in a!sentia to seven years in 5ai$& In 1une 2012" he was convicted o( se$$ing gas to Israe$ at !e$ow, %arket prices" and sentenced in a!sentia to 16 years in 5ai$" and ordered a$ong with other de(endants to pay 2712 %i$$ion in (ines& )a$e%" however" ho$ds )panish citi8enship" which has a$$owed hi% to dodge the Egyptian $ega$ syste%& He is now $iving in a5orca" )pain" and is wanted !y Interpo$ a$ong with his son and daughter& )panish courts" however" have re(used to e0tradite hi% to Egypt !ecause the two nations do not have 5udicia$ or $ega$ !i$atera$ cooperation agree%ents and the courts# uncertainty a!out the (airness o( Egypt#s $ega$ process& 9ut (or the (irst ti%e since u!arak was topp$ed" )a$e%#s (ortunes — and that o( other u!arak,era !usiness%en — %ay !e shi(ting (or the !etter& )ince Egypt#s genera$s ousted Is$a%ist .resident oha%ed orsi $ast 1u$y" )a$e% said he has !een ecstatic and is p$anning his return to Cairo" his $awyer Tarek A!de$,A8i8 to$d +.& The !i$$ionaire u!arak con(idant phoned in to a popu$ar te$evision progra% in 1anuary to o((er a dea$ to the new %i$itary,!acked govern%ent/ Cance$ %y convictions and I#$$ give Egypt %i$$ions& Egyptian o((icia$s pu!$ic$y we$co%ed the o((er& : r& Hussein )a$e% and other no!$e !usiness%en ; your initiative is rea$$y appreciated": said Hany )a$ah" a ca!inet spokes%an" during the phone,in on $oca$ channe$ C9C& :Anyone who proposes a no!$e and good o((er" then the $east we can do is $isten to hi% (or the !est o( our !e$oved country&: )ince the overthrow o( orsi" )a$ah continued" Egypt is %ore open to initiatives o( *reconci$iation- — and he e0pects other u!arak,era (ugitive !usiness%en to propose si%i$ar dea$s& Reconci$iation dea$s can either !e reached !y co%%ittees appointed !y the pri%e %inister and 5ustice %inister" or they can !e !rokered !y the genera$ prosecutor" who is appointed !y the president& Reconci$iation" however" see%s to %ean $itt$e %ore than dropping corruption charges in e0change (or cash& <uring another phone,in on 1an& =" )a$e% o((ered the govern%ent a 2>&? %i$$ion (und to !oost touris% and repair po$ice stations" churches

and %os@ues in e0change (or his (reedo%& That#s actua$$y a drastic decrease co%pared to his pre,coup proposa$/ In ay 2012" 5ust !e(ore orsi !eca%e president" )a$e% o((ered at $east ha$( his esti%ated 21&? !i$$ion in wea$th in e0change (or sett$ing the charges against hi%" according to A!de$,A8i8& Three years a(ter protests against the sort o( !usiness cronyis% that gutted Egypt#s econo%y" the country is now considering turning to the very peop$e who ro!!ed the country (or a (inancia$ !ai$out& <espite protesters# widespread de%ands (or socia$ 5ustice" post,revo$utionary Egypt has witnessed precious (ew i%prove%ents/ Transparency Internationa$ ranks Egypt 117 out o( 133 countries on its *Corruption .erception Inde0"- and its position has actua$$y (a$$en since 2011& The re$ationship !etween u!arak,era !usiness tycoons and the Egyptian govern%ent appeared to have !een severed $ong ago" as the prosecutions targeting these !usiness%en were $aunched !y the interi% %i$itary govern%ent that (o$$owed u!arak& 9ut :reconci$iation: cou$d a$$ow the new %i$itary,!acked govern%ent to reesta!$ish the sa%e power(u$ networks o( $oya$ !usiness%en that ($ourished under u!arak& The process *opens the door (or %ore corruption and escaping 5ustice"- said Ahada A$i oussa" a po$itica$ scientist who heads up the Aovernance Center" a govern%ent agency dedicated to preventing corruption and advancing transparency& *B)a$e%#s prospective reconci$iation dea$C wi$$ !e an idea$ prototype (or others to (o$$ow&Other !usiness%en with ties to the u!arak regi%e are a$so $ining up their reconci$iation o((ers& Other !usiness%en with ties to the u!arak regi%e are a$so $ining up their reconci$iation o((ers& u!arak#s %inister o( (oreign trade and industry" Rachid oha%ed Rachid" is in si%i$ar ta$ks with the govern%ent and is set to put in another o((er" oussa said& Rachid" who was sentenced in a!sentia to 20 years in 5ai$ and at $east 2>>0 %i$$ion in (ines (or s@uandering pu!$ic (unds and pro(iteering" ($ed to <u!ai during the 2011 uprising& Ar%y chie( A!de$ +attah a$,)isi#s conso$idation o( power cou$d a$so increase Egypt#s wi$$ingness to cut reconci$iation dea$s& 'hi$e %uch nor%a$ govern%ent !usiness has !een on ho$d under the current interi% govern%ent" a strong%an in the presidentia$ pa$ace and a new par$ia%ent cou$d change that& :There wi$$ !e a c$i%ate (or such reconci$iation to %ateria$i8e": I!rahi% e$,Henedy" Egypt#s deputy 5ustice %inister and head o( the I$$icit Aains Authority" the !ody in charge o( investigating corruption" to$d +.& *It#s a$$ a!out the o((er o( reconci$iation/ 'hich is !etter (or Egypt" to reconci$e or notDEven though )a$e% was *a%ong the worst- o( the country#s corrupt !usiness%en and has !een ordered to pay so%e o( the !iggest (ines" Henedy said" the govern%ent was sti$$ interested in striking a reconci$iation dea$& )a$e%#s $awyer" Tarek A!de$,A8i8" a$so !e$ieves that the ti%e is ripe to sett$e his c$ient#s disagree%ents with the Egyptian govern%ent& He to$d+. he is working on an o((icia$

reconci$iation o((er" which wi$$ !e su!%itted to the authorities now that orsi has !een ousted& His c$ient is *very opti%istic"- the $awyer said& :Eow" thank Aod" there is an e0isting syste% that takes care o( a$$ Egyptians": A!de$, A8i8 said& :Today we have a new regi%e — hope(u$$y a 5ust regi%e that wi$$ %ove things (orward&: A!de$,A8i8 denied that )a$e% was tied to u!arak and said the charges were po$itica$$y %otivated& However" a $eaked docu%ent (ro% the I$$icit Aains Authority shows that the )a$e%s and the u!araks — together with other !usiness%en tied to the o$d regi%e — invested together in an o((shore (und registered in the Cay%an Is$ands" a Cari!!ean ta0 haven& The invest%ent (und" which was ca$$ed the Egypt +und" invested in 1F Egyptian co%panies in the ce%ent" !anking" rea$ estate" stee$" oi$" (ood" and agricu$ture industries& The head o( investor re$ations at E+A Her%es !ank" Han8ada Eessi%" wrote in an e%ai$ that her !ank set up the Egypt +und in 1==3& 'hen asked whether E+A Her%es was aware o( the investors !ehind the (und" Eessi% wrote that the !ank was (u$$y in(or%ed o( the investors# identities and that no a$$egations o( wrongdoing had !een $evied against the% at the ti%e& 'hi$e )a$e% and u!arak were not persona$$y $isted as contri!utors" the (und inc$uded co%panies owned !y their chi$dren/ C$e$ia Assets Corporation" owned !y 4ha$ed and agda )a$e%" invested 2> %i$$ionG and .an 'or$d Invest%ents Corporation" owned !y Aa%a$ and A$aa u!arak" invested 2260"000& The o((shore (und wou$d have provided signi(icant ta0 !reaks to its investors" as we$$ as a$$owing the% to shie$d their invest%ents (ro% prying eyes& )a$e% not on$y !i$ked Egypt — he a$so sto$e (ro% the Hnited )tates& )a$e% not on$y !i$ked Egypt — he a$so sto$e (ro% the Hnited )tates& In 1=3=" his co%pany" the Egyptian A%erican Transport and )ervice Corporation IEAT)COJ" was granted a contract to ship %i$itary goods (ro% the Hnited )tates to Egypt& The dea$ ca%e in the wake o( the Ca%p <avid Accords" when H&)& %i$itary sa$es started to ($ood in to Cairo" %aking shipping a potentia$$y $ucrative !usiness& )a$e%" however" tried to !oost his pro(its !y charging the H&)& <e(ense <epart%ent (or in($ated ship%ent costs& 9etween 1=3= and 1=F1" according to H&)& court docu%ents" EAT)CO su!%itted (a$se invoices (or >7 ship%ents" which overcharged the .entagon !y 2F %i$$ion& In 1=F>" )a$e% p$ed gui$ty to (e$ony charges in the H&)& <istrict Court in the Eastern <istrict o( Kirginia& The (ines and civi$ c$ai%s sett$e%ents paid !y )a$e% and the co%panies invo$ved in the sche%e tota$ed %ore than 27 %i$$ion& ost o( )a$e%#s %i$$ions ca%e (ro% sweetheart dea$s in Egypt" where he received pre(erentia$ treat%ent (ro% his a$$ies at the top eche$ons o( govern%ent& In Apri$ 2011" u!arak,era spy chie( O%ar )u$ei%antesti(ied !e(ore an Egyptian prosecutor that )a$e%#s co%pany" the East editerranean Aas Co%pany" was handed the %onopo$y

over gas e0ports to Israe$" 1ordan" and )pain in the ear$y 2000s" !ypassing the usua$ !idding process& )u$ei%an was asked to testi(y as Egypt#s inte$$igence services were a$$eged$y invo$ved in !rokering the gas dea$s& )u$ei%an said )a$e% had !een (riends with u!arak (or %ore than 20 years" and that his e0perience in !usiness dea$ings with Israe$ was the reason he was chosen (or the dea$& :B)a$e%C had dea$t with the Israe$is !e(ore with I<OR": )u$ei%an said" re(erencing )a$e%#s ti%e as chair%an (or the idd$e East Oi$ Re(ining Co%pany" an Israe$, Egyptian pro5ect esta!$ished in 1==> to !ui$d a 5oint re(inery on the Eorth coast o( Egypt and to e0tend an oi$ pipe$ine to Israe$& )even years $ater" )a$e% so$d >3 percent o( the East editerranean Aas Co%pany (or 27&2 !i$$ion" according to the Israe$i !usiness news we!siteA$o!es& It#s not hard to see why )a$e% is pushing so hard (or reconci$iation& I( Egypt re(uses to cut a dea$ and negotiates an e0tradition agree%ent" it cou$d win !ack his (ro8en assets in )wit8er$and" Hong 4ong" and )pain& The e0tradition wou$d a$$ow Egypt to convict )a$e% in person" and %any countries — inc$uding the ones where )a$e% stashed his wea$th — re@uire such a (ina$ verdict i( they are to return his sto$en assets& I( success(u$$y e0tradited !ack ho%e" )a$e% wou$d a$so !e o!$iged to pay %ore than 27 !i$$ion in (ines and restitution" and he wou$d serve 22 years in prison !ased on his co%!ined sentences !y Egyptian courts& A reconci$iation dea$" on the other hand" wou$d not on$y p$ace )a$e% !ack in the good graces o( the Egyptian govern%ent" it wou$d a$so e((ective$y end (oreign investigations into whether his wea$th is the resu$t o( i$$icit gain& :It wou$d !e very di((icu$t (or the )wiss authorities to continue prosecution against Hussein )a$e% i( the Egyptian authorities drop any charges against hi%": said O$ivier Longcha%p" o((icer (or internationa$ (inancia$ re$ations at the )wiss EAO 9erne <ec$aration& : oney can on$y !e sei8ed i( it has !een proven to !e o( i$$ega$ origin&: Eow" three years a(ter a revo$ution against u!arak,era cronyis%" )a$e% appears c$oser to his goa$ than ever !e(ore& In an ironic turn" he is now hai$ing the %i$itary, !acked govern%ent (or co%!ating the sa%e underhanded !usiness dea$ings o( which" (or %any Egyptians" he is the sy%!o$& As he put it in 1anuary" :the era o( corruption and in5ustice is gone now&: .osted !y Thava%

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