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MPs condemn reconciliation deals with Mubarak-era officials

Outrage that Ahmed Ezz and other senior Mubarak-era officials could be freed and eligible for political office under new 'reconciliation law'

Salma Hussein, Thursday 15 Mar 2012
Egypt's former Housing Minister Ahmed el-Maghrabi (R) and former Tourism Minister Zuhair Garana arrive at court in a police vehicle in north Cairo February 23, 2011. An Egyptian prosecutor last Thursday ordered the detention of Maghrabi, Garana, former Interior Minister Habib el-Adli and steel magnate Ahmed Ezz pending trial on suspicion of wasting public funds. All four have denied any wrongdoing. (Photo: Reuters)
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It's 2016. Ahmed Ezz, steel tycoon and former senior member of Hosni Mubarak's National Democratic Party (NDP), is head of a new party and running for president. What appears a nightmare for many Egyptians could become reality due to so-called reconciliation deals with corrupt figures of the old regime.

Finance Minister Momtaz El-Saeed on Tuesday revealed that the government was negotiating with Mubarak-era officials because many of them had offered to pay back illegally acquired money in exchange for their freedom. 

The minister said negotiations were underway with Ahmed Ezz, former tourism minister Zoheir Garana, and former housing minister Ahmed Maghraby.

However, the minister did not give details of the legal process under which the settlements would take place.  The main charges in these cases are that public assets were sold at a price lower than their market value.

For example, the owners of the Palm Hills property development company, who are mostly family members of ex-ministers, including Maghrabi, face charges of corruptly purchasing huge plots of land at below their market value.

On 3 January 2012, the ruling military council issued an amendment to the investment law, opening the door to such settlements.  Such laws are common in transitional periods after a corrupt regime falls but not the way they are being implemented in Egypt.

"This reconciliation process violates the rules applied in countries with strong records of fighting corruption," says Safaa Zaki Mourad, a social rights' lawyer.

The reconciliation law was issued by the ruling military council two weeks before Parliament convened, "apparently to avoid opposition and serious debate in Parliament," says Mourad. The law was prepared by the Sharaf government, aimed, they said at the time, at stimulating investment.  Immediately after the law was passed, many indicted former officials asked the court to halt their trials until they had negotiated settlement deals with the government.

Under the settlement, the investor would be pardoned whilst the public servant would still be punished. Dropping charges would allow Mubarak's cronies to run in parliamentary and presidential elections.

Others see the law as providing the Treasury with much-needed funds.

The Egyptian Initiative for Personal Rights (EIPR), an NGO contesting the law, in February issued a statement saying the ruling is unfair because it stipulates that offenders must return the value of the funds at the time the crime was committed.  This means it does not take into account changes in the value of the assets following their acquisition, EIPR says. 

When Ahmed Ezz bought a majority stake in the state-owned Alexandria National Iron and Steel Company (ANSDK)  it had been losing money for several years.

"Every step seemed logical and fair. But if you look closer, they are not," says Sherif Massoud, a financial analyst.

ّIn 1998, Ezz first bought a 20 per cent stake in ANSDK, then his company, Ezz Steel, formed an alliance with ANSDK called Ezz-Dekheila and he used this alliance to transfer ANSDK's profits to Ezz Steel. By the time he offered to buy the rest of the company, the valuation took into consideration heavy losses; hence he bought it at an artificially low price. Under a reconciliation deal, he would only have to pay back the amount he paid for the shares in 1999, regardless of their value today, or the profits he accumulated in an unfair way, explains Massoud.

A memorandum presented to Parliament by MPs of the Socialist Alliance, describes reconciliation under this law as a "legitimisation of public money squandered during the Mubarak era."

The memo calls on Parliament to specify the structure of the committee responsible for negotiating the settlement deals, and to respect the international criteria of reconciliation in graft cases, such as imposing a fine that exceeds the sum illegally gained. 

On Wednesday, the finance minister told reporters that reconciliation would boost public finances, although he admitted that only a small number of indicted figures had opted for this process.

El-Saeed also said that a committee formed by the Ministry of Justice would handle the negotiations, without giving any further details. However, for now, the Investment Authority is negotiating on behalf of the government, according to a press release sent earlier to Ahram Online.

The head of the authority is a former NDP member who worked in the Nazif government. The authority had met with many investors involved in these cases, an official said. He refused to allow media coverage of these meetings or the briefing of reporters, even off the record.

To avoid unfair agreements, Socialist Alliance MPs stressed that "all settlement deals should be approved by a judicial committee and publically debated. In addition, offenders' future activities must be put under close observation and conform with Transparency International's recommendations. 

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