Egyptian prosecutor general, Talaat Abdullah, sits at his desk on his first day in office after being appointed by President Mohammed Morsi, Satirday, Nov. 24, 2012 (Photo: AP)
The asset freeze ordered by Egypt's prosecutor-general on several businessmen, which surprised analysts and spooked investors earlier this week before being struck down by Egypt's Criminal Court two days later, suggests an ongoing power struggle inside Egypt's judicial system.
On Sunday, Egypt's prosecution-general froze the assets of 23 Egyptian and foreign businessmen accused of engaging in insider trading and stock manipulation regarding the 2007 sale of El-Watany Bank of Egypt to the National Bank of Kuwait.
While the court has yet to publish its rationale for revoking the asset freezes abruptly imposed on the individuals – who included some of the most prominent Saudi investors in Egypt – lawyers associated with the case have revealed the legal grounds upon which they successfully challenged the move.
"The prosecution-general had already told the Criminal Court that it had dropped charges against 14 of those under investigation in October, citing lack of evidence of criminal intent," said Yassin Tag El-Din, an attorney representing one of the more prominent defendants in the case since it went to court in May of last year.
In an about-face, the prosecution had suddenly told the court at a 10 March hearing that charges against 14 out of 23 suspects had never been officially dropped, and requested that the court issue an asset freeze. When the court refused to comply, citing its legal inability to freeze the assets of individuals who had not been convicted, the prosecution-general ordered the freeze itself on 17 March.
Notably, the attorney-general himself confirmed to the court reviewing the asset freeze on Wednesday that the charges had indeed been officially dropped in October, leading the court to revoke the asset freeze, according to Tag El-Din, who had been present.
As for the nine defendants indicted last May – including ousted president Honsi Mubarak's sons, Gamal and Alaa, and EFG-Hermes officials Yasser El-Malwany and Hassan Heikal, among others – only the criminal court by which they were tried has the authority to freeze their assets, and this only after they have been sentenced, according to Tag El-Din.
Politics & consequences
The investment community in Egypt, meanwhile, has been very critical of the way legal authorities have handled recent business disputes.
"It's very damaging [to the business environment] when actions such as asset freezes and travel bans are taken before courts give final verdicts," Mohamed Mourad El-Zayat, vice chairman of the Egyptian Junior Business Association, told Ahram Online.
The prosecution-general, however, appears unaware of the impact such decisions might have on Egypt's investment climate.
Mostafa El-Hosseny, a public funds prosecutor, attributed the prosecution-general's recent move to a kind of absent-mindedness. "At the public funds prosecution, we don't take such decisions unless there is an absolute necessity," he explained.
"But other departments within the prosecution might not attach importance to considerations such as investor confidence," he added, acknowledging the devastating effect such decisions can have on Egypt's investment environment.
El-Hosseiny does not believe that the prosecutor-general’s move, while possibly misguided, was political in nature. "This decision cannot be politicised, because it is in the government's interest to attract investors."
Tag El-Din, for his part, hinted that the appointment of a new prosecutor-general in October of last year could be a possible explanation for the prosecution's recent moves.
Egypt’s former prosecutor-general, Abdel Meguid Mahmoud, was dismissed by a controversial presidential decree in November last year, to be replaced by Talaat Abdullah.
The move by President Mohamed Morsi was seen as politically motivated and sparked a bitter feud between the presidency and Egypt’s judiciary, which attempted to launch a nationwide strike.
Since then, prosecution authorities have been the subject of severe criticism by opposition figures and groups, who accuse them of being 'politicised.'
A recent travel ban placed on Orascom Construction Industries (OCI) founder Onsi Sawiris and CEO Nassef Sawiris is probably the new prosecutor-general's most controversial business-related decision to date.
Many legal experts and political analysts viewed the OCI case as a 'groundless' pursuit that was politically driven. Such a view is augmented by the fact that the case was opened after President Morsi alluded to it in a public speech.
"Government watchdogs in Egypt, in charge of investigating financial discrepancies, are likely to be politicised and are highly influenced by the executive authority," prominent legal expert Shawky El-Sayed told Ahram Online. "That's why we sometimes find highly controversial cases that are legally unsound."
Additional reporting by Karim Hafez and Ahmed Feteha
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