Egypt begins hunt for ill-gotten gains of Mubarak era
Jerusalem, Israel David E. Miller – Egypt has barely entered its post-revolutionary era, but the hunt is already on for the country’s missing big money. Legal proceedings as well as public naming and shaming are being used as Egypt struggles to follow the money trail of corruption.
Minister of Trade and Industry Samir Sayyad on Sunday banned the export of gold from Egypt, saying that “exceptional circumstances” forced the government to take action to preserve the country’s wealth. The cabinet approved reopening on Tuesday of the stock exchange, which had been kept closed since Jan. 25 out of concern it will be used to funnel capital out of the country.
A list of Egyptians and Arabs owning private jets in Egypt was published on Monday by the weekly Al-Fagr. The list was topped by Gamal Mubarak, the son of deposed President Hosni Mubarak, who was alleged to own a private jet and a pilot’s license.
In the long list of protestors’ grievances against the Mubarak regime, especially the coterie of business people surrounding Gamal Mubarak, corruption and profiteering were at the top. Reports of Hosni Mubarak’s personal wealth reached the unlikely sum of $70 billion.
Some economists have expressed concern that the bad name reform and privatization got from the Mubarak era will make it difficult for the new government to undertake changes the economy needs to resume growth and create jobs. But analysts said they didn’t believe the pursuit of ill-gotten gains would turn into a general witch hunt against Egypt’s rich.
“There is general hostility towards the business community in Egypt,” Samer Soliman, a professor of political economy at the American University in Cairo (AUC), told The Media Line. “The police regime of Mubarak had strong ties with the business community … [but] “I believe most businessmen in Egypt should be happy, because the new era will bring an end to the nepotism associated with Gamal Mubarak.”
Soliman said the best-connected business people in Egypt were justifiably worried, an inevitable price paid for collaborating with Mubarak. But, he added, suspicion is mainly being directed at specific people and not the business community as a whole.
A new grassroots body called the Egyptian Front for Reclaiming the People’s Wealth emerged in early February, claiming that a former Egyptian official transferred some $620 million from Barclay’s Bank in Britain to UBS Bank in Switzerland. Muhammad Mahsoub, the group’s secretary-general, said he submitted the allegations to Egypt’s attorney-general and called on Egyptians to forward him any new information on high-level corruption.
A date was set Sunday to begin trying former Interior Minister Habib Adly on charges of money laundering and accepting bribes. Adly, previously accused of violently cracking down on protesters in Cairo, is being charged with receiving five million Egyptian pounds ($850,000) from a contractor in return for illicitly approving building projects.
Egypt’s Illicit Gains Authority (IGA) has requested legal authorities to investigate at least 13 other ministers, in addition to several party members, for illegally accumulating vast amounts of money. All of the editors-in-chief of state-run newspapers are being investigated as well.
“For the first time in three decades the public is starting to believe that the law is being applied to all and that no one is above the law,” columnist Mona Al-Nahhas wrote in Al-Ahram, an Egyptian daily.
Hossam Bahgat, executive director of the Egyptian Initiative for Personal Rights, a Cairo-based human rights group, said public frustration with the rich was understandable in a country where 40 percent of the population lived under the poverty line, according to data collected by the World Bank. He added, however, that public criticism of corruption shouldn’t be confused with criticizing the rich.
“The business elite worked closely with President Mubarak,” Bahgat told The Media Line. “But the beautiful thing about the revolution is that it united all segments of society, rich and poor.”
Meanwhile, provisions were underway to ensure clean governance in the future Egypt. Prime Minister Ahmad Shafiq announced on Sunday the establishment of a task force to prevent conflicts of interest between the state and ministers. Soliman of AUC said Shafiq, a former army general who served under Mubarak and maintained strong ties with Egypt’s business elite, is being kept in power by the military which understood the importance of free enterprise in rebuilding Egypt.
“We are still in a transition period that will not last forever,” Soliman of American University said. “The private sector is imperative for Egypt, and will be the dominant force in the economy.” He added that the Supreme Council of the Armed Forces, currently in control of Egypt, will soon try to appease the Egyptian business community.
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Exodus from Libya portends new trouble for Egyptian economy
Jerusalem, Israel David Rosenberg – Egypt’s economy – already beset by strikes, slumping tourism and political uncertainty – is in the process of being dealt another body blow as turmoil in Libya sparks a mass exodus of Egyptian guest workers back home.
Almost 100,000 people, including Tunisians, Egyptians, Libyans and Asians, have fled the violence in Libya over the past week, the United Nations High Commissioner for Refugees (UNHCR) said Sunday. For Egypt, that will likely be the trickle that turns into a flood, with estimates of the number of Egyptians living and working in Libya ranging as high as 1.5 million.
Their return home will not only deprive the country of badly needed foreign currency, but will create a new demand for jobs in an economy already suffering double-digit unemployment and slowing growth, said Magda Kandil, executive director and director of research for the Egyptian Centre for Economic Studies.
“We’re talking about an economy that has at least 10 percent unemployment – and youth unemployment is at 25 percent. This will add additional pressure on a fragile labor market,” Kandil told The Media Line. “No one knows when they will be able to go back to Libya.”
Mass protests have knocked a huge dent in the Egyptian economy, frightening away tourists and causing factories and offices to close for extended periods. Although Husni Mubarak stepped down as president two weeks ago, meeting the opposition’s main demand, the interim government has struggled to return some semblance of normalcy.
On Sunday, Egyptian villagers in the southern governorate of Assiut blocked the main highway for four hours to protest the lack of subsidized bread; and in Manfalout, one of Assuit’s main cities, around 2,000 municipal employees and workers went on strike demanding better living conditions and accusing senior officials of corruption. The stock exchange remains closed.
About 2.7 million Egyptians work abroad in the oil-rich countries of the Gulf, Europe, the United States as well as Libya. The government has long-encouraged the process as a way of keeping a lid on unemployment and as a source of foreign exchange and investment.
The UN International Organization for Migration estimates that in 2009 – a poor year for earnings because of the global economic downturn – the Egyptian ex-patriates sent home close to $8 billion, a figure equal to 5 percent of gross domestic product. That money went to paying the household expenses of families left behind in Egypt and for investment, usually in real estate.
Kandil estimated that the exodus to Egypt would cut into foreign receipts by about a fifth. Libya as a source of employment for Egyptians has grown in importance over the years as many Egyptians in the Gulf were displaced by Asians.
Libyan leader Muammar Gaddafi appeared to have a firm hold in the capital of Tripoli and appeared to be mounting a campaign to regain control of Zawiyah, some 50 kilometers away, as of late Sunday, the Al-Jazeera television network reported.
Fighting between the government and opposition forces has been much more violent than elsewhere in the Middle East, which analysts have said could portend a long conflict. Even if the fighting ends quickly, they have warned that Gaddafi had dismantled much of Libyan’s government and other institutions during his 40-year rule and that re-establishing order could take some time.
“The effect of what is happening there is going to show in the next few weeks because 1.5 million Egyptians work in Libya and they are now returning,” Rania Al-Malki, chief editor of Daily News Egypt told The Media Line. “That’s going to be a huge problem because many of the families depend completely for support on the family member who worked in Libya.”
David Cowan, economist at Citigroup Global Markets in London, said last week that the Egyptian GDP will probably expand no more than 1.5 percent this year, a growth rate he termed “stagnant” because it will just be enough to keep up with the expanding population.
Income generated by Egyptians working abroad was one of the economy’s few bright spots because it isn’t affected by Egypt’s domestic upheavals. Tourism, the country’s biggest earner of hard currency, is still in the doldrums after some 210,000 visitors fled during the last week of January when unrest erupted.
The cancelations and early departures cost Egypt about $178 million and cancelations for February add up to an estimated revenue loss of $825 million. As many as 2 million Egyptians work in tourism. Egypt’s current account deficit will grow to $6.4 billion from $4.3 billion in fiscal 2010-11 if tourism receipts fall by half, Deutsche Bank estimated last week.
Egypt’s transition government knows that the unrest that toppled Mubarak was sparked in large part by economic distress as Egyptians coped with inflation and unemployment. It has taken measures, such as granting 15 percent pay raises to civil servants, aimed at addressing short-term needs.
Kandil said she expected it would look for similar band-aid solutions for the returning guest workers, such as providing them with government jobs. But, she warned, the government will have to find permanent solutions that contribute to the economy after elections later this year.
“Honestly, even though the government may absorb some of those extra workers, it won’t be very productive labor,” she said. “The government already employs 6 million workers and at least a third of them are unnecessary.”
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U.S. stocks in third day of losses, Nasdaq rebounds
New York, NY, United States (AHN) – U.S. stocks ended mixed on Thursday with the blue chips and S&P 500 index extending losses for a third straight session day as oil prices retreated.
The Dow Jones Industrial Average lost 37 points or 0.3 percent to close at 12,068.
The Standard & Poor’s 500 index was a tick off or 0.2 percent at 1,306.
The Nasdaq Composite Index rose 15 points or 0.5 percent to 2,738.
Crude oil futures for April delivery lost 30 cents with a barrel settling at $97 after trading above $100 in the early trading hours.
Gold futures for February delivery rose $1.80 or 0.1 percent to $1,416 an ounce.
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Supreme Court considers when a ‘gift’ is really a bribe of officials
Washington, DC, United States (AHN) – The Supreme Court met Friday to decide which cases it will hear, including one that would more closely define when a public official has taken a bribe.
The case involves a $3.2 billion sewer project in Birmingham, AL. Two county officials were convicted of taking bribes from construction companies that repaired and replaced the Jefferson County sewer system.
The Supreme Court is trying to decide whether anti-bribery laws can result in convictions even when the proof is sketchy whether public officials gave something in return for the money they took.
In other words, did they commit a crime by merely accepting money or must there also be proof they promised an illegal favor in return for the cash?
Lower courts said taking the money was enough to convict the two county officials and four contractors.
The evidence was based on an FBI investigation that began in 2002.
The defendants appealed the trial court’s judgment against them to the U.S. Court of Appeals for the 11th Circuit in Atlanta, which affirmed the convictions in a May 12, 2010, decision.
The appellate court’s ruling said, “We conclude the evidence at the trials overwhelmingly established the defendant-appellants’ guilt, and they have shown no reversible error in the district courts’ rulings, pre-trial or in the trials, in the cases consolidated.”
The main issue for the Supreme Court would be how it interprets Section 666 of the federal funds corruption statute.
The law forbids local government officials who are administering federal funds from “corruptly solicit[ing] or demand[ing] … or accept[ing] or agree[ing] to accept, anything of value from any person, intending to be influenced or rewarded in connection with any business, transaction, or series of transactions” of the local government involving $5,000 or more.
The law also requires a “corrupt” intent by the persons accepting the bribes.
County officials Chris McNair and Jack Swann said they had no corrupt intent.
The Justice Department brief says that in 1996 McNair approved contractors’ pay requests and contract modifications as no-bid contracts.
About the same time, McNair owned a photography studio that was renovated with materials and labor donated by two of the sewer project contractors, Rast Construction, Inc. and Roland Pugh Construction, Inc., the Justice Department’s brief says.
Pugh Construction and another contractor also paid to build a retirement home for McNair in Arkansas.
Swann, who negotiated no-bid contracts for the sewer project contractors, received materials and labor from them to renovate his home, the prosecutors’ brief says.
The sewer project contracts McNair and Swann negotiated or awarded were worth hundreds of millions of dollars.
During their trials, the county officials admitted receiving the services, but said they were acts of friendship rather than bribes.
Federal prosecutors say the county officials’ definition of gifts of friendship violates section 666 of the federal funds corruption statute.
Appeals courts have correctly and consistently ruled that public officials can be convicted of bribery “in cases involving an intent to exchange something of value for official acts, even where the official acts to be undertaken have not been determined with precision,” the government’s brief says.
The Supreme Court case is Rast v. U.S., Docket No. 10-516.
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Jump in exports and Kazakh hitch lift grain prices
Strong US export data, and talk of setbacks to a Turkish wheat order from Kazakhstan, drive a rebound in crop futures. Wheat prices soar 6%
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New Market Poultry Recalls Whole Chicken Products That May Be Tainted
New Market, Virginia, United States (AHN) – New Market Poultry, a New Market, Va., establishment, is recalling approximately 3,339 pounds of ice-packed, whole chicken products that may be adulterated due to leaking cooler condensate, the U.S. Department of Agriculture’s Food Safety and Inspection Service (FSIS) announced today.
The problem was identified Feb. 24, 2011 when the company discovered product under USDA retention had been shipped.
On Feb. 23, 2011 FSIS personnel observed standing water with unidentified black specks pooling on the box lids of the packed chickens stored in a company cooler. The palletized boxes, which contain drainage holes, were retained by FSIS and should not have been shipped.
The products subject to recall include:
Approx. 60-pound boxes of “New Market Poultry 2007, LLC, EVISCERATED POULTRY, For Further Processing Only, Some Parts Missing” bearing case code of “05412.”
Each box bears the establishment number “P-4602A” inside the USDA mark of inspection.
The chicken products were produced on Feb. 23, 2011 and inadvertently shipped the same day to six distribution centers in the Bronx, Brooklyn and Farmington, N.Y.
FSIS has not received any consumer complaints or reports of illness at this time. Anyone concerned about an illness from consumption of this product should contact a healthcare provider.
FSIS routinely conducts recall effectiveness checks to verify recalling firms notify their customers of the recall and that steps are taken to make certain that the product is no longer available to consumers.
Consumers and media with questions about the recall should contact the company’s General Manager, David Whitehouse at (540) 740-4260.
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