Egypt - Corruption

Corruption occurs at all levels of Egyptian society. Giving and accepting bribes are criminal acts in Egypt, but corruption laws have not been consistently enforced. Companies might encounter corruption in the public sector in the form of bribery, embezzlement, and tampering with official documents. Corruption and bribery are reported in dealing with public services, customs (import license and import duties), public utilities (water and electrical connection), construction permits, and procurement, as well as in the private sector. The law provides criminal penalties for official corruption, but the government does not consistently enforce the law. A series of civil cases have been brought against private companies that concluded contracts with the Mubarak regime for the purchase of state-owned assets as part of the regime’s privatization drive. Most of the first-instance decisions in these cases have annulled the original sales contract, calling for the renationalization of the company and mandating that the individuals laid off following privatization be re-hired. These cases have caused considerable concern among current and prospective investors in Egypt. Transparency International’s Corruption Perceptions Index ranked Egypt 94 out of 175 in its 2014 survey an improvement from the difficult 2011-2014 period and a return to the 2010 ranking which placed Egypt 98 out of 178. In 2006, Egypt was ranked 70th out of 163 surveyed countries on perceptions of corruption. Transparency International's Corruption Perceptions Index ranked Egypt 105 out of 179 surveyed countries in its 2007 survey. The World Bank Enterprise Survey reports that general corruption incidence and corruption depth in Egypt is lower than the overall MENA region, and even the world average. Recent ratings from a WB rapid survey, phone survey, and, the World Economic Forum’s Global Competitiveness Report 2013-14 identified corruption as the third to fifth most problematic factor to doing business in Egypt. The World Competitiveness Survey specifically cites policy instability, government instability, access to financing, and foreign currency regulations as four challenges more important than corruption. The new 2014 constitution provides for the establishment of an Anti-Corruption Commission to focus on dealing with conflicts of interests, standards of integrity, and government transparency. It also addresses whistleblower protection. That same year, Egypt launched a four year national Anti-Corruption Strategy empowering the new National Coordinating Committee for Combating Corruption to develop a holistic government strategic for addressing corruption. The long-term effectiveness of this strategy remains to be seen. While U.S. investors have reported corruption by lower-level government officials, they have not identified corruption as a leading obstacle to foreign investment. Corruption in Egypt is a crime. Two agencies oversee enforcement of corruption laws in the public sector - the Administrative Control Authority (ACA) under the authority of the Cabinet of Ministers and the Illicit Gain Office under the authority of the Public Funds Prosecution of the Ministry of Interior. In the private sector, there are two types of corruption cases, commercial and civil. Commercial cases are subject to the Commercial Law and the Dispute Settlement Law. The district attorney's office and the civil courts adjudicate civil cases. The ACA may intervene when corruption occurs in the private sector if public money and/or public interests are involved. Giving and accepting bribes are criminal acts in Egypt. Penalties include pecuniary fines and imprisonment. Bribing foreign officials is also a crime in Egypt. High-profile corruption cases since 2002 have resulted in lengthy trials, and convictions in some instances, for several former government officials, including a former Minister of Finance, former head of the Egyptian Customs Authority, and the former Governor of Giza Province. Several businessmen and prominent bankers also have been charged (and some convicted) for alleged corruption related to non-payment of loans. Enforcement of corruption laws does not appear to be disproportional against foreigners, but evidence indicates that cases brought to court are often politically motivated, i.e., cases tend to be brought against individuals who have fallen out of favor with the government. Egypt is a signatory to the UN Convention Against Corruption, but has not signed the OECD Convention on Combating Bribery or any other regional anti-corruption convention. The Egyptian government has made considerable effort to improve the transparency of government policy. The process has proven difficult, however, given the extremely opaque policies in place prior to 2004 and resistance from entrenched bureaucratic interests. Significant obstacles continue to hinder private sector investment, including the often-arbitrary imposition of bureaucratic impediments and the length of time needed to resolve them. On 21 May 2014, a court sentenced former president Mubarak to three years in prison and his sons Alaa Mubarak and Gamal Mubarak to four years each in prison in a corruption case in which they were charged with embezzling LE 125 million ($17.5 million) for renovations to presidential palaces. They were also fined LE 125 million ($17.5 million). The prosecutor general stated he would appeal the ruling, and the Court of Cassation was scheduled to review the case on January 13, 2015. On November 29, the court dismissed a different set of corruption charges against Mubarak and his sons and acquitted Mubarak on charges related to illegally exporting gas to Israel. In response to the verdict, the cabinet approved a draft law on December 2 to extend the statute of limitations for bribery. In May 2015 a media report based on disclosed financial records from fiscal years 2010-13 indicated authorities had moved billions of dollars into accounts potentially held illegally by state and commercial banks. In September, Agriculture Minister Selah Eddin Helal resigned, and authorities immediately arrested him on charges that he and other ministry officials took bribes to help businessmen illegally acquire state land. Court proceedings against the minister and several other ministry officials continued at year’s end. Criminal proceedings on corruption charges continued in 2015 against former members of the Mubarak regime. On May 9, the Cairo Criminal Court sentenced former president Mubarak and his sons, Alaa Mubarak and Gamal Mubarak, to three years each in prison as a consequence of the appeal of a corruption case in which authorities charged them with embezzling LE 125 million ($16.2 million) for renovations to presidential palaces. They were also fined collectively 21.2 million LE ($2.74 million) and ordered to repay LE 125 million ($16.2 million) in stolen funds. On October 12, the court ordered the release of Alaa Mubarak and Gamal Mubarak from prison upon completion of their sentences. Observers expected the Court of Cassation to rule on January 9, 2016, on whether it will accept an appeal for a second retrial in the case. On 04 June 2015, the Court of Cassation upheld a lower court’s acquittal of Mubarak and his sons in a case involving a different set of corruption charges against them, including charges of illegally exporting gas to Israel. The court ordered a retrial on separate charges related to killing protesters in the same case. On 28 March 2016, the president dismissed the head of the CAA, Hehsam Geneina. In December 2015 Geneina publicly claimed that corruption in public and government circles led to the squandering and misappropriation of more than EGP 600 billion ($33 billion) in 2015. In January a government fact-finding committee alleged that Geneina deliberately exaggerated figures about corruption for political purposes. Geneina told media that the allegations against him were politically motivated. On July 28, a Cairo court convicted Geneina of spreading false information, sentencing him to a one-year suspended prison term and a fine of LE 20,000 ($1,100). A court rejected Geneina’s appeal on 22 December 2016 but suspended the implementation of his sentence for three years. On 09 January 2016, the Court of Cassation rejected an appeal of a May 2015 Cairo criminal court conviction of former president Hosni Mubarak and his sons, Alaa Mubarak and Gamal Mubarak, on corruption charges, sentencing all three to three years’ imprisonment. They were also fined collectively LE 21.2 million ($1.17 million) and ordered to repay LE 125 million ($6.9 million) in stolen funds. In October 2015 the court ordered the release of Alaa Mubarak and Gamal Mubarak from prison upon completion of their sentences. No further appeals are possible. On 12 March 2016, the government announced it had reached a reconciliation agreement with businessman Hussein Salem. Salem had lived in Spain since 2011, following sentencing in his absence to 15 years in prison on corruption charges related to the sale of natural gas and 10 years in prison on corruption charges related to the sale of electricity. According to Salem’s lawyer’s comments to media, the agreement included the transfer of 78 percent of the assets held by Salem, his children, and his grandchildren to the government. On 11 April 2016, a Cairo court sentenced former agriculture minister Salah Eddin Helal to 10 years in prison and a fine of LE one million ($55,100). The court convicted Salah and other ministry officials of accepting bribes to help businessmen illegally acquire state land. Salah appealed the decision, and court proceedings continued at year’s end
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