On May 21, former president Hosni Mubarak and his sons Gamal and Alaa Mubarak received three and four-year jail sentences on charges of embezzlement. They were also charged a LE125 million ($17.5 million) fine. In a special report, based on exclusive access to the court documents and extensive interviews with one of the original investigators, Mada Masr reconstructs the case. The following story, originally published on May 20, has been updated to reflect the verdict.
Amr Khedr was a promising young military officer. He graduated from Egypt’s military technical college in 1986 with a degree in architecture and spent most of the following 15 years in a number of army construction projects in Sinai, the Red Sea and Cairo, where he earned his commanders’ praise.
It all paid off one day in November 2000, when he was seconded from the Armed Forces to the private secretariat of then-President Hosni Mubarak. The former president wanted a new military architect to supervise his multiple residences. Khedr was posted at Mubarak’s private residence in the northeast Cairo district of Heliopolis, known as the Uruba Palace, a few blocks away from the Ettehadiya Palace where the president spent his day. Despite a fancy title of presidential residences supervisor for architectural affairs, Khedr would quickly realize the job did not require any military or architectural background. In court documents, he would describe his job as carrying out “any work assigned to me by President Mohamed Hosni Mobarak, his wife Suzanne Thabet, as well as his sons Gamal and Alaa, and their wives.”
Fourteen years later, fifty-year-old Khedr finds himself standing next to the former president and his two sons in the cage-like dock of a Cairo criminal court facing charges of corruption and embezzlement of public funds. The 2000-page prosecution court filing, obtained and reviewed by Mada Masr, offers a rare insight into the life of the former president’s family and the intricate web of corruption that dominated his last years in office.
For a decade, Khedr reported every day to the Mubarak mansion, where he spent his days fielding orders from family members, mostly from Suzanne and her two daughters-in-law, for refurbishment work, interior design, electrical home appliances and even kitchen supplies for the Uruba Palace and a number of other private houses and offices that belonged to the Mubaraks. (State-owned presidential palaces like Ettehadiya and Abdeen in Cairo or Ras al-Tin and al-Maamoura in Alexandria were the responsibility of the Ministry of Antiquities).
Shortly after arriving at the residence, Khedr later told prosecutors that he received an order from the first lady for five German-made, double-door refrigerators, and from Mubarak himself for a certain armchair that could seat him with his two little grandsons.
Khedr didn’t mind how menial the job was compared to his previous years of military service; it surely came with the status and perks of being a member of Mubarak’s innermost circle. But there was another aspect of the job that immediately made the military architect uncomfortable and nervous, according to his testimony.
All of the construction, renovation and purchasing orders he processed were for private properties of the Mubaraks and therefore could not be covered or reimbursed from public funds. But he was instructed to misrepresent these expenditures so that they could be listed under maintenance work for telecommunication towers around the country that provided secure communication lines for the president.
“I was executing the orders of the president of the republic and his family,” Khedr told prosecutors following his arrest in March 2013. “It was not up to me to refuse. I was told this was how it’s always been done.”
Between 2003 and Mubarak’s resignation in early 2011, investigators and prosecutors estimate that over 125 million Egyptian pounds (or $17 million) were embezzled from public funds and spent on private properties of the Mubaraks but fraudulently listed as fictional maintenance for those telecommunication centers. Initial investigations indicated that the embezzlement started as early as 1990, nine years after Mubarak had assumed the presidency, but public prosecutors decided to exclude any evidence for which they were unable to locate original receipts and, as a result, only indicted the defendants for embezzlement that started in 2003.
Khedr explained to prosecutors how it worked: He would receive the order from one of the Mubaraks and redirect it to a private contractor whom he selected from a database that was assembled, vetted and updated by the president’s private secretariat. Once the contractor executed the requested renovations or purchased the required appliances or goods, he would present a receipt to Khedr, who reviewed and signed it before sending the contractor with the receipt to another presidential staffer, Mohie Eddin Farhoud. Now a co-defendant in the same corruption trial, Farhoud was the official with responsibility for the telecom towers that secured the president’s lines. When a contractor presented him with a receipt that carried Khedr’s signature, he knew what to do. He would produce a fraudulent receipt for the contractor indicating that the same amount of money had been spent on maintenance of one of the telecom towers.
The contractor then took the new receipt to a state-owned construction company responsible for maintaining the telecom towers. The company accepted the fraudulent receipt, added its own profit margin, and reimbursed the contractor from public funds.
The public company that allegedly authorized the payment of millions of pounds in state funds to maintain the private mansions of the Mubaraks was Arab Contractors, Egypt’s mega construction company. Two low-level employees from the company have been charged with corruption and facilitating embezzlement in the same case. Missing from the indictment sheet is the name of the company’s chairman during the period in question, although he was identified in pre-trial investigation documents as being complicit in the graft scheme. Between 2001 and 2012, the Arab Contactors’ chairman was Ibrahim Mehleb, who was appointed as Egypt’s prime minister in February 2014.
Khedr’s arrest and his cooperation with prosecutors was a breakthrough and a vindication for officer Moatassem Fathi, the anti-corruption investigator who uncovered the scheme and convinced the public prosecutor to launch an investigation in the first place. A former police officer, Fathi was appointed in 1998 to the Administrative Oversight Authority (AOA), a state agency that probes corruption allegations against senior civil servants and government officials. Created by former president Gamal Abdel Nasser in the 1960s, the AOA operates like an intelligence service whose officers mostly come from the military or police, and enjoy vast powers of interrogation, search and surveillance.
“The political environment under Mubarak was tough because there was no real political will to seriously go after corrupt officials,” Fathi told Mada Masr in an interview. The soft-spoken investigator, who is now 41, said the agency employed skilled and committed investigators. But they had to push every step of the way to obtain an indictment, let alone a conviction. “I thought all of this would change with Mubarak’s ouster,” says Fathi, “but the revolution was not given a chance to govern.”
Fathi quickly rose through the ranks of the AOA until he joined its “special operations unit,” an elite team that only investigates cabinet ministers and chairmen of public institutions.
But Fathi resigned on January 1, 2011, citing internal pressures and punitive transfers from his superiors at the agency, due to his efforts to go after senior housing officials and businessmen that were close to Mubarak and his son, Gamal. When Mubarak was forced to resign a few weeks later in the face of the mass public revolt against his rule, Fathi decided to go back to his job and go public with his accusations. In February 2011, he filed a complaint with the Public Prosecutor’s Office that detailed allegations against Mubarak and several of his top lieutenants regarding the allocation of state land and housing units. He told the media that corruption had become systemic and widespread under the former president.
Eighteen months later, Fathi’s complaint and media appearances had yielded no response from the Supreme Council of the Armed Forces (SCAF), which had replaced Mubarak. When newly elected president Mohamed Morsi moved in August 2012 to assert his control over SCAF by dismissing the defense minister and other top chiefs of the armed forces, Fathi decided to try again. He went back to the Public Prosecutor; this time he filed a complaint against his boss, Mohamed Farid al-Tohamy, a retired army general who had been appointed by Mubarak to head the Administrative Oversight Authority in 2004 following his retirement as director of military intelligence. Fathi’s new complaint accused Tohamy directly of complicity in corruption by obstructing investigations initiated by officers of his own agency due to his connections to Mubarak and his senior officials. In a television appearance on a popular talk show a week later, Fathi said his complaint listed 14 incidents in which Tohamy had disregarded evidence gathered by AOA officers, blocked new probes, or failed to sign off on completed investigations that were ripe for prosecution.
Fathi was summoned to the Ettehadiya Presidential Palace to meet with two of Morsi’s top aides. The meeting resulted in a presidential decree, on September 2, 2012, dismissing Tohamy from his post and appointing another senior AOA officer as agency chief.
At the time, Morsi’s aides offered Fathi the opportunity to get back his job – he had already started legal proceedings demanding to be reinstated on the grounds that his resignation was involuntary and the result of harassment by his supervisors. He preferred to wait for the tribunal’s decision. “I wanted to get back to work, but on sound legal grounds,” he told Mada Masr. “I didn’t want people to say I got my job back through a favor from the Muslim Brotherhood, which ironically is exactly what many are saying now.”
The judicial tribunal ruled in favor of Fathi and the decision to reinstate him was issued on January 25, 2013.
But rather than returning to the special operations team, he was assigned to the housing unit of the AOA. That reassignment, intended as a demotion, gave him the opportunity to follow up on leads regarding the Mubarak mansions and the Arab Contractors embezzlement scheme.
The most important of those leads was Khedr, the military architect. Fathi does not hide his sympathy with Khedr. “He’s from a good family and he had no authority to defy Mubarak’s orders. He didn’t commit the fraud or falsify those receipts. He was just following orders,” he told Mada Masr. “Of course he could have resigned in protest and refused to obey the orders, but you have to remember how things were under Mubarak.”
A day after being arrested, Khedr decided to cooperate with investigators. “He didn’t want to suffer or be treated poorly. He was crushed by the scandal of being suddenly transformed from an army general in the president’s private secretariat to a suspect in a financial corruption case,” said Fathi.
Fathi escorted Khedr to the state security prosecution office, where he stunned prosecutors by revealing that during his years of service he had discreetly made copies of the original and forged receipts.
Khedr explained that he had feared that “one day I might be accused of having forged the fictitious receipts and kept the variance in value for my personal gain.”
Khedr took the team of prosecutors and investigators, which included Fathi, to the suburban New Cairo apartment where he kept boxes containing 1,007 original and forged receipts The trove of documents helped them piece together exactly how the embezzlement machine worked. But Fathi is no longer involved in the case he helped crack. On July 3 of that year, general commander of the armed forces Abdel-Fattah al-Sisi moved to overthrow Morsi, who had appointed him as defense minister a year before. Two days later, Raafat Shehata, who had been Morsi’s director of the Egyptian General Intelligence Service, was dismissed.
To fill the country’s most senior security post of spy chief, Sisi turned to his old mentor and commander, retired General Mohamed Farid al-Tohamy. The decision to bring back Tohamy from retirement was widely perceived as an effort by Sisi to compensate his friend for his undignified dismissal by Morsi from the Administrative Oversight Authority.
Fathi swiftly experienced the consequences of Tohamy’s re-instatement. Three weeks later, he was suddenly transferred to a local branch of the AOA in the small Delta governorate of Beheira. Before the end of the year, he was quietly decommissioned and transferred to a civilian desk job at the legal affairs department of the Ministry of Trade.
The expense receipts provided by Khedr to Fathi and prosecutors offer a rare glimpse of the lavish lifestyle of the Mubarak dynasty. They also show how ruling family members were prepared to charge the state for even their slightest expenses.
Egyptian citizens have unknowingly paid millions of pounds for refurbishments, furnishings, appliances, utilities bills and maintenance of the two offices that Gamal and Alaa Mubarak used to conduct their profitable investment business on al-Saada Street in Roxy, Heliopolis. Alaa’s wife Heidi charged the state for every last expense in the renovation of a new villa in the posh Golf Area on Qattamiya Heights in New Cairo. When Gamal and his wife Khadiga had their first daughter in 2010, the Arab Contractors company paid the bill to design, build and furnish a separate wing for the newborn in the Uruba Palace in Heliopolis.
At some point, first lady Suzanne Mubarak wanted to have a private office in the new, glamorous City Stars Intercontinental hotel and mall – Egyptian citizens paid for its interior design and every piece of furniture. When Mubarak’s 12-year-old grandson Mohamed died in a tragic playground accident in 2009, Arab Contractors used the telecom towers budget to fraudulently cover the costs of building a new private mausoleum. Many of the receipts describe expenses on the five villas that Mubarak and his sons privately owned in the el-Sheikh Red Sea resort and on a 25-feddan farm jointly owned by Gamal and Alaa on the road from Cairo to Ismailia.
Other expenses covered by the state budget include an elevator to the roof of Alaa and Heidi’s Qattamya villa “to be able to adjust and maintain the satellite dishes on the roof,” a Jacuzzi pool in the Heliopolis residence, and a giant tent and candles for a party in one of the Sharm el-Sheikh villas.
“Think of how many Egyptians lived in poverty and tell me why the Mubaraks needed to charge citizens for their private expenses at this cost,” says a visibly angry Fathi, who points out that no one in the family was short on cash. Alaa and Gamal both made fortunes through their private businesses and investments and they married the daughters of two of Egypt’s richest business tycoons.
“Just look at how easily they offered to pay back the money, even before the case went to trial,” adds Fathi. Gamal and Alaa Mubarak instructed their lawyers to pay the state LE104 million out of the liquid assets that were frozen by the government pending the outcome of their corruption trials. (The lawyers only paid LE104 million out of the contested LE125 million because they argue that LE21 million covered installations that were ordered by the Presidential Guard for security reasons or were spent on public property). The payment does not affect the outcome of the trial but was meant as a goodwill gesture.
Hosni Mubarak and his two sons have maintained their innocence and insisted that they never intended to commit fraud, claiming that if public funds were indeed spent on their private expenses it was done without their knowledge.
But Fathi is adamant that the Mubaraks knew what was going on. “Over 20 years they spent a couple of hundred million without once writing a check or making a bank transfer; where did they think this money was coming from?” he asks with another angry chuckle.
The case file contains hundreds of pages of testimonies by dozens of witnesses who appear to corroborate Fathi’s assertion. Both Khedr and Farhood, his co-defendant from the presidential staff, told prosecutors that their orders often came directly from Mubarak family members. Fathi assembled figures such as Nada Allam, a famous interior designer who offered free advice to Suzanne Mubarak, as well as a group of 40 subcontractors, and presented every one of them as witnesses to the public prosecutors, to whom they testified that the orders often came from the “first family,” and that they were later instructed to produce the fraudulent receipts and told it was for “security reasons.” They also testified that employees from Arab Contractors were aware of the arrangement.
The combination of documentary evidence, confessions by some of the defendants, dozens of witness testimonies for the prosecution and a damning report by a court-appointed five-member technical committee of auditors and architects all point to a strong case for the prosecution. But Fathi is anxiously awaiting the conclusion of the trial, expected tomorrow.
“The case is very strong on paper, but we live in a different country today compared to when I first initiated the investigation a year ago,” Fathi said. He notes that the Mubarak family defense lawyer, Farid al-Deeb, has painted the prosecution as a Muslim Brotherhood-driven conspiracy to settle scores against Mubarak.
Contacted by Mada Masr, Mr Deeb said he did not wish to comment on this story.
Fathi has reason to be concerned. For his zeal, he has been demoted, threatened and finally fired. Meanwhile, figures who, according to his investigations, played a key role in the embezzlement scheme have escaped prosecution all together.
On 13 May, 2011, Suzanne Mubarak was interrogated by the Justice Ministry’s illicit gains department who ordered her detention for 15 days pending investigation on charges of unlawful profiteering, after she failed to account for most of her financial wealth.
Key to the charges against Suzanne was a stunning revelation: The Uruba palace, where the Mubaraks had lived since 1979 when Hosni Mubarak was still vice president, turned out to have been discretely sold in 2002 by the Egyptian state to Suzanne, who registered the mansion under her maiden name. In order to conclude the sale, a complicated process was designed through which the state treasury sold the public property to the Egyptian General Intelligence Service (EGIS), which then sold it to a front housing company called Valley, also owned by EGIS, which then sold it as private property to Suzanne.
After four days in detention in the Qanater women’s prison, Suzanne was released and the investigation against her was closed, among wide yet unconfirmed speculation that Arab Gulf regimes had pressured the military council not to go after Mubarak family women if they had to prosecute any Mubaraks at all. In order to be exculpated, Suzanne had to sign papers forfeiting to the state treasury a wealth of LE24 million (or almost US$3.4 million) for which she failed to account, according to a statement by the Justice Ministry. As for the Uruba Palace, a representative of the intelligence service volunteered to testify that his agency had sold the palace to Suzanne, again for “security reasons.” According to the statement by the Justice Ministry, Mrs. Mubarak agreed to sell the palace back to the Egyptian government in exchange for her release and exculpation. In 2013, the public prosecutor never charged, deposed or even summoned Suzanne or her two daughters-in-law while investigating the presidential mansions and Arab Contractors embezzlement case. This was despite the fact that dozens of items on the receipts made available by Khedr to the public prosecutors refer to purchases and renovations for “al-Hanim” (“The Lady”), the term widely used to refer to Suzanne Mubarak during her husband’s rule.
Astonishingly, Gamal Mubarak revealed to prosecutors, during his interrogation in Tora prison on April 16, 2013, that his mother still lived in the Uruba Palace till this day, adding that this was done “in accordance with the law which stipulates that state authorities must provide her with a secure residence.” Fathi seems particularly enraged about this fact. “Even if that’s a legal stipulation, how could she still be allowed to live in this particular mansion that she was accused of having stolen from the state and over which her husband and sons are currently facing corruption charges?” he asks no one in particular.
The prime minister
The other obvious target in the investigation, who has been shielded from prosecution by invisible forces, is the current prime minister, Ibrahim Mehleb. Fathi’s first investigation memorandum on the case, in February 2013, which set the parameters for the probe, identified Mehleb as a co-conspirator in the scheme to facilitate the embezzlement of public funds. Mehleb spent 42 years working for Arab Contractors, becoming vice chairman of its board in 1997, then chairman from 2001 until he stepped down in September 2012. Fathi insists it is impossible to conceive how the state-owned company spent millions of Egyptian pounds worth of public funds over all these years on the private mansions and offices of Mubarak’s family without its chairman’s knowledge.
“How could he not know? We presented to the public prosecutor pictures showing him supervising workers as they renovated the mansions,” said Fathi. The investigator doesn’t believe the prime minister was one of those profiting from the scheme. But he thinks he was one of the many who “operated within the system and either accepted or ignored that the system was corrupt.”
Mehleb left the country immediately after he resigned as chairman of Arab Contractors and became executive president of a Saudi construction company. He resided in Saudi Arabia until he was called back to the country and assigned to the position of housing minister in Hazem al-Beblawy’s Cabinet, which was appointed following Morsi’s ouster in July 2013.
According to a column by pro-military journalist Salah Montasser, Mehleb was subpoenaed by the public prosecutor while in Saudi Arabia. He contacted his lawyer before returning to Egypt in July 2013, and arrangements were made for him to be escorted by a security delegation from the airport to Beblawi’s office, where he was sworn in as housing minister.
Arab Contractors lawyers concede that the company engaged in construction work for the Mubaraks, but insist that it was carried out via private contracts which were remunerated by the family. The company had a special policy regarding work for the presidency, based on its “sensitive nature.” There was no open bidding process for subcontractors, and the company’s leadership claim they paid for the work without inspecting it as they would have other projects. Two Arab Contactors employees who worked as director and supervisor of the telecommunication centers project are currently standing trial alongside Hosni, Gamal and Alaa Mubarak, as well as Khedr and Farhood from the presidential staff. But none of the company’s executives have been charged. Unlike his employees, “Mehleb was smart,” says Fathi. “There’s no signature, no paper trail, no way of confirming he knew the work his company did was paid for from embezzled public funds,” he added. Mehleb has never been called in for questioning or as a witness. But a number of witnesses, and even two of the defendants in the case, have referred to his personal participation and occasional on-site visits to supervise some of the work done in private mansions of the Mubaraks.
Taher Mamdouh al-Sheikh owns a private company for landscaping and gardening. In a deposition he gave to prosecutors on March 6, 2013, Sheikh said he was commissioned in 2002-3 by then-Housing Minister Ibrahim Suleiman to design a joint private garden for the five villas privately owned by Mubarak and his two sons in Sharm el-Sheikh. He created the garden as a subcontractor for Arab Contractors. “Arab Contractors Chairman Ibrahim Mehleb and Minister Mohamed Ibrahim Suleiman paid regular visits to check on the project,” Sheikh said in his deposition.
Mehleb was a member of Mubarak’s National Democratic Party and its elite policies committee, which was appointed and chaired by Mubarak’s son and heir-apparent, Gamal. In June 2010, Mubarak appointed Mehleb as a member in the Shura Council (upper house of parliament).
The Mubaraks will appeal the recent verdict before the Court of Cassation in a process that could take several years. Fathi is frustrated that the trial has been open only to lawyers, the media and defendants’ families. Since his dismissal from the Administrative Oversight Authority last December, he has had no standing to attend the trial. In March of this year, he submitted a written request to the Chief Trial Judge Osama Shaheen to appear before the court as a witness, given his intimate knowledge of the case. The court did not respond.
In the meantime, Fathi is busy with his own personal fight. He has petitioned the public prosecutor to investigate phone calls he says he received in March that threatened to harm him and his family if he insisted on testifying in the trial. He has also filed a lawsuit before the Court of Administrative Justice challenging his dismissal and demanding, once again, to be reinstated at the AOA. The court is scheduled to decide the case in August. Part of his motivation is financial. With his transfer, his monthly salary shrank from LE12,000 to LE1,400, and he lost the right to bonuses and benefits earned over 15 years with the anti-corruption agency. He can hardly afford to support his family of five. But Fathi insists that his primary motive is his deep sense of injustice and his love of his job. “Fighting corruption is the only thing I’m good at. It’s the only thing I know how to do.”