Money without truth: Egypt’s reconciliation deal with Mubarak-era tycoon
 
 
Hussein Salem
 

The Illicit Gains Authority announced on Wednesday that it has officially completed a reconciliation deal with Mubarak-era business tycoon Hussein Salem that will net the Egyptian government a reported LE5.8 billion, the state-owned Al-Ahram reports.

Salem, a dual Spanish-Egyptian citizen, fled to Spain during the 2011 revolution, and has faced a litany of graft charges that would have sent him to prison for decades. He was sentenced in absentia to 15 years in prison on charges of misappropriation and squandering public funds in connection to a plan to sell Egypt’s natural gas to Israel at below-market prices. He was also handed a 10-year sentence for illegally selling electricity to bodies other than the Egyptian Electricity Authority.

During the Wednesday press conference to announce the decision, Illicit Gains Authority head Adel Saeed said that the government will not pursue further legal action against Salem per the terms of the reconciliation agreement, adding that he has already contacted the prosecutor to lift the freeze on Salem’s assets and to remove the businessman’s name from wanted lists. Saeed also called the deal the largest of its kind to be completed in Egypt.

However, Egyptian Initiative for Personal Rights researcher Osama Diab says that Egypt’s approach to reconciliation disregards any effort toward truth-seeking.

“Reconciliation has to be part of a larger process and be tied to a transitional justice mechanism,” he says.

Diab contends that, while it can serve to smooth tension during a transitional period and neutralize a former regime’s allies, reconciliation should be tied to an attempt to prevent similar future crimes.

“Reconciliation usually entails conditions, is put in a larger context and is not just considered a way to close a shortage in the budget. It should be used as a means for larger goals and not as an end in and of itself,” Diab says.

Diab points to the Truth and Reconciliation Commission (TRC) set up in South Africa after the end of apartheid to demonstrate the importance of truth-seeking to the reconciliation process.

“Salem is a goldmine, not because of his money, but because he was in Mubark’s inner circles and knows the inner workings of the state since the sixties. Current narratives on the gas deal with Israel are still vague, and he has all the details,” Diab says.

Beyond questions of disclosure, Diab contends that tighter restrictions should be imposed on the reconciliation process, as the role of various authorities in the process is unclear and the exact terms of reconciliation are without a normative standard.

In addition to his putative involvement in energy graft, Salem, the founding shareholder of East Mediterranean Gas Company (EMG), was also implicated in a case with Mubarak and his two sons, in which the former president was accused of having illegally allocated Salem 2 million square meters of land in Sinai in return for five villas in Sharm el-Sheikh that are worth an estimated LE39 million. However, the charges were dropped in 2014 when the statue of limitations expired.

Following a request by Egypt, Interpol issued a warrant for Salem’s arrest in May 2011. According to the Spanish newspaper El Pais, Spanish prosecutors accused Salem of money laundering, shortly after which the government seized his assets. Salem was subsequently arrested but later was released upon paying 27 million euros in bail in June 2011.

Spain initially agreed to extradite Salem and his son to Egypt in 2012 provided Egyptian judicial authorities replace the examining judge leading interrogation in the trial and allow Salem to serve his sentence in a Spanish prison, the New York Times reported.

The reconciliation process began in March 2016, after the governmentaccepted Salem’s offer to transfer ownership of 78 percent of his assets to the Egyptian government in return for being allowed to return to Egypt without risk of prosecution.

The privately owned Al-Shorouk newspaper has published a list of Salem’s forfeited assets as revealed by the Illicit Gains Authority: eight villas and a resort in Sharm el-Sheikh, an 800,000-square meter golf course, a villa in the North Coast, two pieces of land in New Cairo that total 10,000 metes square and on which there is a mansion, a five-story building in Heliopolis, a water station in Sharm el-Sheikh, a 140-fedan plot of land in Wadi al-Natrun, shares in several companies and LE123 million in cash.

EIPR’s Diab states that the government’s estimation that it has acquired 75 percent of Salem’s assets is grossly inaccurate, as the Illicit Gains Authority’s list disregards assets held abroad and Salem’s offshore companies, which constitute a large portion of his fortune.

Diab estimates that the assets acquired in the reconciliation deal do not make up more than 20 percent of Salem’s fortune.

Research carried out by the EIPR notes that members of Salem’s family are partners in a company registered in the Caribbean’s Cayman Islands, a known tax haven.

The Egyptian government has been able to pursue reconciliation agreements in cases related to graft and profiteering following a penal code amendment passed in March 2015 that broadened the category of offenses that could be resolved via reconciliation. The amendment and ensuing reconciliations have been criticized by anti-corruption organizations as measures that grant impunity and increase corruption.

In its Wednesday statement, the Illicit Gains Authority declared that the government netted LE301.9 million in reconciliation deals before the latest with Salem. There are 11 outstanding reconciliation requests, while five have been rejected previously.

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