Hussein Salem’s wealth: What’s hidden is more important
A reconciliation deal with Mubarak-era businessman Hussein Salem was said to be based on the recuperation of 75% of his wealth, but it turns out this is more than what was accounted for.

Business tycoon and long-time friend of deposed President Hosni Mubarak, Hussein Salem, gave up three quarters of his wealth in a reconciliation deal brokered by the Illicit Gains Authority, it was announced on August 3.

The deal, which put an end to asset freezes on Salem and his family members, and meant the removal of their names from airport arrival watch lists, put a happy end to the ordeal of one of Egypt’s most wanted men on corruption charges when the Mubarak regime came to an end in 2011.

But an official state-stamped document obtained by Mada Masr, reveals that what Salem has given up is no more than a quarter of his real fortune. The document was submitted to a court during a 2011 case looking into gas exports to Israel in which Salem was one of the defendants.

Head of the Illicit Gains Authority, Judge Adel al-Said, announced at a press conference in August that he had given up in-kind and cash assets worth LE5.34 billion, amounting to three quarters of his fortune inside and outside Egypt.

The list of property given up by Salem does not include any assets or funds abroad, nor any investments or profits made by Salem in the petroleum sector, which constitutes his main investment activity.

Property list given by Hussein Salem and his family following the reconciliation deal

Asset Value
8 villas in Sharm el-Sheikh LE249 million
1 villa in Venus resort on Egypt’s north coast LE4 million
Real estate on Rushdie Street, Cairo LE45 million
Four-story building on Nozha Street, Heliopolis, Cairo Unknown
61 feddans and a 259525 square meter piece of land in Zemam al-Bostan, on the Cairo-Alexandria road LE11 million
59 feddans, and a 251098.8 square meter piece of land in Zemam al-Bostan, on the Cairo-Alexandria road LE8 million
Two pieces of land in the Qusur region, north of Mashtal, including assets built there, in New Cairo Unknown
Bayadeya land holding Temsah Company for Touristic Projects in Luxor LE700 million
Neama Company for Golf and Touristic Investment LE3.079
24 percent of shares of Temsah Company, devoid of any financial privileges LE122.8 million
South Sinai Water Company LE756.997 million

The document

The document obtained by Mada Masr, classified as confidential and drafted on March 28, 2011, includes an inventory of Salem’s properties and those of his family, listing real estate properties and companies in the tourism and petroleum sectors. The memo also details some profits made by selling shares in companies that Salem helped establish.

Document detailing Hussein Salem’s property

The document was prepared at the request of the public prosecutor at the time, after several complaints were submitted against former Minister of Petroleum Sameh Fahmy, other ministry staff and Salem. The complaints accused Fahmy of illicit gains, ministry officials of financial violations in gas exports to Israel and Salem of illegally receiving land.

The document includes a number of companies and real estate properties, which are not among those given up by Salem and his family.

Companies owned by Salem and his family, which are not included in the properties conceded as part of the reconciliation agreement

Company Salem’s share Share of son Khaled Share of daughter Magda Share of granddaughter Nelly Share of granddaughter Nina
Victoria United for Hotels LE89 million LE25 million LE4.6 million
Victoria for Tourism and Touristic Transport LE1.7 million LE0.8 million
Sharm el-Sheikh for Hotels and Conference Centers LE20 million LE15 million LE15 million
Luxor Grand Hotel LE14.5 million LE5.7 million
South Sinai for Environmental Development LE5.5 million LE3.5 million
Arabeya for Petroleum and Energy Investments LE2.6 million LE1.5 million LE0.9 million
Bothur for Agriculture, Industry and Trade LE0.5 million
Sharm el -Sheikh Free Shops LE0.09 million LE0.08 million LE0.08 million
Aktha Janitor Wings Aviation LE1.6 million
Medor Electricity Company (Midelec) 57 shares to the value of US$5,700 14,900 shares at the value of US$1.49 million 9000 shares at the value of US$900,000 3000 shares at the value of US$300,000 3000 shares at the value of US$300,000

Assets owned by Salem’s family, which are not included in the properties conceded as part of the reconciliation agreement

Asset Owner
Villa in Mena Garden City, October 6 Hussein Salem
Two pieces of land, 1540 meter square and 1582 meter square, in Sharm el-Sheikh Khaled Hussein Salem
Pieces of land in Moqattam, Cairo Magda Hussein Salem
Share of an inherited building in Manakh neighborhood, Port Said Nazima Abdel Megid (wife)
Private plane F2000 registered in Belgium Used by Hussein Salem; owner cannot be identified except after examination of registration files abroad
Yacht called Blue Lagoon Khaled Hussein Salem

“Everything he gave up is real estate property or companies owning real estate property, while the major part of his investments are in the petroleum sector. Those are the most hidden funds,” says Osama Diab, a researcher specializing in corruption at the Egyptian Initiative for Personal Rights.

Diab posits that what has been conceded in no way constitutes 75 percent of Salem’s fortune, unless what is considered as part of his wealth only concerns those assets and companies registered with the civil registry and the Investment Authority in Egypt, in addition to local bank accounts controlled by the Central Bank of Egypt. “What the businessman has donated does not exceed 20 percent of his fortune,” Diab summarizes.

Former head of the Illicit Gains Authority claimed that it goes against any logic to say that Salem reconciled with the state. “According to what was declared in the reconciliation deal, Salem owns funds and property the value of which does not exceed LE7.052 billion. Investigation bodies could not reach the full size of Salem’s fortune,” the former official said.

Faulty evaluation of assets

Diab also doubts the estimated value of assets that have been conceded. “I do not think the assets that have been conceded, especially those in Sharm el-Sheikh and Luxor, amount to the announced value, considering the radical decline in tourism over the past few years.”

The document cites, for instance, the profit made by Neama Company for Golf and Touristic Investment in the period between 2005 and 2008 as LE162.83. Meanwhile, the company was conceded at a value exceeding the LE3 billion in the reconciliation deal, which is a questionable estimate, Diab says.

Missing petroleum investments

The document contains an examination of profits made by Salem from his investment in the East Mediterranean Gas Company (EMG), as well as his shares in the company.

EMG was established on January 29, 2011, to take on the transfer and sales of gas to Turkey and other Mediterranean countries. Salem was the chair of its board and owned 60 percent of its shares, while the state Petroleum Agency had a 10 percent share. The Israeli company Mersaf had 20 percent and a British company the remaining 10 percent.

In 2005, all shares owned by Salem in EMG were transferred to the Mediterranean Gas Pipeline (MGPC), which acquired 65 percent of EMG.

In 2007, Salem sold 39 percent of MGPC’s share in EMG to the American EGI and Thai PTTI companies for a total of US$631.9 million. The price for a single share ranged between $7.16 and $13.25. Salem made a profit of half a million dollars from the sales process. He also made profit from the sales of an additional 28 percent of MGPC’s shares in EMG to a Thai businessman, the value of which has not been verified.

Diab says that if we assume that the price of a share in the 28 percent sale deal from EMG to the Thai businessman constitutes the minimum share price in the other sales deals, and which is $7.16 dollars, then we can estimate that Salem made a profit of $294.7.

The document does not mention the fate of the remaining 33 percent of MGPC’s share in EMG. “If we assume that those shares were sold at the minimum price of shares in the rest of sales deals, Salem’s total profit from selling his share in the East Mediterranean Gas Company would amount to $1.5 billion.”

Diab points out that this estimate is lower than that cited in Egyptian and Israeli media reports regarding the sale, which put the profit at around $2 billion.

There is also the Middle East Oil Refinery (MIDOR), which was established as an Egyptian shareholding company in 1994 according to free zone regulations in Alexandria, with a starting capital of $300 million, increasing in 2002 to US$1.1 billion. MIDOR’s shareholders structure was amended in 1996 with the Swiss Maska company owned by Salem holding 40 of the shares, another 40 percent owned by Irish MIDOR headed by Israeli businessman Youssef Maimen, and 20 percent by the Egyptian Petroleum Agency.

The Swiss Maska and Irish MIDOR sold their shares in MIDOR to the Egyptian Petroleum Agency, which came to own 78 percent of the company shares. They sold another 10 percent to the Egyptian Petrojet, 10 percent to ENPI and 2 percent to Egypt’s Suez Canal Bank.

Further research shows that Salem made a profit of around $94.6 million out of the sales deal of all shares of the Swiss Maska company that he owned at MIDOR, due to exaggerated shares value.

According to the document, those shares were sold to the Suez Canal Bank and NBF CAYMAN (referring to NBE CAYMAN Limited), which is affiliated  with the National Bank of Egypt, and registered in the Cayman Islands, a well-known tax haven in the Caribbean. This means that NBE Cayman Limited carried out the purchase on behalf of the Egyptian companies, leaving no trace of the transaction.

MIDOR made no profit until 2004 when it made $4.3 million in profit, according to the document. This supports the fact that the shares sold between 1998 and 2001 before making a profit were overpriced.

In his book, Rules of Experts (2002), Timothy Mitchell, professor at Columbia University, confirms this information, indicating that the share of the Suez Canal Bank later reached 2 percent and that the objective of the project changed from major export projects to production for local market.

There is also the Middle East Oil Tankage and Pipelines company (MIDTAP), which was established in 1996 with a capital of $70 million, in which Salem invested through the Swiss Maska company, acquiring 20 percent of the shares (at a value of $14 million.) Between 1998 and 2001, the company’s capital increased more than once. Salem exited after selling all his shares at market cost without making any profit to the National Bank of Egypt and NBE FINANCE CO Limited company, also affiliated to the bank.

Some of Salem’s funds are probably still hidden in tax havens, Diab says, adding that Salem owns a company that is registered in Panama by the name Celia.

Unaccounted assets abroad

Diab believes that Salem and his family own many assets and investments abroad, which have not been included in the reconciliation process with the Egyptian government. This is because they are based in tax havens, making tracing funds very difficult.

Tax havens allow for tax evasion, and privacy of information such as accounts and registers of company owners, hiding behind companies that provide a front. An estimate published last year said that tax havens include about $7.6 trillion, constituting 8 percent of the world’s total wealth.

In a previous story published in Foreign Policy, Diab and Bel Trew reported that a leaked document from the Illicit Gains Authority confirmed that the Salem and Mubarak families, as well as other businessmen, invested in a foreign fund registered in the Cayman Islands.

Some of Salem’s funds are probably still hidden in tax havens, Diab says, adding that Salem owns a company that is registered in Panama by the name Celia and that it manages a number of investments in different places in the world.

Diab also points out that Salem owns properties in Spain, Hong Kong, and Switzerland, revealed in the public prosecutor’s request to judicial authorities in these countries to lift the freezing on his assets. Salem also owns a chain of hotels and a mall in Romania, revealed by Assem al-Gohary, former assistant to the minister of justice for illegal gains and head of the judicial committee formed after the revolution to reclaim funds smuggled abroad. There is also evidence that Salem was involved in deals related to US military aid to Egypt in the 1980s.

In an October 2011 statement about Salem’s wealth, Gohary said, “The committee found important documents that confirm that Hussein Salem, and his son and daughter, Khaled and Magda, own an enormous fortune abroad, exceeding LE24 billion, traced through the multiple bank transfers made by Salem and his two children to banks abroad during the last six months following the January revolution. During that period, they transferred assets they own in those countries into liquid funds.”

Gohary added that there were also real estate and financial assets in Egypt and abroad as well as deposits by Salem’s family in overseas banks, independent kingdoms, Hong Kong and the Arab Emirates.

The reconciliation deal with Salem is part of a wider reconciliation policy with Mubarak-era businessmen, whose close relations with the authorities branded that era in Egypt as one of crony capitalism.

Why reconcile?

There are two possible hypotheses lying behind the acceptance by the state of the reconciliation deal with Salem, Diab says. The first is an unwillingness to continue the process of litigation, given that it usually takes a long time both domestically and abroad, while the government is looking for any money to close its budget gaps. The second hypothesis is that it is an attempt to send a message of assurance to businessmen, offering them some degree of impunity and protection.

Diab thinks both hypotheses are plausible, saying that the state found in Salem a perfect candidate, as he could be forced to pay the highest fine among Mubarak’s businessmen as, “Nobody is sympathetic to Salem, whether among average citizens or within the current regime, because in Egyptian public opinion, he represents absolute evil.”

The reconciliation deal with Salem is part of a wider reconciliation policy with Mubarak-era businessmen, whose close relations with the authorities branded that era in Egypt as one of crony capitalism.

The Illicit Gains Authority had announced that the government received LE301.9 million in previous reconciliation agreements with Salem, that 11 requests for reconciliation are pending and that five requests have been rejected. A judicial source stated to the privately owned Al-Shorouk newspaper that Mubarak-era Minister of Information Safwat al-Sherif intends to apply for reconciliation in a case of wealth inflation and abuse of power.

The government is now empowered to close reconciliation deals related to illicit gains and profit making cases upon an amendment to the Penal Code by a presidential decree in March 2015. The amendment and the reconciliation processes that followed have been criticized by anti-corruption organizations as leading to greater impunity and corruption.


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