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Egypt, November-4 Volume
43.
22.11.2002
Egypt’s Anti-Corruption
Campaign |
As parliament reopened this
past week, the National Democratic Party showed
its dominance by re-electing speaker Fathi Sorour
for the 13th year running, as well as his
deputies, and continuing to control all the
committees. In fact, the committee heads were
unchanged except for one. Abdallah Tayel did not
join his erstwhile colleagues as the powerful head
of the economic committee because he is in jail on
corruption charges. In September, Tayel had his
parliamentary immunity lifted and was subsequently
charged with improperly giving out loans as the
head of the joint venture Misr Exterior Bank.
Tayel was certainly not the first or the
last. The issue first came to public attention
with the notorious loan deputies case of 1995 when
four parliamentarians and dozens of businessmen
were convicted in an elaborate loan scandal that
involved influence peddling in return for loans
provided without the necessary guarantees. The
scandal involved hundreds of millions of pounds,
several banks and suspects absconding to other
countries. The case dragged on for years before
verdicts were handed down in 1999, then tossed
out, then harsher sentences were given again in
July 2002.
That particular case seemed to
unleash the floodgates and a full-scale
anti-corruption drive by the state is currently
underway. In the latest event, the High State
Security Court announced on November 18th that it
had seized the property of 21 businessmen and two
bankers involved in the usual crime of improper
loan deals to the tune of LE700 000.
On
November 16th, the president himself made it clear
that the anti-corruption campaign that has
stretched through the summer was by no means over.
In the course of his speech before both houses of
the parliament marking the opening of this year’s
legislative session, he stated that "the rule of
the law is a basic necessity for combating
corruption and fighting favouritism." Considering
the importance of some of the figures arrested
over the last few months, it is clear that the
campaign, led by the Administrative Control
Authority, has approval from the highest levels.
The banking sector, with its ready access
to easy money, has been the focus of the
anti-corruption campaign, though most agree that
similar kind of influence peddling exists at many
levels and sectors of the government. In banking
however the alarm bells went off with the sudden
surge in non-performing loans. With banks more
cautious about lending after the loan deputies
affair, businessmen caught by a recession could no
longer get the new funds needed to support ailing
projects and pay back debts, so they fled the
country. Then it became clear that many of these
loans were obtained without proper guarantees.
With continued calls for privatisation,
the four major public sector banks (controlling
65% of the country’s deposits) are trying to get
their houses in order. Executives have been
brought in from the private sector and there is an
effort to grapple with the billions and billions
pounds worth of non-performing loans. Officially
it is around 13% of deposits, though some have
suggested the real number is higher.
The
anti-corruption campaign is also believed to be a
warning against certain members of the old guard.
It has been pointed out that three of the highest
profile figures picked up in the last few months
had close ties to the three members of the ruling
party’s old guard. Abdallah Tayel was close to
Kamal Al Shazli, the powerful minister of
parliamentary affairs and deputy secretary of the
National Democratic Party.
Muhammad Wakil,
the former chairman of the news department was
close to Minister of Information Safwat Al Sherif.
Wakil just received the stunning sentence of 18
years hard labour and a LE10 000 fine for charging
bribes to put people on various prominent talk
shows.
Finally there was Youssef Abdel
Rahman, the undersecretary of the Ministry of
Agriculture and one of the most powerful people
there. Abdel Rahman, besides being the head of an
agricultural bank, received massive bribes for
agricultural contracts, specifically from foreign
pesticide companies. He was a close associate of
the minister, Youssef Wali, who used to be the
secretary general of the NDP. Wali was recently
promoted to a largely ceremonial position in the
party. Al Sherif has taken his place, suggesting
that he was not tarnished by the scandal.
Around this time, Transparency
International released its 2002 Corruption
Perceptions Index, which ranked Egypt 62nd out of
102 countries with a score of 3.4 on a scale of
10, with ten being the least corrupt. Egypt was
ranked below countries like Mexico and China and
tied with El Salvador. The index is based on
perceptions of corruption by locals and
expatriates in each country.
"The World
Bank has identified corruption as the single
greatest obstacle to economic and social
development. It undermines development by
distorting the rule of law and weakening the
institutional foundation on which economic growth
depends," according to the World Bank website.
Other figures netted in the campaign
include former Minister of Finance Mohieddin Al
Gharib, former Minister of Tourism Tawfiq Abdou
Ismail (in the loan deputies case), and former
Governor of Giza Maher Al Guindi. Just going after
individuals, however, does not get at the root of
the problem, say observers.
"Often
initiatives like that are often taken to settle
old political scores," said Arwa Hassan, head of
the Middle East section at Transparency
International. "That on its own is not going to be
sufficient to really do something about the
corruption problem in any country. What really
needs to happen is that the government, the
private sector and civil society need to work
together to try to overcome some problems."
Transparency International's
representative in Egypt Ahmed Sakr Ashour, for his
part, doubts that the move is wholly political,
and says that the government, through its
Administrative Control Agency is working hard at
tackling corruption - but admits that they are
addressing just the symptoms. "The efforts that
are taking place represent good moves, but they
are curative rather than preventative."
The international prescription for
fighting corruption, as articulated by Hassan,
recognises the need for the private sector and
civil society to pressure government since the
initiative cannot come from the top alone.
Unfortunately in Egypt, these key players are weak
or complicit. As many opposition figures point
out, they were sounding the alarms about
corruption in the banking system years ago and no
one listened.
However, now, in the midst
of a long slowdown in the economy, there is less
to go around for everyone and it appears as though
the government has finally gotten fed up with the
little (and not so little) bits being shaved off
here and there.
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