Combating Corruption in Egypt (I): Salem and State Impunity
While we were witnessing the trial of Hesham Geneina, former head of Egypt's Central Auditing Authority, on charges of propagating rumors about the cost of corruption in Egypt, there were ministerial committees working in full swing towards reconciliation with Hussein Salem, the fugitive businessman and one of the masters of the dissolved National Party. Indeed, Adel al-Saeed, assistant minister of Justice for the “racketeering” apparatus, held a press conference on August 3, 2016 in Cairo where he announced the completion of reconciliation procedures with Salem after the latter relinquished 75% of his wealth for the state in exchange for abatement of criminal proceedings against him. Al-Saeed added that the value of assets and cash waived by Salem are up to LE5 billion and 341 million pounds [around US$601 million] of the total value of his fortune of LE7 billion and 122 million pounds. Earlier, a number of Egyptian courts had passed penalties against Salem. He was sentenced to over 50 years, 15 of which were overturned by the Court of Cessation, leaving more than 35 years of jail time. In addition, his son was granted sentences totalling to over 17 years of imprisonment, and his daughter was sentenced to 7 years.
News of reconciliation with Salem in return for these very small amounts of money, compared to the previously-mentioned cases he was convicted in, did not bother me. The amount of money [to be forfeited] is also very small considering all the favoritism he got which in turn made him nicknamed “the owner of Sharm el-Sheikh and its sole investor”. As indicated by how cases of corruption against Mubarak and his family were handled, the majority of post-revolution [Egyptian] governments have prepared hard for the moment of absolving those whose corrupt investments led to wasting the nation’s wealth. Since the removal of Mubarak in February 2011 and in light of the absence of a parliament for over 5 years, the executive authority exploited the fact that it was overpowering the legislature to pass laws that would achieve this purpose. In this framework, it particularly sought to achieve two goals:
Tightening the grip around the oversight bodies and restricting their work in the control of corruption; and
Maintaining the contracts concluded by the National Party governments before the revolution, in an attempt to secure the pre-revolution established circles of interest. The executive authority has succeeded in this to a large extent. It has made amendments to three valid legislations and introduced a new law, according to the following:
The first amendment was made to the Law of Investment Guarantees and Incentives. This amendment managed to circumvent the provisions of the Administrative Judicial Court and the Supreme Administrative Court concerning the invalidity of the state's contracts with some investors. The amendment stipulates the formation of a committee by a prime ministerial decree, to settle disputes arising from the contracts entered into between investors and state bodies. The amendment identified the committee’s task of resolving disputes that arise between the concerned parties -relating to these contracts- in a manner that ensures preservation of the public fund and achieves contractual balance.
In the event the committee has reached a final amicable settlement between the parties, this settlement shall be enforceable and binding after approval by the Council of Ministers. The committee actually dealt with the final rulings issued by the State Council as disputes between the parties of the contract, settling them by contracting with the same investors again under the same contracts, without implementing the rulings of the administrative judiciary and the Supreme Administrative Court. The second aspect of this amendment is the shielding of investors involved in corruption cases against criminal accountability. Reconciliation was made with all the investors against whom lawsuits were filed relating to the crimes set forth in part 4 of the second section of the Penal Code (Embezzlement of and Encroachment on Public Funds and Treachery). Nevertheless, the Government faced a problem in that the door of the administrative court was still open for challenging the decisions of this committee.
The second amendment was made to the Law of Tenders and Auctions which was issued in September 2013. The amendment has closed the door on one of the main justifications for the Administrative Court rulings in terms of the invalidity of the state's contracts: failing to abide by the legal procedures stipulated by the Law of Tenders and Auctions regarding the selling of real estate, movables, projects and licensing the use or the exploitation of real estate. This was the method followed by members of the policies committee of the dissolved National Party to ensure the awarding of large projects to the group within the circle of common interests. The recent amendment to this law shows the Government's keenness on maintaining the same mechanism and following in the footsteps of the pre-revolution governments. The Egyptian Government amended the law in a manner that would allow for some state departments and its special bodies to conclude its contracts without adhering to the Law of Tenders and Auctions. The amendment excluded every administrative body whose establishment law included a text that regulates the manner of contracting which should be followed. Thus, this amendment allowed many of these bodies to contract directly, in accordance with their own laws and without adherence to the Law of Tenders and Auctions.
The third amendment came in the form of a new law on the regulation of procedures for challenging state contracts. Under this law, contracts concluded between the state and investors have been immunized against challenges before the administrative judiciary. This law has complemented what was achieved in the previously-mentioned laws. After the Government achieved its objectives to reconcile with investors in cases involving crimes of embezzlement of and encroachment on public funds; made settlements with them regarding the final judicial decisions issued by the administrative court revoking the contracts between the Government and these investors; and concluded its contracts directly without conforming to the Law of Tenders and Auctions, the only thing left to do on its part was to close the door on the surveillance of the administrative judiciary. In this context, Interim President Adly Mansour ratified the referred to law under the pretext of the need to address the crisis of investors’ trust in the stability and security of their transactions, especially since some of these transactions concluded by the state were revoked.
The law provided for the suspension of appeals against the decisions or procedures on which the state based its contracts, including the decisions on allocation of real estate to certain parties to the exclusion of others, unless a final ruling convicting the contract’s parties or one of them in a crime involving public funds has been issued.
In 2015, the fourth amendment was made to the legislative structure governing the embezzlement of and encroachment on public funds. The Criminal Procedure Code was modified by adding a new article that allows reconciliation in all crimes stipulated in the Penal Code, in relation with encroachment on public funds. Reconciliation should only take place according to a settlement made by a committee of experts, formed by a decree of the prime minister. The approval of the Council of Ministers of this settlement serves as a documentation thereof, without charging any fees. This reconciliation is also considered an executive document. The settlement results in the abatement of all kinds of criminal proceedings on the incident which was the subject of reconciliation. The public prosecution orders a halt to the implementation of the penalties imposed on the parties accused in the incident if the reconciliation was made before these rulings became final. If they are final, then a request shall be submitted to the Attorney General who in turn presents it to the Court of Cassation to decide on it within a maximum period of 25 days of the date of submission.
Given the amendments previously made to the Law of Investment Guarantees and Incentives, it is impossible to obtain a final judgment convicting one end of the contract in public fund crimes because the referred to amendment has opened the door for reconciliation in these proceedings, whatever the status of the case. This means it is practically impossible to get a final court ruling against one end of the contract on a crime relating to encroachment on public funds; thus, it is impossible to institute a lawsuit to void these contracts before the administrative judiciary.
The circumstances of the issuance of the previous four laws and their integration indicate that the real reason for the passing of such legislation is not to restore confidence in the Egyptian investment, but to keep a group of corrupt contracts entered into by the successive governments before the revolution and keenness by the pre-revolution governments to maintain them. Moreover, these laws also aim to maintain the same tools used by the pre-revolution governments in their contracts.
It is in this context that Salem’s case was, as expected, settled. What is even more dangerous than this reconciliation is the confidentiality on the part of these ministerial committees working day and night to make further reconciliations. They are wasting the opportunity to realize transitional justice. Details of reconciliation with Salem have only been revealed to prepare the public opinion for the return of the man into the [bosom] of the state.
 For more on Salem, see http://www.bbc.com/arabic/middleeast/2016/08/160804_hussein_salem_profile
 An amendment to the Law of Investment Guarantees and Incentives by Decree-Law No. 4 of 2012, issued by the military council in January 2012.
 An amendment to the Law of Tenders and Auctions under Decree-Law No. 82 of 2013.
 Law No. 32 of 2014 on the regulation of procedures for challenging state contracts, issued in April. Law No. 16 of 2015, amending some provisions of the Criminal Procedure Code.