Chronicle of the Middle East and North Africa

In Egypt, Corruption Allegations Against al-Sisi Spark New Unrest

Specials- Abdel Fattah al Sisi
Egypt’s President Abdel Fattah al Sisi waits to speak during the 74th Session of the United Nations General Assembly at UN Headquarters in New York, September 24, 2019. Photo: Johannes EISELE / AFP

The growing power and self-enrichment of a corrupt clique of business cronies close to former Egyptian president Hosni Mubarak was one of the main drivers of the protests that toppled his regime in 2011.

Egypt’s current president, Abdel Fattah al-Sisi, has vowed to tackle corruption. However, in September 2019, corruption and slander allegations against him in a series of videos by the relatively unknown actor and contractor Mohamed Ali sparked new unrest.

In June, Egypt organized the first African Anti-Corruption Forum in Sharm el-Sheikh, during the opening speech for which al-Sisi said, “Egypt has come a long way in the past years in the fight against corruption.” He also committed “to ensure the preservation of public money”.

The Administrative Control Authority (ACA) is the body responsible for fighting corruption in Egypt. In recent years, a number of high-ranking officials have been sentenced on corruption-related charges.

The head of the customs authority was arrested in July 2018 for corruption and bribery. In January that year, Hisham Abdel-Basset, the governor of Menofiya, a governorate north of Cairo, was arrested and later sentenced to ten years in prison for accepting a bribe of $1.65 million.

Also arrested in 2018 were four officials from the Supply Ministry on charges of taking bribes from commodity trading firms. Soad al-Khouly, the former deputy governor of Alexandria, was sentenced to 12 years in prison in January 2019 for taking bribes in the form of money, a gold necklace and foodstuffs, local media reported.

The latest high-profile arrest on corruption charges was Ahmed Selim, the secretary general of the Supreme Council for Media Regulation, in August 2019.

There are limits, though, to what can be openly discussed about corruption. Former top auditor Hisham Geneina was removed from his position after claiming in early 2016 that the country had lost $36.8 billion over the span of four years due to corruption, mostly as a result of illegal purchases of state lands. Two years later, he was sentenced to five years in prison in a separate case.

Neither have the convictions significantly improved Egypt’s track record on corruption. In the 2018 Corruption Perceptions Index published by Transparency International, Egypt ranked 105th out of 180 countries. Although a three-point improvement on the year before, the report nevertheless noted that ‘very few improvements exist on the ground’.

‘[…] political corruption remains a major problem in Egypt with clientelistic networks playing a central role both in politics and in the economy. Corruption in the country’s law enforcement agencies severely undermines the rule of law, and some recent abusive trials give the impression that the judiciary has become politicized,’ the report said.

This undermining of the rule of law can be observed in how the police deals with street cafes in Cairo. Many of these cafes, especially in central Cairo, have grown substantially without a license, partly because of the bureaucracy involved in obtaining a license and partly because of opportunism on the part of the business owners.

Every couple of months, the police raid the cafes, confiscate their furniture and close them down for a day or two. Owners have to report to the police, pay a substantial amount that lies somewhere between a bribe and a fine, collect their furniture, reopen and continue business as usual. A few months later the cycle begins again.

More problematic is corruption at the higher levels. Al-Monitor reported in September that Egypt is expanding its already widespread use of no-bid sale and lease of state property to investors, as per a decree issued by Prime Minister Mustafa Madbouly. The degree circumvents the normal bidding processes, which could facilitate favouritism and corruption, according to an expert cited in the report.

Often profiting from no-bid contracts are military-owned companies, which – while no hard data are available – appear to have significantly increased their business activities over the past few years.

“The government spends billions of dollars on no-bid contracts that go to companies owned by the military from which they derive a profit,” Timothy Kaldas, a non-resident fellow at the Tahrir Institute for Middle East Policy, told Fanack.

A recent example is the two agreements signed in August by the Ministry of Petroleum for oil and gas exploration in the Western Desert with an army-owned oil company established in 2017. No tenders are known to have been issued for exploration of these blocks.

“Much of the work awarded to military contractors is ultimately farmed out to civilian subcontractors who take on the work while the military keeps its cut for, as al-Sisi puts it, ‘managing’ the project,” Kaldas said.

Al-Sisi has repeatedly countered criticism of the army’s economic role, saying it only supervises projects.

One of these civilian subcontractors is owned by actor Mohamed Ali, who managed to rattle Egypt and al-Sisi in particular with a series of YouTube videos. Ali claimed his company worked on several large-scale construction projects such as new palaces for al-Sisi and hotels for senior army commanders. He said the army owed him millions in unpaid fees.

The videos touched a nerve. The suggestion that al-Sisi was spending public money on palaces while subjecting the population to harsh austerity measures that have pushed up poverty levels, angered many.

The videos went viral, forcing al-Sisi to respond in a hastily organized press conference. “Yes, I build palaces, and I will build more, but not for me, for Egypt,” he said.

His statement offered little reassurance. Ali called for a revolution in his videos, and on 20 September, hundreds of people across the country ran the risk of arrest and took to the streets, including Cairo’s Tahrir Square, to chant anti-government slogans.

The state’s response was swift and fierce. In the week after the protests, over 2,000 people were arrested, and the security presence in central Cairo was raised to unprecedented levels.

The measures were effective, and plans for new protests on 27 September were abandoned, aside from a few scattered demonstrations outside the city centre.

Popular anger, difficult economic circumstances and corruption are all tied together. In November 2016, Egypt signed a $12 billion loan agreement with the International Monetary Fund, which came with a number of harsh but necessary economic reforms. Subsidies were phased out, the Egyptian pound devalued and a value-added tax was implemented.

The aim in the short-term was to improve the state budget, which was successful to a large extent, and in the mid-term to stimulate private sector growth and foreign investments.

The latter has not yet materialized, with non-oil foreign direct investment at a low level and private sector activity contracting for most of this year.

“Fears of corruption, preferential treatment for the regime’s businesses and concerns about the ability to enforce contracts and recuperate funds all play a role in this,” Kaldas said. “Foreigners are particularly concerned about competing in any industry directly with the nation’s ruling institution, the armed forces.”

In this context, it is clear that the fight against corruption requires more than the arrest of a few officials, starting with revising the role of the army in the economy and making the way major contracts are awarded more transparent.

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