Mubarak assets are target of global search

September 4, 2011

As prosecutors prepare to bring former Egyptian president Hosni Mubarak back to court on Monday, a quiet but intensive global effort is underway to find assets allegedly stolen by Mubarak family members and their associates.

Thus far, the search — prompted by an Egyptian request sent to countries around the world — has located about $520 million in assets in Switzerland that Swiss authorities say have been frozen. But no money has been returned to Egypt, and it is far from certain whether any assets will ever be recovered.

Even those accounts frozen by the Swiss amount to a fraction of the alleged billions of dollars in illicit assets that Mubarak and his sons, Alaa and Gamal, have been accused of acquiring. The Mubaraks and their attorneys strongly deny the allegations.

In the United States, Treasury and Justice department officials, whose spokeswomen declined to comment, have taken no action to freeze or seize assets. But Egyptian officials have indicated they are working with U.S. authorities to try to find any recoverable funds or property.

Rumors of stolen assets and the wealth of the Mubaraks and many of their friends were among the main factors fueling public anger before Mubarak’s downfall. A staggering wealth gap exists in Egypt, where the average working wage is a few dollars a day.

Egyptians remain unhappy that no assets have been returned. “People are disappointed, to say the least, given that the country is going through hard times when it comes to the economy,” said Wael Ghonim, a former Google executive who was an Internet organizer during the revolt. “If Europe and the U.S. are serious about helping Egypt, then helping the current government return those assets back to the Egyptian people is crucial.”

That Egypt has yet to recover pilfered assets does not particularly surprise specialists in the area of recovering funds stolen by heads of state and senior government officials — called “kleptocrats” by the U.S. Justice Department.

“There are huge expectations,” said Jean Pesme, coordinator of the Stolen Asset Recovery Initiative jointly operated by the World Bank and the United Nations. “It is not going to happen overnight.”

Tracking down stolen assets can be complicated. Some kleptocrats hide the money using tactics such as shell companies and clandestine intermediaries. Further, most countries require a judicial finding that the money was illegally obtained or stolen before it can be returned.

“The difficulty will be how much evidence can be brought to show that specific assets belong to or are controlled by people who are undertaking corrupt activities,” Pesme said.

U.S. officials have been asked repeatedly why they have not ordered banks to freeze any Mubarak assets, yet moved in light of the Arab Spring revolts to freeze the U.S. accounts of Libyan leader Moammar Gaddafi and Syrian President Bashar al-Assad. Officials have explained that Treasury’s sanctions programs are aimed at altering or penalizing malevolent behavior or preventing terrorism, drug trafficking or, in the case of the Middle East revolts, halting violent attacks on peaceful demonstrators and democratically inspired uprisings.

For example, a senior administration official said last month said that the freezing of more than $30 billion in Libyan assets was part of a multi-pronged “effort to stop a massacre in its tracks, to reverse the momentum against Gaddafi, to create space for the Libyan people to organize.”

In the case of Egypt, Mubarak was forced from power before the United States froze any assets in connection with uprisings in the region. However, Treasury did issue a reminder to banks that it is illegal to launder or hold the illicit proceeds of kleptocrats.

Switzerland’s order called for a freeze on the assets of not only the Mubaraks — including the ousted president’s wife, his sister-in-law, his sons and their wives — but also several government ministers and billionaire steel magnate Ahmed Ezz, a senior political party official.

“These assets were not confiscated but frozen,” Swiss officials said in a news release in May announcing the order. “The freezing of these assets does not demonstrate their legal or illegal origin. Thus, it is now up to the Egyptian judicial authorities to determine, through criminal proceedings, whether these assets were illicitly acquired.”

The Swiss have sent a team of experts to Cairo to help Egyptian judicial officials revise their request for “mutual legal assistance,” the formal procedure used to ask for assets to be returned, Swiss foreign affairs spokesman Adrian Sollenberger said.

Of about a dozen such requests, only one has been forwarded to the Swiss Attorney General’s Office, the authority that will review and possibly execute it, said Folco Galli, spokesman for the Swiss Justice Department. The others “still don’t meet the formal requirements and have to be completed,” Galli said.

Ted S. Greenberg, former head of the money-laundering unit at the U.S. Justice Department, said there are several possible reasons for the U.S. government’s inaction.

“There might not be any proceeds in the United States, or that passed through the United States, or it may be that the Egyptian government has not yet provided sufficient evidence to the United States about crimes in question,” he said.

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