Corruption costs Egypt $25 billion a year

As Egypt tries to rebuild itself and turn page on political and security turmoil, experts fear rampant cor­ruption could scare investors away.

Under a cloud

2015/09/18 Issue: 23 Page: 5

The Arab Weekly
Hassan Abdel Zaher

CAIRO - Egyptian President Abdel Fattah al-Sisi assigned Pe­troleum Minister Sherif Is­mail to form a new govern­ment, hours after Egypt’s cabinet submitted its resignation hard on the heels of a high-profile corruption case.

The case involves agriculture minister Salah Helal, who allegedly wanted kickbacks for easing the il­legal acquisition by a businessman of a plot of state land. The case was the latest in a long series of finan­cial corruption allegations that have damaged Egypt’s reputation and economy.

Corruption costs Egypt approxi­mately $25 billion a year, according to the state-run Central Agency for Public Mobilisation and Statistics.

Helal, who took over the Agricul­ture portfolio in March, was arrested September 7th, accused of demand­ing a villa worth $1 million, clothes valued at $28,000 and about $1,750 worth of food, allegedly to ease the acquisition by a businessman of 2,559 acres of state land.

The minister’s office manager was also accused in the case along with a former Ministry of Culture media adviser, who allegedly played the mediator.

Two days before Helal’s case be­came public, the head of a local anti-corruption society was named in an investigation. Hamdi al-Fakharani, who was known for filing lawsuits against what he described as “cor­rupt” firms and investors, allegedly accepted a bribe of $370,000 from a businessman. He was charged with demanding the payment in re­turn for withdrawing a lawsuit filed against the businessman, challeng­ing the acquisition of land in the southern province of Minya.

“There is a lack of accountabil­ity and sufficient supervision by the government,” Ain Shams Univer­sity economics Professor Yumn al- Hamaqi said. “There are too many supervisory agencies here but little do these agencies enforce the law or bring corrupt people to account.”

The investigation into Helal and his subsequent arrest were reported to have been ordered by Sisi, who has made it a goal to erase corrup­tion from the government.

On September 13th, one day after the cabinet submitted its resigna­tion, Sisi told university students in the eastern province of Suez that his administration would not allow any­body to take a penny undeservedly.

The media reported that the Egyp­tian president had asked Egyptian supervisory agencies to submit re­ports about the financial integrity and the performance of senior gov­ernment officials.

Egypt launched an anti-corrup­tion strategy in 2014 to halt alleged widespread administrative corrup­tion and massive financial viola­tions. The Central Auditing Agency, Egypt’s highest supervisory author­ity, said there is a new case of cor­ruption every 1.5 minutes in the country. According to Transparency International, increasing levels of corruption have bolstered Egypt’s informal economy to the point that it accounts for almost 70% of the economy.

In 2014, Egypt ranked 94th out of 175 countries assessed by Transpar­ency International’s corruption per­ceptions index with a score of 37 (0 represents highly corrupt and 100 means little corruption). The coun­try had a slight increase in its score compared to previous years.

The World Bank’s 2014 World Governance Indicators, however, show a decline in all Egyptian gov­ernance areas examined on account­ability with a percentile rank of 32 with regard to control of corruption (compared to 41 in 2009), 34 for the rule of law (54 in 2009), 20 for gov­ernment effectiveness (47 in 2009) and 26 for regulatory quality (47 in 2009).

As Egypt tries to rebuild itself and turn a page on political and security turmoil, experts fear rampant cor­ruption could scare investors away.

“Investors cannot come to a coun­try where corrupt people are out there waiting to share profits with them,” economist Mukhtar al-Sher­if said. “Corruption actually kills investments and reduces to zero countries’ competitive edge as in­vestment magnets.”

The 2015 Heritage Foundation In­dex of Economic Freedom said cor­ruption poses a serious problem to the Egyptian economy, with “free­dom from corruption” being the area in which the country receives its poorest score (32 on a scale from 0-100).

The World Economic Forum and The International Finance Corpora­tion/World Bank also point to cor­ruption impeding business in Egypt. The survey for the World Economic Forum’s 2014-15 Global Competi­tiveness Report indicates that cor­ruption is the fifth biggest obstacle for doing business in Egypt.

Khaled Salah, a TV host, said al­most all businessmen he had met recently told him they had been asked to pay some form of bribery to have paperwork finalised at state institutions. This is why experts such as Hamaqi said Egypt has no time to waste in the fight against corruption. “Supervisory agencies must work harder, the government must pick people for top jobs very carefully and punishment must be toughened in corruption cases,” Hamaqi said. “We are late already and we have to act now if we really want to save our country from this phenomenon.”

Hassan Abdel Zaher is a Cairo-based contributor to The Arab Weekly.

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