Has Egypt's backdoor to corruption been discovered?

Analysis: For decades, Egyptians have wondered where billions missing from state funds went. A local media report might at last have uncovered the truth.

Analysis

2 min read

Al-Araby al-Jadeed

01 June, 2015

Egypt, and particularly its military, is still largely reliant on outside aid [AFP]

Egyptian officials and generals have allegedly stashed away billions of dollars of state funds into secret accounts, according to a media report.

Africa Confidential claims that leading figures in Egypt's armed forces, interior ministry, and the Suez Canal Authority have skimmed $9.4 billion from the national budget over the past decades.

Journalists Nizar Manek and Jeremy Hodge were forced to flee Egypt after Hodge was arrested and briefly detained for allegedly being a member of a foreign spy ring and "spreading false news that threatens Egypt's national security".

The billions are allegedly being held in loosely defined and unregulated "special funds" in state banks. These were created during the presidency of Anwar Sadat as a way for state institutions to manage their own budgets.

However, these budgets soon turned into "slush funds" and a "backdoor to corruption, squandering state funds in the worst way", according to Hisham Genena, chair of the Egyptian central auditing organisation.

"Many special funds are just fronts for corruption," Samir Radwan, Egypt's first finance minister after the 2011 revolution, stated in the Africa Confidential report.

"We used to see the numbers but we didn't know what the hell they were. We had no control over these funds."

Many special funds are just fronts for corruption.
Samir Radwan, former finance minister, Africa Confidential

Egypt's finance minister, Hany Qadri Dimian, announced last year that there was just $3.8bn in these funds.

In 2013, the European Union court of auditors claimed that $1.1bn given to Egypt between 2007 and 2013 by the European Union, was "mismanaged" and funneled "primarily into the state budget despite graft and a lack of public transparency", according to Reuters.

Soon after Abdel Fattah al-Sisi became president, he launched an investigation into Egypt's massive budget deficit caused in part by the "special funds".

However, alleged audio recordings of Sisi from his time as defence minister in 2014 suggest he might have attempted to divert billions of dollars in Gulf aid into "army accounts".

This article is an edited translation from our Arabic edition.