How SCAF is seeking to resolve corruption cases behind closed doors

The following post, on legislation dealing with economic corruption recently decreed by SCAF, was contributed by Shereen Zaky, a lawyer in Cairo. 

On January 3rd, SCAF discreetly passed an amendment to the Investment Law essentially permitting the settlement of economic corruption crimes via financial reconciliation, as well as designating an extra-judicial process for the settlement of disputes regarding government contracts. Published only a few days before parliament was due to convene, the timing is significant both in terms of circumventing parliament’s assumption of legislative power and because the amendment could escape scrutiny, overshadowed as it was by greater events.

Law 4 of 2012 permits the General Authority for Investment and Free Zones, the regulator of investment and companies in Egypt, to settle with investors who have committed either in person, or as an accomplice of a government employee, embezzlement, theft, illegal acquisition or misuse of public funds and property, harming the public welfare, and similar offences, while undertaking any of the investment activities covered by the law, provided they restore the disputed amounts or reimburse the state for their approximate value at the time the offence was committed. The settlement can take place any stage before a defendant is convicted by the final court of appeal.

Essentially, this could allow the likes of Ahmed Ezz and other corrupt businessmen to slip neatly out of prison, as well as many other regime figures. It seems like one of SCAF’s now-familiar counter-revolutionary gambits, designed to protect their corrupt cronies and conceal their own implication in crime, but with a little adjustment it would actually be a reasonable means of protecting Egypt’s collapsing economy.

It seems self-evident that after an extended period of corruption it will be neither possible nor desirable to hold every (non-government official) perpetrator to account, for several sound policy reasons. First, the sheer number of possible perpetrators, many of whom are foreign nationals and entities, would defeat the efforts of even the soundest and most efficient judicial system, which Egypt certainly does not possess. Second, mounting a widespread campaign against businessmen would have the dual effect of inducing them to escape justice, and of killing any potential for recovering the illegal gains. Thus far the efforts made to recover funds embezzled by former government officials, including Mubarak, has proven fruitless, and a year later, any other guilty party has had ample time to dispose of evidence. Third, many ostensibly guilty businessmen had no choice but to comply with the illegal demands of corrupt government officials in order to do business in Egypt. Reporting a corrupt government official would certainly have had no other effect than to prevent that businessman from ever doing business in Egypt again. Morally dubious though an investor’s complicity in some of the relevant crimes might be, it should not necessarily entail a long prison sentence given the coercive nature of the involvement.

However, as with much else undertaken by SCAF, this initiative falls far short of addressing the real need for justice and restitution in several major ways, eloquently made by a recent memorandum authored by EIPR on the subject and sent to Parliament’s legislative committee.  According to the amendment, the investor and a GAFI representative sign a document together with the terms of the settlement, which is subject to the approval of the Chairman of GAFI. It need hardly be stated that this presents a conflict of interest, as the Chairman of GAFI, if not actually personally implicated by the crime in question, has a strong interest in protecting unfettered investment and avoiding legal issues with foreign investors in particular. An even greater miscarriage of justice is that the amendment neatly circumvents the supervision of the judiciary, by stipulating that these settlement agreements will be binding and enforceable – and thus not subject to judicial review, placing entire responsibility for this process in the hands of one person, and more generally with the executive branch, in violation of accepted principles of separation of powers and justice. There is also no evidence that this extra-judicial resolution process is temporary, basically allowing investors to continue to violate the law with impunity, knowing they can easily pay their way out of it if the political tide should turn against them. Essentially, the amendment defeats the three objectives behind all criminal laws: deterrence, punishment and rehabilitation.

EIPR also opined that under Egyptian law, this different treatment of investors compared to public employees – or other non-investors - guilty of the same offence is unconstitutional discrimination, as all are equal before the law. I, personally, see no moral issue with this discrimination against public employees in particular because it is made for a rational reason – the greater responsibility and control that public employees have over public resources – but a constitutional challenge is currently making its way through the courts on this ground. Of course, with such uneven enforcement of court decisions, this could well mean nothing.  

Further reading:

Daily News Egypt: Rights group slams law allowing settlement with corrupt investors  

Ahram online: Egyptian NGO contests ruling army's investment law