Africa Confidential/Angaza File special investigation | 26 May 2015
EGYPT
Investigators chase $9.4 billion siphoned into secret accounts – police accused of stealing records disclosing own corrupt funds, Finance Ministry uses accounting trick to bury the bodies
By Nizar Manek and Jeremy Hodge
One sunny day last March, Egyptian government auditors walked past the concrete barricades surrounding the Ministry of Interior (MOI), which oversees the country's non-military security services. There, they sought to ferret out irregularities from the Ministry's financial records, among them allegations that seven unnamed senior officials at the MOI used state funds to distribute nearly $12 million in bonuses to themselves. Before the auditors could inspect the records, they were thrown off the premises. Eight months later, the audit chief complained to Egypt's new President and Prime Minister that MOI staff burgled a room his auditors used to investigate the Ministry, stealing investigative records and notebooks. In a memo, the audit chief told them the Ministry justified the break-in with Egypt's 'war on terror', claiming that how it spends state cash must be kept a state secret.
What the auditors were looking for turns out to have been the tip of an iceberg. According to previously undisclosed official records uncovered by The Angaza File in months of investigations, at least US$9.4 billion of state funds had been stashed in nearly 6,700 unaudited accounts in the Central Bank of Egypt and, illegally, in a number of state-owned commercial banks, and spent by the end of the 2012/2013 fiscal year. This was one year before Egypt's popular military putsch brought with it an outpouring of Gulf aid into the country, some, it has become apparent in recent months, deposited in army-operated accounts at the Central Bank. Insiders say these accounts are used to stash stolen state funds that are never relayed into Egypt's treasury or national budget, but instead serve as the private piggy banks of generals and other senior officials at state organs across the bureaucracy. This enables them to collect bonuses off-the-books away from the eyes of regulators and their subordinates. Known as 'special funds', President Abdel Fatah el-Sisi asked regulators to investigate soon after he was elected to the nation's high office as the country was suffering from a massive budget deficit. In December, Prime Minister Ibrahim Mehleb followed, announcing a 'new anti-corruption strategy', preparing the way for El-Sisi to fly to the Davos World Economic Forum to court foreign investors.
One fissure which now appears to undermine that 'strategy' involves the Finance Ministry playing an accounting trick (see Box, $5.6 billion accounting trick). By August, Egypt's Minister of Finance Hany Kadry Dimian claimed the total size of the network of slush funds did not exceed $3.8 bn., but failed to explain the apparent $5.6 bn. discrepancy. Interviewed in his office in Cairo, Hisham Genena, who chairs Egypt's Central Auditing Organization (CAO), calls the gargantuan network of funds the 'backdoor to corruption, squandering state funds in the worst way'. These funds stretch from the MOI to the Ministry of Defence (MOD), which El-Sisi headed before rising to the high office, said the audit chief, who had his auditors show up at MOI HQ that day a year ago, but has since given the military a clean bill of health. The MOI has since undergone a change of face at the top: Interior Minister General Mohamed Ibrahim was sacked in March, replaced with retired Major General Magdi Abdel-Ghaffar who headed the infamous Department of Homeland Security. Despite this shake-up, Genena still claims he is being hounded by the MOI. The audit chief appeared on Egyptian television in April, claiming he had been verbally threatened by General Khaled Tharwat, another ex-head of the Department of Homeland Security, or Al-Amn Al-Watani, a security service whose responsibilities include counter-intelligence, surveillance, and border security.
(7,000 words)
https://www.africa-confidential.com/article/id/13202

Arabic -- القصة الكاملة للصناديق الخاصة.. أكبر قضايا الفساد المالي في مصر
في أحد أيام شهر مارس الماضي، قام بعض المدققين الحكوميين بالذهاب إلى مبنى وزارة الداخلية، بهدف كشف مخالفات من السجلات المالية لوزارة الداخلية، بعد مزاعم استنزاف عدد من المسؤولين في الوزارة أموال الدولة لصالحهم، والتي تقارب الـ12 مليون دولار كمكافآت ومزايا مالية، وقبل أن يقوم المدققون بمراجعة الحسابات، تم إلقاؤهم خارج مبنى الوزارة.
http://www.sasapost.com/opening-the-black-box-of-egypts-slush-funds/