Days before the chamber of the recently elected People’s Assembly first filled with members, the Supreme Council of the Armed Forces quietly released two amendments to the country’s 1997 investment law.
Articles 7 and 66, which have yet to be formally challenged in Parliament, allow investors accused of graft, embezzlement and even corruption to return assets at the value at which they were when they were stolen in exchange for escaping any other form of punishment for their embezzlement of public funds.
“It is required for settlements that investors give all money or movables or land or property subject of the crime or the equivalent market value of time of the crime,” the law states.
The law’s authors were also sure to rule out any other existing contradictory laws. “All rules that violate the provisions of this law are hereby abolished,” they wrote.
If they return the assets at their original value, the amendments say, there is no trial, no jail time, no penalties.
Instead of a court, Egypt’s General Authority for Investment (GAFI), along with a committee formed by the minister of justice, would rule what assets exactly were stolen, their value at the time of their theft, and how they should be returned. The law does not explain the process by which specific cases would be referred to the committee.
Many lawyers say the laws completely bypass the justice system. Several lawyers, some who are involved in fighting the law and some who are not, told Egypt Independent that if the law is allowed to stand, it could severely hinder transitional justice in Egypt and set dangerous precedents.
“There is something very fishy behind this law,” said Fatma Salah, an arbitration lawyer at Ibrachy & Dermarker. “This is an invitation to misuse public funds, even in the future.”
Lawyers also say these amendments could be used by the likes of Ahmed Ezz, an iron and steel magnate who brokered deals with a slew of public officials, including former President Hosni Mubarak, former Prime Minister Atef Ebeid and former Agriculture Minister Youssef Wali, who was recently sentenced to 10 years in prison for selling a protected nature reserve in Luxor for more than LE700 million.
Already, the legal team of Zoheir Garana, the former tourism minister serving five years for corruption and embezzlement, has appealed the sentence based on the military council’s new law. The judge has not yet replied. On Thursday, the website of state-run daily Al-Ahram quoted finance minister Momtaz al-Saeed as saying that Ezz and former housing minister Ahmed al-Maghrabi are also trying to avail themselves of the deal.
Salah said she believes it was designed to protect the system of crony capitalism embodied by the likes of Ezz and other businessmen who used their connections within Mubarak’s regime to cut favorable deals.
“His legal team will use this very well,” she said of Ezz. “It is for them, this law.”
She, like other lawyers, doesn’t understand why the law isn’t perceived as urgent by Parliament.
“I don’t know why the Muslim Brotherhood remains silent,” she said. “I am sure that there is no law anywhere in the world that allows the stealing of public funds.”
The law, which was issued on 3 January, appears to have been designed to release the team of cronies associated with the Mubarak regime, many of whom have come under scrutiny or trial over the past year.
Though it should apply to private investors only, lawyers said that some public officials involved in crimes are likely to take advantage. Many could argue that their investments were made in a private, not public, capacity.
Lawyers say confusion between investment disputes and corruption cases could be disastrous, violating both the independence of the judiciary and the rule of law.
On this basis, lawyers argue the legal text is unconstitutional, under Egypt’s current constitution, which includes the principles of equality and justice under the law for all citizens.
“This violates principle of equality. If you’re going to do it, you should waive this crime for all people and not just investors,” Salah said.
Though rights groups and activists have sounded the alarm bell, no members of Parliament have taken up the cause as of yet. With the writing of the constitution, a high-profile case against foreign-funded NGOs, and an impending presidential election, it doesn’t seem that the issue will become a priority for many MPs in the near future.
“We sent them the information,” said Tareq Abdelaal, a lawyer for the Egyptian Initiative for Personal Rights who helped write an extensive critique of the law, which he then presented to the Parliament's Economic and Legislative Affairs Committees. “That’s all we can do.”
This last minute legislating seems to pave the way for the ruling military council to quickly settle business disputes at a time when the economy is suffering from a rising budget deficit, and investors are taking a “wait and see” attitude.
The generals might have introduced the amendments in the hopes that it would bring back foreign investment to Egypt and that they might afford them with some badly needed cash, according to Hussein Azmy, an associate at the law firm Hegazy and Associates.
But they have miscalculated, in his view. He believes the majority of foreign investors would rather not do business in a corruption-ridden environment.
“Any fair and honest investor would like to work in a country with a fair and transparent judicial system,” he said.
The military council, Azmy added, is merely continuing a legacy of catering to foreign investors instead of working in the public interest. In recent years, many business disputes between Egypt and foreign businesses have ended up in international arbitration, a third party resolution mechanism.
International third-party arbitrators, he said, often rule in favor of the foreign investors, without regard for the local public.
And then there's the timing of the new provisions. The leading generals issued the amendments shortly before the Parliament's first meeting. Critics say this was a blatant attempt to change the investment law before the legislating body had a chance to create or review a new legal code.
But if Parliament chose to address the issue and repeal the amendments, Abdelaal said the military council would have no choice but to respect it.
“No one can do anything if they actually take this on,” he said. “They are the only legitimate legislative authority right now.”
If Parliament continues to ignore it, the lawyers said there will likely be a crop of business dispute settlement cases making use of the law.
Eventually though, they said, one of the cases will be appealed to the constitutional court, where the law will probably be thrown out, according to Abdelaal.
