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Ministers take measures to avert ‘conflicts
of interest’
The cabinet appointment in July of two big names
in the world of local business – to the tourism and industry/foreign
trade portfolios – begs the question of what exactly the law
requires to ensure the separation of private interests and public
postings.
A partial answer came on July 23, when flagship
state daily Al-Ahram reported that Minister of Tourism Ahmed El
Maghraby – who was chairman of the French tourism company Accor
Group’s Egypt operations – and Minister of Industry &
Foreign Trade Rachid Mohamed Rachid – who was chairman of Unilever
Mashreq, part of the eponymous multinational – had resigned
their respective private sector managerial positions as well as
their memberships on the boards of other companies.
The paper also mentioned that the pair had transferred
their assets to the stewardship of trustees for as long as they
held the cabinet posts, and that they had submitted the details
of their trusts, as well as notice of their resignations from their
private sector posts, to Prime Minister Ahmed Nazif.
At a July 25 press conference, El Maghraby referred
to the scheme as a “blind trust,” using the American term,
but was quick to point out that Egypt really doesn’t have a
legal framework for such arrangements. Nonetheless, he explained
that the overriding aim was to separate him entirely from the management
of his assets.
Recourse to legal expertise suggested that the measures
taken by the ministers actually go beyond what’s required of
them as stipulated by the constitution and by Law 62 of 1975, known
as the “Illicit Gains Law.”
Responding in writing to questions, Abdel Aziz Al
Aïdaros, attorney at law at the local Shalakany Law Office,
pointed to one article of the constitution in particular as highlighting
“how keen the constitution is to preserve the integrity of
the minister and to distance him, beyond any shadow of doubt, from
any potential abuse of his position.” Thus, Article 158 states,
“No Minister, during his time in office, is entitled to practice
any profession, carry out any commercial or financial or industrial
action, rent any state property, or lease or sell to the state any
of his properties, including by barter.”
With respect to the declaration of assets, the Illicit
Gains Law, to which ministers are also subject, “sets out the
mechanism of financial statements submissions by officials once
in office throughout their time in office and finally when quitting
the office,” Al Aïdaros wrote. He added that the statements
“shall include properties, whether real estate or movables,
held by wives and children who are minors. These statements are
reviewed by a committee, especially formed for this purpose, consisting
of reputable judges from the Cassation Court.”
Neither the official nor the state, however, is
legally required to make those statements public.
Confirming that Egypt “does not recognize the
concept of blind trusts,” Al Aïdaros wrote that, prior
to the revolution, it was possible under the rules of religious
trusts to set up “Family Trusts,” which allowed nominated
family members to enjoy the fruits of trusted property. This system,
however, was canceled by virtue of Law 180 for the year 1952.
Speaking about the measures taken by both himself
and Rachid, El Maghraby said that, in addition to resigning their
posts, “We’ve isolated ourselves further from those companies
– although the law doesn’t require any of this –
by not allowing any information from those companies to flow to
us, and we have selected in each case very senior persons, either
legal or academic, and entrusted them to receive information about
the performance of those companies and vote on behalf of our shares.”
Rachid’s office, meanwhile, didn’t respond to requests
by telephone and fax for comment.
El Maghraby, for his part, doesn’t anticipate
any changes in the legal framework aimed at making such measures
mandatory. “I don’t think you need to change the legal
framework. I think the standard is now set,” he said. “Everyone
who will follow will be under, not legal, but under some kind of
peer pressure to abide by the practices we have established.”
As for whether El Maghraby’s old competitors
in the hotel business are anxious about his appointment to the cabinet,
Orascom Projects & Touristic Development chairman Samih Sawiris
railed at journalists in a four-paragraph op-ed piece in the August
9 issue of Arabic-language daily Al-Masri Al-Youm for not asking
his opinion on the conflict-of-interest issue. He wrote, however,
that, not only was he not concerned about the choice of the new
minister, but that he believed a businessman was in a stronger position
to fight bureaucracy. Reached by telephone, Sawiris clarified his
position: “A conflict of interest arises as a worry only if
the person has much more to gain by the abuse of that office than
by performing a good job in the office,” he told Business Monthly.
Concerning whether he thought public disclosures
of assets would help mollify such concerns, Sawiris said, “You
have absolutely no control over the authenticity of the statements
about one’s wealth in Egypt. There is no proper record, there
is no illegality in maintaining wealth outside the country –
so there’s no purpose served by a public declaration from these
people, because the public will not take it seriously.”
Willa Thayer
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