Identifier
Created
Classification
Origin
06CAIRO125
2006-01-08 14:26:00
CONFIDENTIAL
Embassy Cairo
Cable title:  

TACKLING CORRUPTION IN EGYPT

Tags:  PGOV ECON KDEM EG 
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This record is a partial extract of the original cable. The full text of the original cable is not available.
C O N F I D E N T I A L SECTION 01 OF 02 CAIRO 000125 

SIPDIS

E.O. 12958: DECL: 01/04/2016
TAGS: PGOV ECON KDEM EG
SUBJECT: TACKLING CORRUPTION IN EGYPT

REF: A. CAIRO 35

B. 05 CAIRO 9547

Classified by DCM Stuart Jones for reasons 1.4 (b) and (d).

-------
Summary
-------

C O N F I D E N T I A L SECTION 01 OF 02 CAIRO 000125

SIPDIS

E.O. 12958: DECL: 01/04/2016
TAGS: PGOV ECON KDEM EG
SUBJECT: TACKLING CORRUPTION IN EGYPT

REF: A. CAIRO 35

B. 05 CAIRO 9547

Classified by DCM Stuart Jones for reasons 1.4 (b) and (d).

--------------
Summary
--------------


1. (C) The issue of corruption took on a higher profile in
Egypt in late 2005, after a dearth of high profile cases in
recent years. In December, a significant case with political
implications emerged at the Egyptian TV and Radio Union, a
cabinet shuffle resulted in the unexpected dismissal of
several veteran ministers long notorious for their
corruption, and, perhaps not coincidentally, two of Egypt's
leading pro-government weeklies published cover stories on
the subject of corruption. Long a festering political issue
in Egypt, anti-corruption drives have in the past come in
irregular spurts, and have generally appeared selective and
limited in scope. In recent months the Embassy has been
urging senior GOE contacts to seize the high ground on the
issue of corruption. Two key members of the cabinet are
ahead of the game in this regard. End summary.

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High Profile Scandal at Media City
--------------


2. (SBU) In early December, two key figures in Egypt's media
sector were arrested and indicted on corruption charges.
Abdel Rahman Hafez, director of the State-owned Media
Production City, and Ehab Talaat, a private sector
advertising executive, were indicted on December 8 by the
Public Prosecutor, after a case against them was brought by
the Administrative Control Authority (ACA),the GOE agency
mandated to combat public corruption. According to the
indictment, Hafez and Talaat were involved in a sweetheart
deal granting the latter's ad agency advertising time on the
state-owned Nile Satellite Channel for a tenth of its actual
value. Hafez is also reportedly under investigation for
various other illicit practices.


3. (SBU) There has been a particular public focus on 40 year
old Ehab Talaat, who has cultivated a "playboy" image --
often photographed in Cairo's most fashionable restaurants
and clubs with his wife, pop singer Sherine Wagdy. The day
after his indictment was announced, Talaat was stopped at
Cairo International Airport as he attempted to board his
private jet for a flight to Greece. Authorities advised

Talaat that his passport was being revoked pending the
resolution of the criminal charges.


4. (SBU) The case against Talaat and Hafez apparently
originated with a complaint to the ACA brought by Minister of
Information Annas al-Fiqqi. Fiqqi dismissed Hafez from his
post as head of Media Production City several weeks before
his indictment. There has been considerable speculation in
the media that Fiqqi's ultimate target is his predecessor as
Minister, Safwat al-Sherif. Sherif, who served as Minister
of Information for over two decades, is widely believed to
have exploited his position to enrich his family and cronies.
In 2003, Safwat's son Ashraf won from the Ministry two
coveted licenses for new FM stations. The two new stations
have since gone on to become Cairo's most popular stations,
second only in listenership to the station which broadcasts
recitals of the Holy Qu'ran. Ashraf el-Sherif is also widely
believed to have been Ehab Talaat's silent partner in his
highly profitable ad agency.


5. (C) Safwat el-Sherif, one of Egypt's principal symbols of
the GOE's reactionary/statist "old guard," is seen by many
Egypt watchers as a stealthy but implacable enemy of Gamal
Mubarak and his ambitions to succeed his father. By
contrast, Sherif's successor, Anas al-Fiqqi, a reform-minded
former publisher, is known to be a close ally of Gamal. In
this context, the Talaat-Hafez corruption case could be
viewed as the latest stage of a proxy war between Gamal
Mubarak and Safwat Sherif. Some observers downplay this
theory, however, arguing that Ehab Talaat's alliance with
Ashraf el-Sherif dried up some time ago.

--------------
Key Symbols of Corruption Purged from Cabinet
--------------


6. (C) In a separate but potentially related development, a
late December cabinet shuffle (reftels) resulted in the
dismissal from the government of a number of cabinet
veterans, including two ministers infamous for their
corruption and impunity. Among those removed was Housing
Minister Ibrahim Soliman, who for years controlled public
expenditures on housing and residential development projects
was widely reputed to have steered contracts in order to
enrich himself, family, and cronies. His actions so outraged
Mamdouh Hamza, an Alexandria-based engineer and developer,
that he allegedly conspired, during a stint in London, to
have Soliman assassinated. Hamza is currently standing trial
in the U.K. on these charges. An even larger symbol of state
corruption and power politics was Minister for People's
Assembly Affairs Kamal el-Shazly, also removed from the
cabinet in late December. Shazly, also famous for cutting in
his friends and family epitomized the machine politics and
back-room dealing that ensured the ruling NDP dominance of
the parliament and broader political life. While we cannot
be sure that the removal of Soliman and Shazly was primarily
due to their reputations for corruption, it is reasonable to
surmise that this was a factor in the decision.

-------------- -
Increased Media Focus on Corruption Writ Large
-------------- -


7. (U) Also in December, two of Egypt's leading
pro-government weeklies, Al-Mussawar and Rose al-Youssef, ran
prominent stories on the issue of corruption in public life.
In a December 23 cover story which attempted to analyze
public corruption in Egypt, Al-Mussawar acknowledged that the
phenomenon is present in all levels of government, and
identified systematic flaws which allow the phenomenon to
survive. The article cited the failure of parliament to
address the issue and develop stronger anti-corruption
legislation and its failure to interpolate Ministers and
other senior officials working in and around corrupt
environments. Another article, in the weekly Rose al-Youssef
cited, "a lack of religious awareness" and the meager
salaries of public sector employees, and the lack of
investigative resources as all contributing to the problem.

--------------
Comment
--------------


8. (C) Corruption has long been a hot-button issue in Egypt
and is one of the public's chief complaints about the GOE.
Many attribute the popularity of the Muslim Brotherhood (MB),
and their recent strong showing in the parliamentary
elections, to their use of the corruption issue against local
NDP candidates and the public perception that MB's are
"clean" or even "incorruptible." We have been urging senior
GOE contacts to seize the high ground on this important
issue, and follow through on a sustained anti-corruption
campaign. Two key cabinet members, Trade Minister Rachid and
Investment Minister Mohieldin are ahead of the game in this
regard. In recent (separate) public remarks, each have
underscored the role public corruption has played in
inhibiting development and discouraging investment in Egypt's
economy.

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