Egypt Country Profile

General Information

Political Climate


Following the introduction of a liberal reform policy, the Egyptian economy is demonstrating impressive development. The ruling National Democratic Party has dominated the political landscape in Egypt since its establishment in 1978, and is today headed by President Mohammed Hosni Mubarak. Upon gaining office after former President Sadat's assassination in 1981, President Mubarak declared a state of emergency in Egypt, which has been in force ever since. The political environment is characterised by an extremely strong executive and many political areas (e.g. interior, defence, and justice) lie outside parliamentary review and control. Moreover, the constitution subordinates the legislative and judicial branches to the executive. Egyptian elections are exclusive and suffer from irregularities. The 2007 referendum on amendments to the constitution not only resulted in the boycott by the political opposition, notably the Muslim Brotherhood and Kefaya, but was also characterised by fraud, bribery, pre-marked ballot cards and other irregularities.

Observers agree that corruption in Egypt is pervasive and that the use of wasta ('mediation' or 'influence' in Arabic) and facilitation payments are essential for doing business. The country faces major challenges in combating both grand and petty corruption. In 2007, the government even admitted that corruption is a serious problem and Prime Minister Ahmed Nazif expressed his dedication to combating bribery, as reported by Transparency International Focus on Egypt.

A number of initiatives to combat corruption have been launched by the government in recent years, such as the establishment of the National Committee to Combat Corruption in 2008 and the Transparency and Integrity Committee, set up within the Ministry of State for Administrative Development in 2007 with the aim of diminishing corruption in the public sector. However, it is a widely held perception that President Mubarak controls all existing anti-corruption initiatives and agencies, and that they serve as tools for the President's personal political agenda. This explains why corruption scandals involving the sale of public companies at under-valuated prices to affiliates of the President have had few consequences for the parties involved. Furthermore, it seems that in cases where action has been taken against high-ranking officials involved in corruption, the officials in question had already fallen out of the government's favour. Accountability of the government and Parliament is generally weak, despite the fact that there are regulations to govern conflict of interest and asset disclosure for members of government and the head of state - these have proven to be largely ineffective. Global Integrity 2008 presents several examples of high-level politicians engaging in business relations with the state or fraud related to asset disclosure forms. More than half of the business executives surveyed by the Transparency International Bribe Payers Index 2008 distrust the government's efforts to fight corruption, perceiving them to be 'ineffective' or 'very ineffective', while about one-third perceive them to be 'effective' or 'very effective'. Egyptian citizens surveyed by the CIPE & Ahram Center for Political and Strategic Studies Egypt National Corruption Survey 2009 are also sceptical of the effectiveness of governmental anti-corruption institutions. Only 17% of the citizens surveyed stated that monitoring agencies play a principle role in combating corruption, while 29% mentioned religious clergy as the principal institution in the fight against corruption. On the other hand, according to the World Economic Forum Global Competitiveness Report 2009-2010, the public trust of politicians in Egypt constitutes a competitive advantage for the country. When business executives are asked to rate the level of public trust in the ethical standards of politicians, Egypt scores of 3.5 on a 7-point scale (1 being 'very low' and 7 'very high').

Business and Corruption

Companies wishing to invest in Egypt should be aware that several sources identify pervasive corruption as a major obstacle to doing business. According to the World Bank & IFC Enterprise Surveys 2008, a bit more than 45% of companies identify corruption as a major constraint of doing business. On the other hand, while acknowledging the existence of corrupt low-level officials, many US investors have not identified corruption as a major impediment to foreign investment, as reported by the US Commercial Service 2010. Moreover, although companies in the World Economic Forum Global Competitiveness Report 2009-2010 identify inefficient government bureaucracy as the most problematic factors for doing business in Egypt, corruption is identified as the fifth.

According to the UNDP Project 2007-2011 Supporting the Ministry of Investment in Enhancing Transparency and Fighting Corruption, the civil service is marred by nepotism in hiring procedures and by general over-staffing. Companies are likely to encounter corruption in meetings with public officials, as officials in various government departments are known for bribery, embezzlement and tampering with official documents. According to the CIPE & Ahram Center for Political and Strategic Studies Egypt SME Survey Report 2009, 42% of the surveyed SMEs reported having paid bribes to obtain necessary licences in the establishment process, while 29% paid bribes to government officials during the operation of the company. On the other hand, the same study shows that those who did pay bribes spent more time establishing their companies and had to obtain more licences than those who did not bribe. This indicates that bribes were not paid to speed up procedures but to receive other benefits, such as being awarded a licence despite failing to meet legal requirements. According to the World Bank & IFC Enterprise Surveys 2008, a little more than 15% of companies expect to make unofficial payments to public officials to 'get things done'. The Ministry of State for Administrative Development has specified several areas where corruption and bribery are commonly found, including public services, customs and taxes, public utilities, and procurement. Foreign companies should note that they are required to go through a local agent in order to bid directly on a government tender. The World Bank & IFC Enterprise Surveys 2008 report that 12.5% of companies surveyed expect to give gifts in order to secure a government contract. The CIPE & Ahram Center for Political and Strategic Studies Egypt SME Survey Report 2009 shows that 39% of respondents with public procurement experience report that bribes are paid to a great extent to win government contracts, while 40% state that bribery takes place to a limited extent. In this regard, companies are recommended to use a specialised public procurement due diligence tool in order to mitigate the corruption risks associated with public procurement in Egypt. Furthermore, companies are recommended to develop, implement and strengthen integrity systems and to conduct extensive due diligence when planning to do or when already doing business in Egypt.

Regulatory Environment

Egypt was singled out for the third year running as one of the world's top reformers by the World Bank & IFC Doing Business 2010. The country has dramatically improved its performance in a number of areas, including starting a company and trading across borders, areas in which Egypt performs impressively compared to regional averages. Starting a company in Egypt now requires the entrepreneur to go through just 6 procedures, taking an average of 7 days at a cost of 16% of GNI per capita. Payment in minimum capital in regards to starting a company was eliminated in 2009. According to the World Economic Forum Global Competitiveness Report 2009-2010, Egypt holds a competitive advantage with regard to the time and number of procedures required to start a company. However, the same source also states that inefficient government bureaucracy is considered to be the most problematic factor for doing business in the country by business executives.

Despite Egypt's position as a top reformer, numbers from the World Bank & IFC Doing Business 2010 show that companies continue to face time-consuming procedures, particularly in relation to taxation, registering property, contract enforcement and dealing with construction permits. According to the same source, companies report that building a warehouse and obtaining the necessary licences, permits and completing the required notifications and inspections requires 25 administrative steps and takes 218 days at a cost of more than 331% of income per capita - more cumbersome and time-consuming than the averages for both the OECD and the MENA region. The US Department of State 2009 stresses that excessive bureaucracy is an obstacle to investment, and notes that bureaucratic impediments are often imposed arbitrarily. Companies should know that Egypt's vast privatisation programme poses a licensing and entry barrier in relation to certain sectors. Due to the privatisation process, no licences are issued for the establishment of new companies in the banking sector and the insurance sector. In effect, this means that companies can only enter into the insurance and banking market through acquisitions and mergers.

Egypt has established free zones and qualified industrial zones that are targeted to attract foreign investment, whereas the General Authority for Investment and Free Zones (GAFI) operates as a one-stop shop for investment that offers a range of services, including company registration, partner identification, contracts and licences acquisition. These services are provided free of charge for investors. The Ministry of Investment Egyptian Investment Portal provides business information concerning investment and joint venture opportunities. The government's Business Services Portal presents business related legislation (mostly in Arabic). The Egyptian government has also prioritised investment dispute resolution and has succeeded in resolving some disputes with foreign investors. However, companies should note that the resolution of disputes in Egypt is both costly and time-consuming due to an inefficient judicial system. Companies can access the Investment Conflict Resolution Committee (in Arabic) for information regarding decisions on commercial disputes. Egypt is a signatory to the International Centre for the Settlement of Investment Disputes (ICSID) and the related framework regarding dispute settlement is in place. The US Commercial Service 2008 advises companies to include clauses in their contracts specifying provisions for binding international arbitration of disputes. The Cairo Regional Centre for International Commercial Arbitration provides access to arbitration laws and information and services to companies seeking international arbitration solutions to commercial disputes. Access the Lexadin World Law Guide for a collection of legislation in Egypt.

Judicial System

Individual Corruption

The constitution stipulates equal access to the judicial system regardless of ethnic or racial origin. The judicial system usually functions well, although according to Global Integrity 2008, bribery, favouritism and informal relationships affect the implementation of judicial decisions. The Carnegie Endowment for International Peace Egypt Country Report 2008 states that civilian courts are generally seen as impartial and independent. However, cases of political or security offences are often referred to the military courts or the State Security Emergency Courts, in which basic constitutional rights are often set aside. This critique is also expressed by the US Department of State 2009, according to which the government uses Emergency Law to try non-security cases in the military courts, where the accused does not receive full constitutional protection.

Business Corruption

The government is reportedly planning to establish special economic courts to rapidly settle commercial disputes. Currently, however, companies wishing to enforce commercial contracts or seeking to resolve disputes face a costly and time-consuming process. Both the average cost and the time required to resolve a dispute are higher than in other countries in the region. According to the Heritage Foundation 2010, it takes an average of 6 years to decide commercial cases and appealing procedures can extend the cases above 15 years. On the other hand, the Heritage Foundation 2010 reports that local contractual arrangements are mostly secure.

Political Corruption

According to Global Integrity 2008, the Military Court, the Supreme State Security Court and the Political Parties Court are not judicially reviewed. Reportedly, the President uses the military courts, in particular, for political purposes. In April 2008, the military courts tried and convicted 25 civilians, all leading members of the opposition, the Muslim Brotherhood.

The independence of judges is guaranteed by the constitution. According to the US Department of State 2009, the government generally respects judicial independence in non-political cases in civilian courts, while executive influence remains strong in politically charged cases and emergency courts. The US Department of State 2009 also notes that the judicial system, besides being extremely slow, in some cases is subject to political influence, and according to Transparency International Global Corruption Report 2007, both the Chairman of the Supreme Judicial Council, who oversees the functioning of the judicial system, and the General Prosecutor are appointed by the government. This situation hinders independent investigation into corruption within government ranks. Reportedly, the Ministry of Justice rewards loyal judges with generous bonuses. However, although the executive tries to influence the judiciary, the higher echelons of this sector have occasionally ruled against the government, while nearly 7,000 out of Egypt's 9,000 judges conducted a sit-in in spring 2006, advocating for independence and judicial reform. The campaign was led by the Judges' Club, a professional union that fights for judicial independence.

The executive wields significantly more over the lower levels of the judiciary because of the low salaries and selective bonuses found at these levels. The absence of lifetime tenure and other institutional guarantees of independence is a major problem.

Frequency

The World Bank & IFC: Doing Business 2010:
- Enforcing commercial contracts requires 42 procedures, taking an average of 1,010 days and costing 26% of the claim.

World Economic Forum: The Global Competitiveness Report 2009-2010:
- Business executives give the Egyptian judiciary's level of independence from influences of government, citizens, or companies a score of 3.9 on a 7-point scale (1 being 'heavily influenced' and 7 'entirely independent').

- Business executives give the efficiency of the legal framework for private companies to settle disputes and to challenge the legality of government actions and/or regulations a score of 4.3 and 3.7 respectively on a 7-point scale (1 being 'extremely inefficient' and 7 'highly efficient').

Transparency International: Bribe Payers Index 2008:
- Business executives give the judiciary a score of 2 on a 5-point scale (1 being 'not at all corrupt' and 5 'extremely corrupt').

Police

Individual Corruption

The US Department of State 2009 reports that petty corruption in the police force is pervasive, especially below senior levels. Police are known to demand bribes and to violently abuse prisoners and detainees. The government has prosecuted some of the police officers involved in corruption and abuse. According to the CIPE & Ahram Center for Political and Strategic Studies Egypt National Corruption Survey 2009, the traffic police and Ministry of Interior is the institution that the third most of the surveyed citizens perceive to be highly affected by corruption.

Business Corruption

According to the World Economic Forum Global Competitiveness Report 2009-2010, Egypt holds a competitive disadvantage concerning the reliability of its police services to protect companies from crime.

Companies should note that there are reports which question the reliability and integrity of the Egyptian police. For example, according to the Kefaya Movement 2006, companies are often forced by the police to hire guard services at exorbitant rates. Furthermore, it is reported that the department within the police that handles the implementation of judicial decisions is accustomed to taking bribes in exchange for treating a case partially.

Political Corruption

According to Global Integrity 2008, the police are subject to political interference. The police force is accused of being an instrument of the government to suppress political opponents and ordinary citizens.

Impunity of the police is a persistent problem; Global Integrity 2008 reports that officers found guilty of corruption rapidly receive an administrative sentence issued by the disciplinary military council within the Ministry of Interior, which never exceeds suspension for 6 months. The council does not refer these violations and crimes to courts. In cases when legal suits against law enforcement officials appear in courts, the council rushes to pass a weak administrative ruling to preclude the sentence that would be passed by the ordinary court involving dismissal and imprisonment. Because a person cannot be judged for twice for same crime, the corrupt officers receive the lowest sentence, i.e. an administrative sentence.

Allegations have been made by the Kefaya Movement 2006 that the Minister of Interior took advantage of his position to illegally amass wealth. He allegedly purchased shops from detainees and even seized some of the detainees' properties. Moreover, high-ranking police officials are accused of receiving money from drug traffickers.

Frequency

World Economic Forum: The Global Competitiveness Report 2009-2010:
- Business executives give the reliability of Egyptian police services to enforce law and order a score of 4.5 on a 7-point scale (1 being 'cannot be relied upon at all' and 7 'can always be relied upon').

Transparency International: Bribe Payers Index 2008:
- Business executives give the police a score of 3.3 on a 5-point scale (1 being 'not at all corrupt' and 5 'extremely corrupt').

The World Bank & IFC: Enterprise Surveys 2008:
- 6.8% of the companies surveyed identified crime, theft and disorder as major constraints to doing business.

Licences, Infrastructure and Public Utilities

Individual Corruption

Global Integrity 2008 reports that the Egyptian law allows all citizens to apply for business licences. However, citizens face many cumbersome bureaucratic procedures and obtaining a business licence can be time-consuming.

Business Corruption

Companies should take note that the Ministry of State for Administrative Development (in Arabic) specifically pointed out public utilities as an area that was particularly marred by corruption. According to Transparency International Bribe Payers Index 2008, business executives perceive the registry and permit services to be the most corruption prone institution in Egypt, so companies should be aware that there is a great risk that they will experience demands for bribes when registering or applying for permits. According to the CIPE & Ahram Center for Political and Strategic Studies Egypt SME Survey Report 2009, almost half of the SMEs surveyed found their experience with government agencies during the establishment process difficult, and many companies reported to have paid bribes to obtain necessary licences. The study also indicates that the average time of establishing a company varies from governorate to governorate, with Minia and Gharbeya governorates being the most time-consuming.

The Unified Construction Law No. 119 (in Arabic) was passed in 2008, bringing together previous laws related to construction and simplifying administrative procedures, with the purpose of reducing corruption.

Despite Egypt having improved its performance in relation to obtaining of licences and permits, obtaining utility connections and the completion of required notifications and inspections, it still lags behind other countries in the region. Companies should note that facilitation payments are often required when dealing with licences.

Political Corruption

According to Al-Ahram Weekly, investigations into the ferry accident in the Red Sea in February 2006 that led to more than 1,000 deaths concluded that the key factors leading to the accident were incompetence by the authorities and neglect by the ship owner. The ship owner was also a member of the Upper House appointed by President Mubarak, and this has led to speculations of collusion and corruption.

Investigations into the Nasr City incident (the collapse of an 11 story building in 2004 that had been illegally modified) confirmed that fining lawbreakers has become an important source of revenue for both municipal and central government alike. This has given rise to speculation of whether the government is 'selling' fines so that citizens can 'pay' to break the law and ignore licensing requirements.

Frequency

The World Bank & IFC: Doing Business 2010:
- To construct a warehouse, a company is required to go through 25 procedures, taking 218 days and costing 331% of the income per capita.

World Economic Forum: The Global Competitiveness Report 2009-2010:
- Business executives give government administrative requirements (permits, regulations, reporting) in Egypt a score of 3.2 on a 7-point scale (1 being 'extremely burdensome' and 7 'not burdensome at all').

CIPE & Ahram Center for Political and Strategic Studies: Egypt SME Survey Report 2009:
- 42% of SMEs surveyed report having paid bribes to obtain necessary licences in the establishment process, while 29% report to have paid bribes during the operation of the company.

Transparency International: Bribe Payers Index 2008:
- Business executives give the permit and registry services a score of 3.6 on a 5-point scale (1 being 'not at all corrupt' and 5 'extremely corrupt'), thus indicating this institution as the most corrupt in Egypt.

The World Bank & IFC: Enterprise Surveys 2008:
- 15.2% of companies expect to make informal payments to public officials in order to 'get things done'.

- 13.5% of companies expect to give gifts to obtain an operating licence.

- Around 30% of companies expect to give gifts in order to get a water or electrical connection and 15.5% expect to give gifts to get a telephone connection.

Land Administration

Business Corruption

Property rights are well-defined and protected under Egyptian law. However, according to the Bertelsmann Foundation 2010, the complexity of the legal code combined with a high level of corruption in government agencies and courts can give rise to violation of property rights. The US Department of State 2009 also reports that complex laws can make it difficult to establish and trace titles to land and other real property.

According to the World Bank & IFC Doing Business 2010, the cost involved in registering property is very low in Egypt, both in comparison to MENA regional and OECD averages. On the other hand, registering property is very time-consuming, taking twice as long as the regional average. In this regard, companies should note that a cumbersome bureaucracy often gives rise to demands for so-called 'speed payments'.

Political Corruption

In February 2010, the Public Funds Prosecution Office and the Administrative Control Authority started an investigation of the former Minister of Housing, Mohammad Ibrahim Suleiman, indicted on misappropriating public funds during his time in office from 1993 to 2005. According to Al-Ahram Weekly, the investigation covers a number of corruption charges, the most important being that the former minister illegally allocated land to family members and sold land to companies at prices less the value of the land in return for kickbacks. The investigation was opened shortly after Suleiman was forced to resign from parliament due to the State Council's decision that it was in conflict with the constitution when he was appointed chairman of the government-owned Maritime Petroleum Service Company while serving as an MP.

Frequency

The World Bank & IFC: Doing Business 2010:
- Registering property takes 7 procedures, can last an average of 72 days and amounts to 1% of the property value.

World Economic Forum: The Global Competitiveness Report 2009-2010:
- Business executives give the protection of property rights in Egypt, including financial assets, a score of 4.4 on a 7-point scale (1 being 'very weak' and 7 'very strong').

Tax Administration

Business Corruption

According to the World Economic Forum Global Competitiveness Report 2009-2010, tax regulations and tax rates constitute problematic factors for doing business in Egypt. The number of payments and the time spent on preparing, filing and paying taxes constitute a burden for companies.

Tax administration was mentioned by the Ministry of State for Administrative Development as one of the areas that are particularly tainted with corrupt practices. According to Global Integrity 2008, tax laws are not always enforced uniformly and without discrimination. It is further reported that, while public employees have taxes deducted from their pay, the government will grant preferential treatment to wealthy businesspeople, allowing significant levels of tax evasion to go unpunished. Craftsmen and small business owners often face harassment by tax officials. Tax officials will sometimes arbitrarily determine required tax payments.

Frequency

The World Bank & IFC: Doing Business 2010:
- A medium-sized company must make 29 payments and spend 480 hours per year managing the administrative burden related to paying taxes at a total tax rate of 43% of profits.

The World Bank & IFC: Enterprise Surveys 2008:
- 5.3% of companies expect to give gifts when meeting with tax inspectors, which is a decrease compared to 2007.

- 29% of companies claim that tax administration is a major constraint for doing business.

Transparency International: Bribe Payers Index 2008:
- Business executives give the tax revenue authorities a score of 2.9 on a 5-point scale (1 being 'not at all corrupt' and 5 'extremely corrupt').

Customs Administration

Individual Corruption

According to a 2006 report on corruption in Egypt by the Kefaya Movement, employees of the Suez Canal customs administration and those working in the associations related to the Suez Canal have a reputation for engaging in corruption. They routinely extort money, and illegally confiscate cigarettes and wine from ferries crossing the Suez Canal.

Business Corruption

Companies should know that corruption is not uncommon in relation to customs administration. According to Global Integrity 2008, customs and excise laws are not always enforced uniformly and without discrimination. Large companies are reportedly unofficially exempt from paying customs duties. Low-level officials in customs zones are known to demand bribes to expedite paperwork for licences, clearances and other permits required to do business.

Frequency

The World Bank & IFC: Doing Business 2010:
- A standard export shipment of goods requires 6 documents and takes an average of 14 days at a cost of USD 737 per container.

- A standard import shipment of goods requires 6 documents and takes and average of 15 days at a cost of USD 823 per container.

World Economic Forum: The Global Competitiveness Report 2009-2010:
- Business executives give the efficiency of customs procedures (formalities regulating the entry and exit of merchandise) in Egypt a score of 4 on a 7-point scale (1 being 'extremely inefficient' and 7 'extremely efficient').

Transparency International: Bribe Payers Index 2008:
- Business executives give the customs a score of 3.1 on a 5-point scale (1 being 'not at all corrupt' and 5 'extremely corrupt').

The World Bank & IFC: Enterprise Surveys 2008:
- It requires in average 81 days to obtain an import licence.

- 20% of companies expect to give gifts in order to obtain an import licence.

Public Procurement and Contracting

Business Corruption

Public procurement in Egypt has been stained by corrupt practices. The Office of the United States Trade Representative 2007 reports that numerous concerns regarding a lack of transparency in public procurement procedures remain, such as the power of the Prime Minister to determine and authorise the terms, conditions and rules of the tendering method for specific entities. According to the CIPE & Ahram Center for Political and Strategic Studies Egypt SME Survey Report 2009, a great majority of SMEs experienced with public procurement report that bribery sometimes occurs in order to win government contracts. Companies are recommended to use a specialised public procurement due diligence tool in order to help mitigate corruption risks associated with public procurement in Egypt.

Bribery is common in the housing sector in relation to awarding contracts and granting demolition and building licences, as reported by Al-Ahram Weekly. Several corruption scandals have been revealed within this sector, including international cases where Egyptian contractors have been charged with committing corrupt acts abroad. For example, in October 2008, the British company Balfour Beatty agreed to pay GBP 2.25 million to settle bribery allegations concerning the company's involvement in the rebuilding of the Alexandria Library. When agreeing on the settlement, Balfour Beatty accepted that payment irregularities had occurred within a subsidiary entity.

Political Corruption

According to a June 2009 article in the online newspaper Egypt News, officials from the Egyptian Health Ministry have been charged with taking a LE 300.000 bribe to help a medical equipment company win a tender from the Ministry's Contract Office.

Read more on public procurement under 'Public Anti-Corruption Initiatives' in the Initiatives section.

Frequency

World Economic Forum: The Global Competitiveness Report 2009-2010:
- Business executives give the diversion of public funds to companies, individuals, or groups due to corruption a score of 3.1 on a 7-point scale (1 being 'very common' and 7 'never occurs').

- Business executives give the favouritism of government officials towards well-connected companies and individuals when deciding upon policies and contracts a score of 2.9 on a 7-point scale (1 being 'always show favouritism' and 7 'never show favouritism').

CIPE & Ahram Center for Political and Strategic Studies: Egypt SME Survey Report 2009:
- When asked how government tenders are implemented, 33% of SMEs surveyed stated that 'laws are interpreted to favour specific interests' while 26% indicated that there is 'poor oversight by those implementing the laws'.

- Of the SMEs experienced with public procurement, 39% stated that bribery occurs to a great extent to win government contracts, while 40% stated that it happens to a limited extent.

The World Bank & IFC: Enterprise Surveys 2008:
- 12.5% of companies surveyed expect to give gifts to win a government contract.

- The value of a gift expected to secure a government contract is 1.17% of the contract value.

Environment, Natural Resources and Extractive Industry

Business Corruption

Several corruption cases have marred the Egyptian oil and gas industry. Egypt Oil & Gas Web Portal reports that in 2007, the Egyptian General Petroleum Corporation (EGPC) was hit by a bribery and information leak case, when six EGPC officials were convicted on charges of releasing secret information to clients and giving them special facilitations in EGPC bids in return for money and gifts. Several other oil and gas companies have been involved in corruption cases, for example Petrogas that was investigated for importing foul gas valves or Al-Nasr Petroleum Company and Petroleum Marine Service Company that both saw top-officials charged for being paid LE 2 million bribes by companies as kickbacks for information on pricing lists in bids or the acquisition of contracts.

Political Corruption

According to the online newspaper Al-Ahram Weekly, the Ministry of Agriculture has had several high-profile corruption scandals involving the former Minister of Agriculture Youssef Wali and several of the Ministry's officials. The corruption cases covered misappropriation of public funds, falsification of documents and import of illegal pesticides.

Public Anti-Corruption Initiatives

  • Legislation: Egypt ratified the UN Convention against Corruption in 2005, but is not party to either the OECD Anti-Bribery Convention or the AU Convention on Preventing and Combating Corruption. Egypt do not have a specific anti-corruption law, but active and passive bribery, attempted corruption, abuse of office, using public resources for private gain, and extortion are criminalised by Egypt's Penal Code. Furthermore, the Anti-Money Laundering Law 2002 and subsequent amendments criminalise money laundering. The law only refers to public sector and private-public sector corruption, whereas business-to-business corruption is not covered. Since foreign officials are not included in law on the list of individuals whom it is a crime to bribe, Global Integrity 2008 concludes that it is not considered illegal to bribe foreign public officials in Egypt. In 2008, the Unified Construction Law no 119 (in Arabic) was passed, aiming at reducing corruption in the construction sector by cutting down the number of regulations and entities involved in the construction process. Access the Lexadin World Law Guide for a collection of legislation in Egypt.

  • Government Strategies: Since 2002, the government has run a 'Say no to corruption' campaign, which has resulted in several high-profile cases where top officials and Members of Parliament have been taken to court. The campaign is entirely top-down and government-run without any input from NGOs or CSOs. The government strategy seems to be moving towards compliance with the UN Convention against Corruption, but it acts inconsistently. The vast number of agencies and initiatives designed to combat corruption are directly or indirectly controlled by the President. Furthermore, the reports published by Egypt's anti-corruption agencies are often not discussed in Parliament, in the media, or divulged to the general public. In 2007, a Transparency and Integrity Committee (TIC) was established within the Ministry of State for Administrative Development with the aim of promoting transparency, accountability and anti-corruption efforts in the public sector. TIC has published reports assessing the status of transparency in Egypt, which are available on the ministry's website. The Ministry of Investment (MOI) cooperates with the UNDP and other partners on a project that runs from 2007-2011 and aims at promoting investment by enhancing transparency, drafting a legal document on Freedom of Information and raising public awareness on corruption. Impunity amongst cabinet ministers, provincial governors, ministers' deputies and Members of Parliament is widespread. However, there have been recent initiatives to change the law regulating legal proceedings against cabinet ministers. The current law dates back to the 1958-1961 Egypt-Syria union and is considered to be anti-constitutional and impossible to enforce. Article 81 and Article 158 in the constitution make it illegal for the President, members of government and ministers to engage in business with the state while in public office. However, after their terms in office, they are free to pursue careers in the private sector.

  • Anti-Corruption Agencies: There are multiple agencies designed to address corruption, none of which are politically independent. They are all closely linked to the President, the Prime Minister or the Minister of Justice. The agencies are required to make annual reports, but these are not made publicly available and are only presented to the President, the Minister of Justice or the Minister of Interior. The most important anti-corruption agencies are presented below.

  • Administrative Control Authority (ACA): The ACA has been active for over 40 years and has a legal mandate to detect and combat public sector corruption, including corruption by state-owned companies and companies performing public work. However, it is a weak institution - the ACA requires presidential permission to arrest public officials suspected of corruption. The ACA refers its allegations to the Supreme State Security Court, which is responsible for the prosecution of corruption cases. The ACA is authorised to investigate and examine public servants' asset disclosures and to hand over the suspects to the Illegal Profiting Apparatus (see below). The ACA is also tasked to investigate citizens' complaints of illegal activities by civil servants as well as complaints published by the media (see 'Whistle-Blowing' below).

  • Administrative Prosecution Authority (APA): The APA was established by Law No. 117/1958. The law authorises the APA to monitor and investigate all civil servants at all level in all ministries and agencies. The APA, supported by a large and professional staff, investigates administrative and financial crime and has the mandate to hand over perpetrators to the criminal courts. The APA also serves as an internal reporting mechanism whereto public officials may direct their complaints or reports of corruption (see 'Whistle-Blowing' below).

  • Illegal Profiting Apparatus (IPA): The IPA was established by Law No. 11/1968 and has the mandate to investigate suspected illegal income. Public officials are required to disclose their assets and those of their spouses and children upon gaining office. The IPA receives reports concerning corruption from the general public and from private and public employees. However, the IPA does not investigate corruption cases, but rather passes cases forward to investigative authorities. Should investigative authorities not find evidence to support charges, Law No. 2/1977 also imposes penalties on people that report corruption falsely or with 'bad intentions'. In situations where asset disclosures are proven to be fraudulent, the IPA transfers the case to specialised criminal courts.

  • Money Laundering Combating Unit (MLCU): The MLCU was established in 2002 by virtue of the Anti-Money Laundering Law and is responsible for combating money laundering and the financing of terrorism in Egypt. Financial institutions can submit suspicious transaction reports to the MLCU, and forms to do so are available made available on the MLCU homepage.

  • Ombudsman's Office: The Office of the National Ombudsman is the same as the General Prosecutor's Office. The General Prosecutor/Ombudsman and the Attorney General are appointed by the President. The office is not politically independent, but is instead subordinate to the Ministry of Justice and subject to political interference. The General Prosecutor/Ombudsman cannot be removed from office without relevant justification. However, it is a well-known fact that the General Prosecutor/Ombudsman is loyal to the government and the President. Corruption and abuses by the state's security agencies or by government employees are rarely prosecuted, and the General Prosecutor/Ombudsman's Office is generally perceived as a defender of the government rather than of the people, as the constitutional mandate determines. The General Prosecutor/Ombudsman's Office is not required to make its reports publicly available.

  • Auditor General: The Central Auditing Organization (CAO, in Arabic) was established by Law No. 129/1960 to monitor the financial and administrative operation of civil service agencies, and companies and banks receiving public funds. The original purpose of the CAO was to assist the Parliament in overseeing the state finances and civil servants. However, after the passing of Law No. 144/1988, the CAO became subordinate to the President rather than the Parliament, to whom the CAO now submits its reports. It does not have the authority to give penalties or turn perpetrators over to the General or Administrative Prosecution Authorities. The result is that the government and public institutions ignore the CAO. The annual reports on government and public institutions' expenditures can only be accessed by a limited number of people.

  • E-Governance: Between the Egyptian Government Services Portal, the Ministry of Trade and Industry, and the Industrial Development Authority, the general public, domestic and foreign companies and investors are provided with a broad selection of online services, ranging from telephone and water bill services to tax and licensing services and company registration. Online investor and exporter guides, as well as company directories are provided. It should be noted that the e-facilities of the Ministry of Trade and Industry, such as shipping, packaging and banking were out of order at the time of review. The Egyptian Government Services Portal's main page is in English, while the different e-services only are available in Arabic. In 2002, the Ministry of State for Administrative Development created local service centres where citizens and investors can carry out their business with the government without going to the relevant line ministries. The ministry also publishes an Internet guide to the 450 most requested services, specifying the documents and official fees associated with each. By spring 2009, as a part of the e-government strategy, the ministry had taken the initiative to make certain services accessible via SMS. Besides making government services more efficient, the aim is to reduce facilitation payments by minimising direct contact between government officials and citizens.

  • Public Procurement: Global Integrity 2008 describes Egypt's public procurement framework as 'very strong'. Public procurement is regulated by Law No. 89/1998 on organising tenders and bids. The law addresses conflicts of interest and has a mechanism to monitor assets, income and spending of public procurement officials. According to the law, major procurement requires competitive bidding, unsuccessful bidders have the possibility to challenge the decision in court, and companies that have engaged in corrupt practices are excluded from future participation in bidding. The Office of the United States Trade Representative 2007 reports that preference in awarding government contracts is given to parastatal companies when a state-owned company's bid is within 15% of other bids. The Small and Medium-Sized Enterprises Development Law 2004 gives SMEs the right to supply 10% of the value of all government procurement denoted in any tender. The Government Procurement Portal, the first of its kind in the region, is still in its nascent stage and mostly in Arabic, but aims to provide companies with online access to supplier registration and tender information.

  • Whistle-Blowing: Citizens as well as private and public sector employees can report corruption to the Illegal Profiting Apparatus (IPA). Public sector employees also have an internal reporting mechanism under the Administrative Prosecution Authority (APA). However, there are no laws designed to protect whistleblowers in the private or public sector. In fact, according to Law No. 2/1977, civil servants as well as private sector employees face serious repercussions if they report corruption falsely or with the intent to defame the accused. According to Global Integrity 2008, this prevents citizens and public servants from informing the IPA of corruption cases for fear of being imprisoned, especially when the asset disclosure records of civil servants can be manipulated. Due to the high number of investigated cases (about 75,000 cases annually between 2002 and 2007, tens of thousand of which are criminal cases involving embezzlement, facilitating the theft of public money, bribery and fraud), the IPA acts on complaints relatively slowly. This adds another layer of deterrence to reporting corruption.

  • General Comments on the Public Anti-Corruption Initiatives: Because the anti-corruption campaign is entirely government-run and does not seek to include input from NGOs or CSOs, the government has set itself up for criticism. The critics claim that the campaign is targeted at those in disagreement with the government, and that it is being used by President Mubarak to pave the way for his son Gamal's political career. The bias of the campaign is further substantiated by the fact that impunity amongst cabinet ministers and their deputies, Members of Parliament, and provincial governors is widespread. Egypt has set up several anti-corruption agencies, but none are completely free of political interference. Taking into account the fact that whistleblower protection is highly problematic, it is doubtful if the anti-corruption campaign will have the effect desired by observers. A positive development is the strong public procurement law and the Government Procurement Portal, which has the potential to become an important tool to combat corruption and increase transparency.

Private Anti-Corruption Initiatives

  • Media: The constitution provides for freedom of expression, of the press, of publications, and of the media. Censorship of newspapers is forbidden by the constitution, although limited censorship can be practised under exceptional circumstances, such as in time of war or in a state of emergency, in the name of public safety and of national security. The government has successfully restricted liberties by invoking a state of emergency that has been in place since 1981. The emergency law has granted the authorities powers to ban publications, books, newspapers, and other public expressions. The broadcast media are mostly state-owned and toe the official government line. Local newspapers have reported on corruption at lower levels, although many journalists reporting on corruption have been imprisoned or assaulted. Egyptian journalists face up to 5 years of imprisonment for publication of false information, defamation or for undermining national institutions, such as the Parliament or army. According to Global Integrity 2008, the government has established a special unit within the Interior Ministry responsible for monitoring crimes resulting from technological developments. The unit is popularly known as 'the internet police' as it has arrested many journalists and political activists who are active on the internet. Freedom House 2009 ranks Egypt 128th out of 195 countries and describes its press environment as 'partly free', while Reporters Without Borders 2010 ranks Egypt 143rd out of 175 countries.

  • Civil Society: Civil society and activism suffer from a restrictive environment in Egypt. The state of emergency allows the government to search persons and places, intercept e-mails, tap telephones without warrants, and detain suspects indefinitely without charges. Within this environment, citizens are not only denied access to information, but are also punished for acting as watchdogs in the fight against corruption. If one makes a complaint against a public official, one risks being imprisoned for two years if the government disagrees with the complaint. The activities of NGOs in Egypt are regulated by Law No. 84 of 2002, according to which civic associations must register with the Ministry of Social Affairs. The law prohibits NGOs from engaging in political activities, which makes the task of using civic participation to combat corruption very difficult. Foreign funding to NGOs must be approved by the state, with the exception of funds from governments with established development programmes in Egypt. In general, those institutions which can investigate and curb corruption are limited by the many restrictive laws and institutional hindrances in Egypt.

  • Center For International Private Enterprise Egypt (CIPE Egypt, in Arabic): CIPE works to strengthen democracy through private enterprise and market-oriented reform. CIPE's Egyptian office conducts a programme called Combating Corruption and Promoting Transparency, which aims at raising awareness about corruption in Egypt through research and training. As a part of the programme and in collaboration with Ahram Center for Political and Strategic Studies, CIPE Egypt has published the studies Egypt SME Survey Report 2009 and Egypt National Corruption Survey 2009. CIPE Egypt has also made an Arabic version of the Collective Action Guide published by the World Bank Institute Business Fighting Corruption.

  • Egyptian Transparency Network (ETN): The ETN is a community coalition that aims to cooperate with governmental organisations, NGOs and CSOs. The ETN is implemented by the Development and Institutionalisation Support Center and is supported by USAID. The ETN observes the progress of transparency and integrity issues and provides consultancy and support for anti-corruption mechanisms and strategies to enhance transparency.

  • Arab Center for the Independence of the Judiciary and the Legal Profession (ACIJLP): The ACIJLP is a NGO that works to reinforce and support the status of justice, the independence of the judiciary and the legal profession, and the respect for human rights and fundamental freedoms in the Arab regions.

  • Egyptians Against Corruption (EAC): The EAC is an organisation that sprang from Afro-Egyptian Human Rights Organisation (AEHRO). The EAC established a website through which people can report incidences of corruption in Egypt.

  • Global Compact: The Global Compact was introduced in 2004 in Egypt. An Egyptian Global Compact Network with more than 50 Egyptian companies has been established and seminars on different aspects of the Global Compact have been held.

  • Arabian Alliance for Combating Corruption (AACC): The AACC is an alliance of CSOs dedicated to fighting corruption. It comprises several Arab countries, including Egypt, and is headed by the Yemenite Human Rights Information Training Center. The main aim of the AACC is to raise awareness about the risks of corruption and to enhance the role of CSOs in combating it. The AACC organises capacity-building sessions to empower CSOs in their fight against corruption.

Resources

The websites listed below provide useful facts on Egypt as well as contacts and tools for companies operating in Egypt:

 

Sources for further reading:

Conventions and Indices

UNCAC Status: Signed 9 December 2003. Ratified 25 February 2005.

Status on UNCAC Implementation
This field describes the country's status on the United Nations Convention against Corruption. Please note any declarations and reservations made upon ratification. The list of signatories can be found on the UNODC website. Read more about the UNCAC.

 

Other Relevant Conventions or Treaties:

 

Transparency CPI: 2009: 111/180 (Score: 2.8)

Transparency CPI
This field consists of the score for the country in question on the Corruption Perceptions Index from Transparency International as well as its ranking.

 

World Bank CORR Index (-2.5 - +2.5): 2008: -0.67

World Bank Corruption Index
This field consists of the score for the country in question on the 'Control of Corruption' indicator in the World Bank Governance Research Indicator Country Snapshot (GRICS): 1996-2008.

 

OECD Country Risk Classification (0-7): 2010: 4

Country Risk Classification
The classification of countries by risk category has the aim of providing OECD countries with a basis for calculating the premium interest rate to be charged to cover the risk of non-repayment of export credits. Countries are placed in risk categories 0 - 7, with 0 being the lowest risk category and thus the least expensive. Conversely, premium group 7 is the highest risk category. Each classification is comprised of 2 components: 1) an assessment of the country's economic/financial situation, and 2) its overall political stability. Access the complete list of OECD Country Risk Classification figures.

 

Data Verification:

Latest update: March 2010

Data verified by: Global Advice Network

Information Network

 

Relevant Organisations

 

Center For International Private Enterprise Egypt (CIPE Egypt) (in Arabic)

1 El Fayoum Street, Off Cleopatra Street
8th Floor, Apartment 801
Heliopolis
Cairo

Tel: +20 2 2414 3282
Fax: +20 2 2414 3295
E-mail: cipe(at)cipe-egypt.org

CIPE's regional office in Egypt works to combat corruption and raise awareness about corruption's negative effects through survey studies and training.

Egyptian Transparency Network

C/O Support Center DISC
28 Obour Buildings
Salah Salem
Cairo

Tel: +20 2 2404 8844 / +20 18 308 4440/1118
Fax: +20 2 2403 4734
E-mail: kamal.nabil(at)discenter.com

Network of organisations and individuals engaged in promoting transparency and accountability in Egypt.

Arab Center for the Independence of the Judiciary and the Legal Profession (ACIJLP)

8/10 Mathaf El Manyal Street
Manyal El Roda
11451 Cairo

Tel: +20 2 2531 0027
Fax: +20 2 2362 0732
E-mail: acijlp(at)thewayout.net

NGO that works to reinforce and support the status of justice in the Arab regions. Focus is on the independence of the judiciary, the legal profession and the respect of human rights and fundamental freedoms.

Egyptians Against Corruption

E-mail: info(at)nadafa.org

NGO working to raise awareness on corruption in Egypt.

Global Compact in Egypt

UNDP Egypt
1191 Corniche El Nil
World Trade Centre
Boulac
P.O. Box 982
11599 Cairo

Contact person:

Global Compact Coordinator
Jonas Haertle
haertle(at)un.org

Tel: +20 2 2578 4840/4841/4842/4843/4844/4845/4846
Fax: +20 2 2578 4847
E-mail: registry.eg(at)undp.org

National office of the Global Compact.

Transparency International

Omnia Hussien
Alt-Moabit 96
10559 Berlin
Germany

Tel: +49 30 3438 200
Fax: +49 30 3470 3912
E-mail for information on Egypt: ohussien(at)transparency.org

Transparency International does not have a local chapter in Egypt, but the Secretariat in Germany has a representative in Egypt, who can be contacted for further information.

International Chamber of Commerce (ICC) Egypt

C/O Fed. Egyptian Chambers of Commerce
4 El Falaky Sq. (Bab El Louk)
Cairo

Tel: +20 2 795 1835/6479
Fax: +20 2 794 5872/3801

International Chamber of Commerce national commission.

 

Partner Embassies

 

Embassy of Denmark

12, Hassan Sabri Street
Zamalek
11211 Cairo

Tel: +20 2 2739 6500
Fax: +20 2 2739 6588
E-mail: caiamb(at)um.dk

Embassy.

Embassy of the Netherlands

18, Hassan Sabri Street
Zamalek
11211 Cairo

Tel: +20 2 2739 5500
Fax: +20 2 2736 5249
E-mail: kai(at)minbuza.nl

Embassy.

Embassy of Norway

8, El Gezirah Street
Zamalek
Cairo

Tel: +20 2 2735 8046 / 2735 3340 / 2736 3955
Fax: +20 2 2737 0709
E-mail: emb.cairo(at)mfa.no

Embassy.

Embassy of Sweden

13, Mohamed Mazhar Street
Zamalek
Cairo

Tel: +20 2 2728 9200 / 9255 (Visa)
Fax: +20 2 2735 4357
E-mail: ambassaden.kairo(at)foreign.ministry.se

Embassy.

British Embassy

7, Ahmed Ragheb Street
Garden City
Cairo

Tel: +20 2 2791 6000
Fax: +20 2 2791 6130 (Trade & Investment)
E-mail: information.cairo(at)fco.gov.uk / economic.cairo(at)fco.gov.uk / commercial.cairo(at)fco.gov.uk

Embassy.

Embassy of Austria (in Austrian)

5, Wissa Wassef Street, 5th Floor
Corner El Nil Street
Riyadth-Tower
Giza
11111 Cairo

Tel: +20 2 3570 2975/2974/2978/2971
Fax: +20 2 3570 2979
E-mail: kairo-ob(at)bmeia.gv.at

Embassy.

Country Profile Sources

General Information Sources

Corruption Levels Sources

Judicial System

Police

Licences, Infrastructure and Public Utilities

Land Administration

Tax Administration

Customs Administration

Public Procurement and Contracting

Environment, Natural Resources and Extractive Industry

  • Global Integrity: Egypt Country Report 2008.
  • Egypt Oil & Gas: 'The art of bribery: What not to do', July 2007 Issue.
  • Al-Ahram Weekly: 'Agriculture Feels the Heat', Issue No. 623, 30 January - 5 February 2003.

Public Anti-Corruption Initiatives Sources

Private Anti-Corruption Initiatives Sources