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Parliament reviewing proposal to create new body to manage billions in seized funds, assets

Under a bill put together by the Cabinet and currently under review in the House of Representatives, billions of pounds worth of money and assets confiscated by the state could soon be transferred to a new entity that judicial sources and lawmakers told Mada Masr would distance the funds from budgetary oversight.

The new entity would operate outside of the state treasury, would be able to partner in contracting out part of the seized assets to the Sovereign Fund of Egypt and contract independently with private companies.

Properties in Cairo’s upmarket Zamalek neighborhood and in downtown, deeds for areas of land, and companies and schools formerly owned by the Muslim Brotherhood could be repackaged for the private sector and foreign investors if the draft legislation is passed, said a legal expert who spoke to Mada Masr on condition of anonymity.

Any other assets consigned to state ownership by the courts, including the seized assets of organizations and individuals legally designated as terrorists, would also be transferred to the new body, opening the door to the extra-budgetary exploitation of assets belonging to thousands who have been added to terrorist lists in a series of rulings since the 2014 ouster of the now terrorist-designated Muslim Brotherhood.

Lawmakers on the House committee for budgetary affairs and planning convened in the second week of January at a meeting to review the draft law, which committee member and Nation’s Future MP Mohamed Badrawy described as a way for “the government to move money from one pocket to the other.”

The bill, of which Mada Masr reviewed a copy, would establish a new body as an umbrella for the existing Sequestered Properties Authority, the Central Authority of Resources and Agrarian Reform, and the General Authority of Recovered Funds, all of which currently fall under the Finance Ministry.

The three existing bodies, according to Badrawy, were established to manage funds and assets seized from the ruling family during the nationalization drive of the 1950s and from investment firms in the 1980s. Working independently of each other at present, they manage property, land and financial deeds worth billions of pounds.

The Sequestered Properties Authority currently owns the properties in downtown, while the Central Authority of Resources and Agrarian Reform owns the deeds to lands claimed in previous state land reform campaigns currently on lease to the government or to farmers.

The new umbrella body would be responsible for administering and disposing of all the funds and assets transferred to state ownership and for the restoration of funds it manages to any parties entitled to them after the deduction of administrative fees.

Civil servants currently working for any of the three existing bodies would work instead for the new entity, retaining their current positions and titles, and each of the existing bodies would retain its properties, legal obligations and rights.

Assets formerly belonging to the Muslim Brotherhood, designated a terrorist organization, and its members, which have been confiscated in a flurry of court cases over recent years, and which were diverted to a new committee in 2018, would form part of the new entity’s resources.

Under a 2018 decree, the management of Muslim Brotherhood assets was granted to a judicial committee that oversaw the sequestration, evaluation, administration and disposal of all funds designated the property of “terrorists” or of “terrorist organizations.” The committee was previously responsible for the management and transferral of the assets into the state treasury, a Court of Cassation source told Mada Masr on condition of anonymity. But under the new bill, the judicial committee, composed of seven appeals court judges, would be stripped of its mandate and limited to handling the appraisal of the funds and their administration under the new state body.

Any revenues generated from managing and disposing of assets transferred to state ownership should be returned to the state treasury under the draft law’s third article.

But the bill’s fifth article allows for the new body to enter into contractual relationships to manage some of the assets — currently owned by the state treasury and managed by the three older entities — with companies or other entities, or to contribute an in-kind share of the assets to the sovereign fund.

The article comprises a loophole, said the court source, that would allow dividends from the assets’ management to be administered by the new body or diverted toward company capital, criticizing the principle and comparing it to the proposal for a new fund to manage the Suez Canal Authority’s assets.

The treasury is strapped for cash, the source said, and yet the state persists in diverting resources out of state coffers and into parallel channels.

Transferring ownership deeds from this new entity to the private sector or the sovereign fund would amount to removing the asset from the state’s general budget, the source stated.

Badrawy, meanwhile, stated that the principle itself is not the issue. It’s not important whether the funds are in the treasury or in trusts, administrative bodies or companies the state owns a stake in, he said. What’s important is how successful the state is in managing its assets, he continued. Sovereign funds in many other countries manage to generate profits, but Egypt’s experience with funds and private agencies has been largely unsuccessful, despite which the government has continued to pursue this strategy, he argued.

The bill proposes that the new body would be run by a committee appointed by the Finance Ministry, competent for four-year renewable terms and composed of representatives from the ministries of justice, planning and interior, the public prosecutor’s office and three economic and financial experts.

Following the House Planning and Budget Committee’s review, the bill for the entity is awaiting discussion and approval in the lower chamber’s plenary session.

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