The limits of transparency

The World Bank is sticking with its Managing Director, Egypt's former minister of investment Mahmoud Mohieldin, as allegations of financial malpractice against him mount, reports Emad Mekay.

THE World Bank, which has often pressed borrowing nations to adopt more robust financial transparency regulations, has refused to disclose financial records of one of its senior officials despite allegations of corruption, abuse of authority and mismanagement of public funds when he served as a minister under the now toppled Hosni Mubarak.

In correspondence seen by Al-Ahram Weekly between the World Bank and a Washington-based NGO that advocates for greater accountability in international institutions, the lender has refused to make known records of Managing Director Mahmoud Mohieldin, who was a close aide to Mubarak and his son and heir-apparent Gamal in Egypt, citing concern over personal privacy.

The bank's legal counsel Anne-Marie Leroy told the Government Accountability Project (GAP) that the bank had to strike 'a careful balance between disclosure of financial interests and personal privacy and security concerns', and therefore decided against disclosing Mohieldin's financial statements.

The 46-year-old Mohieldin, who served as minister of investment from 2004 until his appointment as the World Bank's managing director in October 2010, became a controversial figure in Egypt following the ouster of Mubarak in February.

Along with Foreign Trade and Industry Minister Rachid Mohamed Rachid and Finance Minister Youssef Boutros Ghali, Mohieldin was a member of the economic team in charge of deeply unpopular policies that included an aggressive privatisation programme.

Both Rachid and Ghali fled abroad to escape facing charges of corruption, misuse of public funds and profiteering.

Numerous allegations of financial misconduct have been filed against Mohieldin with the prosecutor-general's office, and his alleged role in sweetheart deals involving the sale of public assets at below market rates has been raised in countless press articles.

Mohieldin travelled to Egypt several times following his World Bank appointment but has not set foot in the country since probes began into widespread corruption under Mubarak.

GAP said it began seeking Mohieldin's financial disclosure records from the World Bank after it became clear that he was the subject of controversy in Egypt. It maintains that the bank's publication of 'abbreviated forms' will 'not suffice to clarify the questions that now surround the alleged business conduct of Mr Mohieldin as Egypt's former investment minister'.

One of the accusations filed against Mohieldin is that he pressured the committee charged with valuing the Omar Effendi retail chain to lower its valuation, illegally benefiting the buyer.

In May an Egyptian court ordered that the sale of the chain to the Saudi-based company Anwal be annulled on the grounds that the valuation was too low.

According to court documents, the 82 Omar Effendi stores were sold for LE590 million when the land on which they were built was alone worth LE4 billion.

As the World Bank resisted calls for greater transparency over the financial dealings of its managing director, hundreds of workers from Omar Effendi were distributing fliers asking Egypt's interim military rulers to demand Mohieldin's extradition from Washington.

Another case before investigators alleges that Mohieldin approved the sale of the chemical manufacturer Egypt for Chemical Industries to Belgian investors at well below market prices.

'Mr Mohieldin is apparently under investigation for corruption in Egypt, yet the bank appears to be shielding his finances from public scrutiny in the United States,' said GAP international programme officer Beatrice Edwards.

A source close to the World Bank, speaking on condition of anonymity, said Mohieldin 'may be enjoying the personal protection' of World Bank Group President Robert Zoellick, who has publicly stated his admiration for Mohieldin's work under Mubarak and the economic changes it wrought in Egypt.

Zoellick had publicly praised Mohieldin as 'a tireless reformer' with an 'outstanding track-record of results in reform, modernisation, and knowledge-generation'.                     

This article is reproduced from Al-Ahram Weekly (No. 1061, 18-24 August 2011).

*Third World Resurgence No. 251/252, July/August 2011, p 49