What do we know about stolen assets in the Middle East?


Elizabeth Johnson
is an intern in Transparency International’s Research and Knowledge Department

The 2011 turmoil in the Middle East and North Africa has illuminated the issue of stolen assets. The publicly available figures on this issue are startling, even while concrete numbers have been difficult to find because monies are moved illicitly through shadow operations which prevent their tracking and are thus open to speculation.

How much money is estimated to have been stolen by leaders of the Arab spring countries?

At the upper end of the scale, some experts believe that Egypt’s former leader, Hosni Mubarak’s net wealth is between US $40 billion and $70 billion, more than Bill Gates the founder of Microsoft is worth. Karly Crucio, an economist with Global Financial Integrity, claims that more than $6 billion of Egypt’s financial resources were lost to illicit flows per year between 2000 and 2008, accumulating in losses of $57.2 billion from Egypt’s state funds.

money

photo: khrawlings

During the 23-year long dictatorship of Tunisian leader, Zine el-Abidine Ben Ali, his extended family are believed to have siphoned off one-third of the Tunisian economy through corruption and fraud. With the Tunisian economy standing at $44 billion, this means that Ben Ali and his cronies controlled almost $15 billion. 

The total assets held by Libya’s sovereign wealth fund, the Libyan Investment Authority, established by Libya’s former leader, Colonel Gaddafi and his son Seif-al-Islam, in 2006, is believed to total $65 billion, according to an LIA report from late 2010.

Less has been uncovered about potential stolen assets by the Syrian leader, Bashar Al-Assad and family. In response to Assad’s policy of violence and repression however, Switzerland has blocked Syrian assets worth $32 million.

According to Abdul Ghani-Iryani, a Yemeni development analyst, Yemen’s leader, Ali Abdullah Saleh, and his cronies have been skimming $2 billion a year for private gain over the last few decades – money stolen from the fuel-subsidy programme that uses up to 10% of Yemen’s GDP. Moreover, estimates for the family holdings of the Yemeni leader run well into the billions, much of it held overseas.

The private wealth of the Moroccan royal family is estimated at £2.5 billion (approximately $4 billion) by the financial magazine, Forbes, which makes King Mohammed IV one of the richest royals in the world. This is at least in part due to his stake in Morocco’s largest conglomerate, ONA, a phosphate producing company.

Every Saudi Arabian royal receives a huge monthly stipend, uncovered by WikiLeaks in 2010, on top of the $10 billion, skimmed from state money and controlled by a few key princes in an ‘off-budget’ programme. Moreover, spending by the Saudi royals became the subject of much controversy in 2008 following allegations of corruption connected with the signing of a $43 billion deal with the British arms manufacturer, BAE systems.

Recent unrest in Jordan has stimulated discussion on alleged looting of public funds and corrupt political practices in the country, with the disenfranchised groups calling for an end to the corruption, nepotism and bureaucracy that is polarizing the wealth between rich and poor. Particularly in the spotlight is Queen Rania, who is known for her lavish lifestyle and fashion credentials.

The figures that these leaders have allegedly plundered are stark when compared to the miniscule amounts that many people in each country survive on daily.  For example, Adel Iskander, Egyptian-Canadian lecturer on Middle Eastern media at Georgetown University, argues that Mubarak and family are out of touch with the Egyptian population, “the majority of which live under the international poverty line of $2 a day.”

What have Western countries announced regarding their holdings?

The Obama administration has frozen $37 billion in Libyan assets, whilst Britain impounded the equivalent of £900 million worth of Libyan currency associated to Gaddafi, and also announced the release of £100 million to the Libyan opposition – money that may have been held for Gaddafi in UK banks. Germany also noted that it would lend €100 million to the Libyan opposition to ease growing humanitarian crisis in rebel-controlled parts of the country – money that may also have been held for Gaddafi in German banks.

Switzerland has identified $1 billion worth of assets from dictators whose countries were part of the Arab Spring movement.  The Swiss president and foreign minister Micheline Calmy-Rey said that the assets include 360 million Swiss francs that may belong to Gaddafi or his associates; 410 million Swiss francs of the former Egyptian president, Hosni Mubarak; and, 60 million Swiss francs of Tunisia’s ousted leader, Zine El Abidine Ben Ali.

With such a systematic abuse of power, it appears that not only are dictators unexceptionally embroiled in criminal activity involving the stealing of public monies for private gain, but that Western banks are all too often complicit in the harbouring of these illicit accounts.

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Elizabeth Johnson

About Elizabeth Johnson

Elizabeth Johnson is an Intern in the Research and Knowledge Department of Transparency International.

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13 Responses to What do we know about stolen assets in the Middle East?

  1. James Hannigan 26 September 2011 at 2:21 am #

    Thanks for the article. It is interesting to read time and time again about the complicity of banks, especially Western banks, in hiding the assets of criminals. Yet we have the chief of the section dealing with organized crime and money-laundering at the UNODC, Pierre Lapaque, making statements such as the following: “There are a number of safeguards and checks and balances, because a bank cannot afford to be linked to criminal activities which might damage its reputation” (http://www.unodc.org/unodc/en/frontpage/2011/August/tracing-dirty-money-an-expert-on-the-trail.html). If the events (including the GFC and the Arab spring, not to mention those in Africa) of the last five years have shown anything, many financial institutions are more than willing to engage in any activity in which they see a profit, regardless of its legality or, perhaps more to the point, morality. Asinine statements (such as above) by people in positions of power and responsibility just shows how corrupt the global financial system is, not to mention those meant to oversee it.

  2. Kanan V. Jaswal 8 November 2011 at 6:05 pm #

    James Hannigan is absolutely right. It is primarily the banks in the western countries which help kleptocrats launder stolen moneys and hide them in numbered and other secret accounts. These banks violate all ‘Know your customer’ or KYC norms for opening and maintaining bank accounts because before they open bank accounts for Politically exposed persons (PEPs) they ought to have done due diligence to establish that amounts to be credited have been legitimately earned by those PEPs and not stolen taking advantage of their official positions.

    If the western governments are seriously and sincerely against corruption by the ruling classes of the developing world they must come down heavily upon tax havens and off-shore banking centres within their own territories. Why can’t the off-shore and name-plate banking be simply banned? The banks violating, in any way, the KYC norms should be made to lose their licences to conduct business. If this is not done, it will only show that the western countries and the U.N., World Bank and IMF only do a lip service to probity and financial rectitude, and that they are the real beneficiaries of the astronomical amounts looted by the rulers of the developing countries.

  3. Elizabeth Johnson
    Elizabeth Johnson 8 November 2011 at 9:01 pm #

    Thank you James and Kanan for your interesting comments. I agree ‘Know Your Customer’ principles are clearly not working and the burden falls on banks to identify unusual financial movements, and should have as a matter of standard practice, requirements for identifying clients. In addition, the anti-corruption community, and civil society at large, must pressure senior managers and governments to focus on the enforcement of anti-money laundering regulations, the facilitation of asset recovery, and whistleblower protection. Financial integrity, needless to say, is a huge issue, and one which requires sustained and multiple initiatives to improve the situation. Occupy Wall Street, which has become occupy ‘everywhere’ provides hope that civil society can mobilise in order to advocate for the changes that need to happen.

  4. Matthias Treutwein
    Matthias Treutwein 29 March 2012 at 11:22 am #

    Update on stolen assets in Libya:
    Italian financial police announced on Wednesday that they had seized assets worth over 1.1 billion Euros belonging to the family of the Libyan leader Muammar Gaddafi. The assets were confiscated at the request of the International Criminal Court in The Hague, which also demands the extradition of Saif al Islam Muammar Gaddaf, on charges of crimes against humanity to him. According to a police statement “the police confiscated the movable and immovable assets, the shares in companies and the bank accounts belonging to the family of the former Libyan leader Gaddafi and his entourage”
    http://www.alquds.co.uk/index.asp?fname=today\28z492.htm&arc=data\201233-28\28z492.htm

  5. Thomas Coombes
    Thomas Coombes 17 April 2012 at 9:02 am #

    Another interesting figure cited in the stories about Egypt calling on UK to do more on stolen assets:

    “The Treasury’s Asset Freezing Unit froze about £85m worth of Egyptian assets 13 months ago.”

    http://www.bbc.co.uk/news/uk-17717988

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