Systematised corruption dominates government projects in Egypt

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Digging and construction followed by demolition and digging again; this is what is happening non-stop along the roads connecting the new cities around Cairo over the past several years. It is a familiar scene that has become recurrent over time. In one day, you can see a road paved, but tomorrow you can see the same road broken up for constructing water and electricity networks. Later on, the road could be dug to change the pathways of the networks after constructing new roads or bridges.

The most recent experience began one week ago in 6 October City, west of Cairo, where giant drilling equipment was deployed with trucks carrying away the rubble all day long. The construction is said to be the pathway of the monorail that is to connect Al-Alamein City on the Mediterranean Sea with Ain Sokhna Port on the Red Sea passing through the New Administrative Capital.

The new construction works worried residents of the city that have already witnessed big changes over the past five years. The city that was planned to be one united area, transformed over time to four large residential complexes. This required big changes to water, electricity, telephone, and sanitation networks. Poor planning wasted a lot of money and is still persistent until now. These sudden changes that occur regularly reveal that the executive authorities are not following a set plan.

During the past several days, official and private television channels run by the security services showed the beginning of the implementation of the “Giant Egypt Project,” as mentioned in the propaganda film that was broadcast in celebration of the 30 June revolution, as a high-speed train project. The film showed equipment that can blow up mountains in the Jabal El Galala area near the port of Ain Sokhna. The footage came from a drone, which is not allowed to operate except by military orders, to inform us that work has begun on the project. At a length of 470 kilometres, the track starts from El Alamein, running through 6 October, then the new capital, and finally the port of Ain Sokhna.

To build this new train means redrilling in a major axis in the city and its environs, after the Ministry of Housing and Construction celebrated just days ago the completion of its paving line, for the last time, as it started the expansion works in the water, sewage, electricity and telephone networks, even allowing mobile phone companies to set up hundreds of service booster stations in the middle of the road, to eliminate all obstacles to housing citizens in new communities that aim to house about two million people during the next five years. The residents expressed their dissatisfaction with the matter, and the hope that their area would be calm. They are consoling themselves that they may be more fortunate than others who will be exposed to the removal of their homes located on the path of this project, even though they built their homes in new pre-planned areas from the state.

The ring roads around the capital required the demolition of thousands of homes, except for those who lost their privacy, with the construction of hundreds of bridges in more prestigious areas, such as in the neighbourhoods of Heliopolis, Nasr City, Giza, New Cairo, and others across the country. They did not have projects that appear in many places, and then disappeared, so others are built and they do not find a trace of these projects in their homes, such as the availability of job opportunities for their children that would enable them to pay high prices that rise annually.

People see huge spending of money on palaces, clubs, exhibition centres, ministry headquarters and a new parliament, in a new capital, and think that Egypt has become a wealthy country, at a time when they see that foreign loans rose about $100 billion in just seven years, while the local debts have doubled by four times during the same period. Citizens’ questions increased with the start of the government’s implementation of the new state budget, which began in early July 2021 to the end of June 2022. The budget approved by parliament reveals the continuing deficit in financing the annual budget because the state’s expenditures this year are about EGP 1.8 trillion, while its revenues will not exceed EGP 1.36 trillion, most of which are from taxes, customs and a sovereign royalty imposed by the government on public economic sectors.

Thus, the cash deficit is only about EGP 472 million, except for the installments of local and international loans, which are estimated at EGP 593 million. At a time when the state is demanding the repayment of interest on loans by about EGP 0.5 trillion, the total budget expenditures are estimated at EGP 2.4 trillion, meaning that the expected budget deficit exceeds EGP 1.1 trillion, and this “chronic” deficit will be financed by more external and internal loans. Also, this calls into question, how will the country’s affairs be managed?

The budget report, which the government obtained approval from parliament to start working on as of this month, showed a serious decrease in the allocations needed for investments in the state, whether from the government or the private sector. The state, according to the announced official statement on the website of the Ministry of Finance, and we have a copy of it, will not spend more than EGP 358 billion on projects for human and social development plans that include the administrative apparatus and localities across the country, including EGP 16 billion for all governorates except for Greater Cairo, which usually consumes about 60 per cent of the value of the state’s public expenditures annually. The report did not mention any information about the project celebrated by the presidency and its media apparatus. Parliamentary discussions that took place over the course of two months did not reveal any words about the express train project that the state has started implementing, especially since the information published about it confirms that the cost of the train will exceed EGP 100 billion.

Upon further scrutiny of the 164-page budget statement, it was confirmed that no information was mentioned about the “major projects” that the government is currently implementing, including the modernisation of train and road networks, the establishment of water and electricity stations, and others, unlike the detailed data that was done in the past about these projects, which includes cost, implementation steps and annual final accounts, in conjunction with the reports of the Central Auditing Organisation on the financial and administrative performance of projects during the previous fiscal year.

A simple audit that we conducted of what was published by the official newspapers and media during these days in celebration of the seventh anniversary of Sisi’s assumption of power, shows that there are hundreds of projects implemented by the government that were not mentioned in the state’s general budget. There is a national project for the new delta to reclaim about two million acres in the west of the delta and the northern coast, in addition to a project previously talked about to reclaim one and a half million acres, across the country, and to establish 14 new residential cities and a network of broad regional roads linking the north of the country to its south, an extension to Sudan.

The purchase of railway equipment will cost about EGP 250 billion within three years, the construction of several regional airports in the new capital and the regions, and the development of 1,500 Egyptian cities, in order to keep pace with the change expected to be transmitted by the new capital in Egyptian society, which is the same national project that Sisi seeks to export to the Egyptians and foreign countries as the leader capable of catching Egypt in the global ranks of giant technological cities.

There are many projects, and what unites them is that businesses announce their birth at the hands of the president, or different ministries attribute them to him, while the supervising bodies are those affiliated with the armed forces and security services, while ministries and public and private companies remain just executive bodies or work subcontracting for those bodies. Projects are present in the media, with no effect on the public budget, and a parliamentarian or journalist in a country where information has become a matter of national security cannot track what is published about the parties that finance these projects or who act in their affairs since their birth, even if they continue until the operational stage.

A former parliamentarian reveals the ways public funds are wasted by repeating spending on projects whose sizes change, are substituted, or are completely cancelled after huge budgets are spent on them. The representative, who refuses to be named, states that “the government is no longer the planning authority for major projects in the state as it was before and has not become an executive authority for most of these projects, and that parliament is no longer an observer of these plans before or after implementation.”

There are projects decided by the president himself. He orders them and during implementation, its conditions and vision change, so he searches for a new formula for it, and the most prominent example of this is the Suez Canal project, which started as a giant idea, by completing the digging of a canal parallel to the old canal and the establishment of several free cities around it.

Extensive cultivations in Sinai ended with 63 kilometres of excavation, and no other projects were completed years after the start of the project. The parliamentarian measures on this the new spending projects under the Suez Canal, for which the state purchased equipment worth about $3 billion, and then transferred it to warehouses after the completion of implementation because the government does not have funding for new projects that fit that equipment.

Sisi publicly admits, after the anger of the Egyptians erupted in the events of September 2019, that he ordered the construction of several presidential palaces, saying that they are for Egypt, and at the same time he does not want the Egyptians to ask where this money comes from, and how it is spent, stressing the need for Egyptians to trust in his honesty and wisdom and that “God provides for him from where they do not know.”

Sisi, who talks about state projects and accounts that parliaments around the world have established for their oversight, prevented former MP Yasser Omar from presenting the government with accountability in parliament for the accounts of the new capital, for which the army established a private company whose affairs are managed by a group of former and current generals in the armed forces. Rather, he could not hold the Ministry of Health to account, because the health sector and medical manufacturing is now run directly by the armed forces.

Sisi’s interventions in tightening his grip on all projects implemented in the state and his complete disposition in its financial affairs did not start with the new budget, as a report by Malcolm Care Carnegie Corporation issued in March 2021 confirms that “Sisi personally supervised the steady expansion in the role of the armed forces in playing the role of the armed forces” in commercial enterprises and new infrastructure projects and that these enterprises remain unchecked and accountable by the legislature or the civilian bureaucracy, with their ability to exploit conscripted labour and exemption from taxation.”

The report explains that since Sisi came to power he wanted to redistribute the wealth of the Egyptians by paying a large part of this wealth to the military leaders and the groups that would enable him to control the reins of government.

It has benefits of up to 25 per cent of the value of the projects which it supervises the implementation of across the country. It is no longer surprising that the government has assigned the Ministry of Defence and its affiliated bodies to manage major projects in Egypt for an indefinite period, such as the express train project, tunnel projects, and the development of the Suez Canal, the development of East Port Said and the new capital, and the reclamation of 1.5 million acres, in addition to projects to manufacture cars, trains, fertilisers, cement, quarries and chemical products.

Absent from the general budget were the budget statements related to these projects because the party responsible for them came out of the law from under parliamentary oversight, and the government was satisfied with establishing an office for the Ministry of Finance in the Ministry of Defence to review the books of companies operating in these activities that are not included in military activity, which are matters only concerned with setting a budget for the books and not audit accounts.

The role of the Central Auditing Organisation as a sovereign oversight body was obscured after Sisi dismissed its president, Counselor Hisham Genena, in March 2016, as he sought to apply accounting transparency standards to judges and officers, like the rest of the authorities in the country, and Sisi obtained amendments that enabled him to dismiss all heads of regulatory agencies in the country.

Sisi requested the issuance of Law No. 89 of 2015, which consists of a single sentence that gives the president the power to dismiss the heads of these oversight bodies, a matter described by the Egyptian Initiative for Personal Rights as “leading to more legislative chaos and subjecting the regulatory bodies to the executive authority and harming the principle of separation of powers” and efforts to combat corruption and strengthen frameworks for good governance.”

The government previously introduced amendments to the Tenders and Auctions Law in 2013 which granted broad authorisations to heads of bodies to purchase supplies and services in amounts amounting to EGP 10 million by direct order, with the possibility of repeating them without a financial ceiling for these contracts.

Other legal amendments were issued in 2014, allowing government agencies to contract by direct order with military agencies and bodies of a military nature affiliated to the Presidency of the Republic and the Minister of Defence to carry out any business, whether service-wise or profit-seeking. Such provisions made the Military and General Intelligence and its subsidiaries dominant over the projects currently run by the state, with the possibility of establishing hundreds of new companies in accordance with the law of joint stock companies, through which they manage contracting companies, security, money transfer, tourism, aviation, roads, transportation, construction, gas stations, supermarkets and modern cafes.

Working in the fast train track, perhaps, seems disturbing to some, while its presence is a new hope for other citizens, but in any case, it is revealing about how Egypt’s wealth is managed, which is currently flowing through networks of interests and building alliances that are formed between the ruling military class and the politicians it chooses to deal with, or businessmen. Decisions are made through the directions and objectives of the president and the interactions between stakeholders in the local government, the army, the intelligence services, and public and private sector companies.

Egypt’s wealth is flowing through networks of interests and building alliances that are formed between the ruling military class and the politicians it chooses to deal with, or businessmen. Decisions are made through the directions and objectives of the president and interactions between stakeholders in the local government, the army, the intelligence services, and public and private sector companies.