Frankly, I was curious about this myself. Amassing 5 to 10 billion dollars or more (there are estimates of up to 70 billion) while working on a government salary, be it in the United States or Egypt, requires considerable energy.
How did they do it? My figured it was the usual means such as corruption in state-owned enterprises and government-run banks giving out loans without the expectation of being paid back. However, they did it more slowly with the appearance of legality.
This scheme appears to be based on the 51% rule. That rule says that no foreign business can be set up in Egypt without a majority stake being owned by an Egyptian. Obviously, the Mubarak family is more “Egyptian” than anyone else.
There is a warning in this. Nations requiring such partnerships may not in reality be all that friendly to business, not in the long-term. Certainly foreign interests are going to take a hit when they are in such an incestuous relationship with a corrupt government, first by shakedown and then by the inevitable revolution.
Such economic rules exist in many parts of the globe. The most prominent being China. For those businesses investing overseas I would recommend caution in these kinds of partnerships. Such an investment may pay off for the next quarter or the next year. But in theory, corporations are eternal. Having your immortal organization seized by an enraged population is an ignominious end. The situation in Egypt is a textbook example of how such investment can go wrong.
Whether the investment is shared with a corrupt Middle Eastern nation run by a single family or by a single political party (Chinese Communist), the future is hardly serene.
James Pilant
via PLANETIZEN POST
