While most attention has focused on the origins of the wealth of Hosni Mubarak and his family, allegations of corruption run far deeper into Egyptian society and pursuit of the charges may result not only in the punishment of cronies but also a wider witch hunt against businessmen that may stymie an economy that needs as much growth as possible.
More than 1,000 cases of corruption, lodged with the government in recent years but largely ignored, will now be opened, according to Gawdat al-Malt, the director of Egypt's Central Auditing Organization. The breadth of potential exposés is staggering, poking into virtually every corner of the economy from agriculture to the financial mess that state banks have bequeathed by way of sweetheart loans that will probably never be paid back. The investigations may eventually touch foreign investors, if not foreign governments, in particular the U.S.
But some observers warn that the zeal to clean house may cause significant collateral damage. "It's an important step and it's a necessary process that the country needs to move forward," says Khairi Abaza, a former Egyptian politician who is currently a scholar at the Foundation for Defense of Democracies in Washington, D.C., "but I think they have opened a real Pandora's box by starting this process." "This is going to be a big deal and is part of the reason emotions are running very high now in Egypt," says an Egyptian-American academic who has asked not to be identified. "There was certainly serious, serious corruption, but one worries about it widening to include people who were fairly honest businessmen, and I fear it portends a kind of willingness to backtrack on some of the necessary economic reforms that got Egypt out of the command state and are in part responsible for some of the growth that have we have been seeing there. "
Stifled reforms and a return to some form of state socialism, Abaza says, could result from the merged interests a "resurgent left" and the military, which has never been keen on reforms. Paul Sullivan, an economics professor at National Defense University who taught in Cairo for six years, says, "My sense is that there could be extensive expropriations of assets of those found to be corrupt, but this may cause greater capital outflows and harm Egypt's abilities to attract foreign investments." Sullivan adds, "This is a peoples' rebellion, and they are looking for some way to tax those ill-gotten gains."
The importance of wasta, or connections, makes it difficult for investigators to know where to draw the line especially if the purge against corruption is largely a continuation of the military's behind-the-scenes campaign against the regime faction led by Gamal Mubarak, the former President's son, whose economic-liberalization policies were tarred by extensive crony capitalism. "Anyone who has [lots of] money in Egypt had to deal with corruption, had to be involved in one way or another with a degree of corruption because that's how the system functions," argues Abaza, who for a decade was associated with the long-established liberal political party Wafd. "This started in the last days of Mubarak, mainly to have a few scapegoats, but I think this process has gone a little bit out of hand, from a regime perspective." There are already long lines of people seeking to register complaints with the attorney general's office, and many observers say that a cascade effect will occur when those accused of corruption in turn expose others higher up in the food chain.
The business community is now frantically trying to reconnect with a new and still emerging hierarchy of power and the efforts can be frustrating. Naguib Sawiris, one of the richest businessmen in Egypt, says he has stopped providing advice to the regime after being part of the committee that tried to mediate between the Mubarak regime and the opposition. He says the junta could clearly benefit from consulting with business leaders but adds wearily, "You know, they need to see that for themselves. It's not for me to tell them that." Sawiris does not fear for himself, despite alleged ties to Gamal Mubarak. (Sawiris also happened to bankroll the country's best independent newspaper and TV network, which both covered the protests extensively.) But at the same time, Sawiris says he is uneasy about the new zeal displayed by prosecutor general Abdel Meguid Mahmoud. "He did not take action [when the cases of corruption were brought up in the past]. Now he is taking action. How can I trust a man like that?"
Another potential result of the corruption probes: a chilling effect on business and economic reform. "The cause of economic reform in Egypt is over for a long time, maybe the next 10 years," says an Egyptian-American academic who prefers not to be named. "I mean, come on, how are you going to privatize now in this atmosphere? Forget about it it's a dead letter." Instead, he foresees the government even a democratically elected one falling back on policies to try to guarantee full employment with an artificially boosted minimum wage, embracing the socialism that he points out has been around since the military first took power in 1952. "Liberty does not bring economic liberalization, but that's the price you have to pay in the short term."
There may, however, be some military-imposed limits on prosecutions. Recent Egyptian government requests to foreign governments to freeze assets of high-placed former regime officials notably did not include any Mubarak family members. The logic there, says the anonymous academic, is that if the former President could be prosecuted, then high-ranking generals could be too. The top brass presides over a fount of military wealth, which includes control over huge swaths of public land, much of which was converted in recent years into malls, upscale housing and resorts.
While potential witch hunts concern many observers, Samer Shehata, a Georgetown University professor, says his principal concern is that the investigations go far enough and "not simply to placate public opinion momentarily." He says they should include not just the financially corrupt but also the most zealous regime defenders, particularly its chief propagandists in the state media. Says Shehata: "I think they certainly need to be held accountable [and] I just want to make sure that these investigations really are thorough, that they are unbiased and professional, fair and so on. But you have to remember, we have been dealing with a government that has not been the most efficient or transparent or credible for some time now."