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How The Mubarak Family Made Its Billions

First Posted: 02/11/11 09:16 AM ET Updated: 05/25/11 07:30 PM ET

Mubarak Family

This story has been updated to reflect breaking news

A tourist in Cairo spots three photographs on the wall of a restaurant: one of Nasser, another of Sadat, and the third of Hosni Mubarak. He asks the owner who the first man is, and the owner tells him it's the man who overthrew the Egyptian monarchy and served as the country's president. "Who's the second man?" the tourist wants to know. "That's Anwar Sadat, our next president," comes the reply. "He made peace with Israel but was assassinated in 1981." Next the tourist wants to know who the third man is. "Him?" says the restaurant owner. "That's my business partner's father" - A popular joke in Egypt

NEW YORK -- In his first speech to the country, the new president of Egypt promised "not to commit myself to what I cannot implement, hide the truth from the people, or be lenient with corruption and disorder."

That was Hosni Mubarak in 1981, taking the reins of his proud country in the wake of Anwar Sadat's assassination and expressing a determination to steer Egypt in a new direction. During a crackdown on profiteering by politically-connected wealthy businessmen, Sadat's half-brother and his sons were jailed and handed steep fines. Several dozen prominent members of Sadat's circle were slapped with criminal charges for misusing their power and other corrupt practices. Mubarak was known for his "rigid personal probity," according to a 1990 New York Times profile, which noted that "his family has not profited from his office."

But over the last 20 years, Mubarak, his family and his close circle of advisers have enriched themselves through partnerships in powerful Egyptian companies, profiting from their political power, according to numerous reports. The 82-year-old leader and his two sons also wield the levers of the government, including the military and the country's preeminent political party, to reward friends and punish enemies.

Mubarak -- who stepped down on Friday in the wake of massive protests that have gripped Cairo and Alexandria for weeks -- and his family have a net worth of at least $5 billion, analysts tell The Huffington Post. Recent media reports pegging the family fortune at between $40 and $70 billion are considered to be exaggerated.

Much of their fortune has reportedly been invested in offshore bank accounts in Europe and in upscale real estate. On Friday, Switzerland froze accounts possibly belonging to Mubarak and his family, a spokesman told Reuters, under new laws governing ill-gotten gains. Last month, the Swiss froze the accounts of Mubarak's ally, ousted Tunisian president Zine El Abidine Ben Ali, whose overthrow inspired the first protests in Cairo.

The Mubarak family reportedly owns properties around the world, from London and Paris to New York and Beverly Hills. In addition to homes in the Red Sea resort of Sharm al-Sheikh and the upscale Cairo district of Heliopolis, they also have a six-story mansion in the Knightsbridge section of London, a house near the Bois de Bologne in Paris and two yachts.

Largely through Mubarak's two sons, Gamal and Alaa, the family controls a network of companies that earn money through concessions wrangled from foreign companies that do business in Egypt, according to prominent businessmen and "Corruption In Egypt: The Black Cloud Is Not Disappearing," an investigative report compiled in 2006 by a coalition of opposition groups. (The report, which names the companies allegedly owned by the Mubarak brothers and details multiple instance of corruption by government officials, has been cited by numerous international good government groups, such as Transparency International, but it was taken offline and is no longer available on the Internet. The Huffington Post obtained a copy, replete with rhetorical flourishes and thinly-sourced allegations, which is available here.)

"Egypt's state under Mubarak's regime is an embodiment of corruption," concludes the report, with descriptions of numerous allegations of corruption involving bribery, undue influence and nepotism.

In the 1980s, Mubarak seemed sincere in his desire to crack down on corruption in an effort to distinguish himself from Sadat, says an Egyptian-American businessman who often does business in the country. "But as time went on, the cronies around him started taking advantage of the system," he says. "And the other factor was his children got into business, taking commissions out of each and every company that comes to Egypt. The way they have amassed that money is not by stealing but by ensuring that businesses that want to operate in Egypt pay from 5 percent to 20 percent commission to a company formed by Gamal Mubarak. I know businessmen who have been squeezed this way."

Some of the family's wealth is also believed to be through partnerships with foreign companies -- under Egyptian law, foreign businesses are required to give a local partners a 51-percent stake in their Egyptian operations. "According to this law, any multinational company needs to have a local sponsor, and this local sponsor usually goes through members of the family or powerful people in the ruling party," says Aladdin Elaasar, the author of "Last Pharaoh: Mubarak and the Uncertain Future."

A spokesman for the Egyptian Embassy did not return calls for comment and members of the Mubarak family could not be reached for comment.

Privatization initiatives sponsored by the World Bank, the International Monetary Fund and the U.S. Agency for International Development have been accused of favoritism. When several historic hotels were sold by the government to friends of the Mubaraks, local newspapers complained about the "smell of corruption."

The wealth of the Mubarak family and other elites stands out in a country where millions toil as low-wage laborers, high rates of inflation make it harder for those aspiring to a middle-class lifestyle and unemployment is a persistent problem -- half of all Egyptian men don't have a job and 90 percent of females remain jobless two years after graduating college, according to a recent Congressional Research Service report.

Gamal, who has been groomed to succeed his father before the recent protests, was educated at the American University of Cairo and spent six years working as an investment banker for Bank of America. He then formed his own investment advisory firm, Med Invest Partners, which helped Western investors seeking to purchase stocks and companies in Egypt.

Alaa, the older brother, is a businessman who owns a company that services most of the airlines in Egypt, according to Elaasar, though he reportedly fell out of favor when he was accused of benefiting from privatization initiatives. One persistent rumor making the rounds is that the government enacted a law in 2001 making seat belts mandatory in vehicles because Alaa has a concession to import seat belts.

Close friends of the Mubarak government also prosper. Taher Helmy, adviser to Gamal and Hosni and president of the American Chamber of Commerce in Egypt, recently bought a $6.1 million apartment overlooking New York City's Central Park. Ahmed Ezz, a steel magnate and close confidant of Gamal, has been accused of using his connections to monopolize the steel market.

Several former government officials have started to go public with their allegations of corruption. Last week, former deputy foreign minister Ibrahim Yosri and 20 lawyers petitioned Abdel Meguid Mahmoud, the country's prosecutor general, to put Mubarak and his family on trial for allegedly stealing state wealth. Yosri did not return emails for comment.

In 2005, the most senior official to defect in decades fled to Switzerland and began a campaign to have Mubarak put on trial at Belgium's International Court of Justice for corruption and human rights abuses. "The Mubarak era will be known in the history of Egypt as the era of thieves," said Mohammad Ghanam, former chairman of the legal research unit in the Egyptian Interior Ministry. The unlikely whistleblower condemned the regime in a speech to a human rights conference in London, condemning Mubarak and his sons in the strongest terms: "his official business is the looting of public money, and we find that the super-corrupt, ultra-delinquents have attained state posts; extreme corruption and treachery throughout the land has caused the current condition of our country, as all of you know!"

Ghanam's case turned a strange corner in 2007. Though he was granted political asylum by Switzerland, he later claimed that Swiss authorities were trying to coerce him into infiltrating and spying on the country's Arab community. When he vehemently refused and some of his comments appeared on jihadist Websites, Ghanam was jailed for what Swiss authorities called his "dangerosite" (French for "dangerousness").

His brother, Ali, who lives in the United States, says that he has been unable to talk to his brother for more than two years and blames the Mubarak regime for his detention. "He exposed the corruption of the Mubarak family," Ali Ghanam says, "and look what happened to him."

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