It is no secret that many of the rights that are taken for granted in some countries are systematically and increasingly denied in others —particularly political freedoms such as freedom of expression and peaceful assembly. What might be surprising to many, however, is to find out that some of the investments funded by our tax money through international financial institutions like the World Bank Group are being used to target and suppress human rights activists.
On July 28th, 2017, a prominent Egyptian human rights activist submitted a complaint to the watchdog of the World Bank Group’s private sector arm - the Compliance Advisor/Ombudsman (CAO), which holds the International Finance Corporation (IFC) accountable. The complaint alleges that a commercial bank in which the IFC holds an equity stake and has invested hundreds of millions of dollars, has colluded with the Egyptian regime to retaliate against human rights defenders, violated national law and the constitution, and threatened her safety.
The actions by the IFC’s client, Ahli United Bank (AUB), appear to stem from a 2011 raid by Egyptian authorities of seventeen nongovernmental organizations (NGOs) working on democracy and human rights. The raid was followed by an Egyptian court order two years later that resulted in the closure of several international NGOs and sentences for several activists on charges of operating illegally in the country and receiving foreign funding to disrupt the country’s stability. The case received worldwide attention, particularly in the US, since it involved 19 American citizens, as well as well-known American organizations such as the International Republican Institute (IRI), National Democratic Institute (NDI) and Freedom House, among others. The US administration managed to rush its citizens out of the country before the court date, and the case all but disappeared from the international mainstream media afterward. Several Egyptian NGOs, rights workers and lawyers continued to fight the charges brought against them in the “Foreign Funding Case.”
In its ongoing war against human rights activists, the Egyptian regime is violating the country’s constitution and its laws. It also colludes with different institutions and uses increasingly controlled media outlets to incite public opinion against those activists in a way that threatens their lives. Most relevant to the case now before the CAO is the regime’s tactic of freezing the assets of those activists.
On November 11th, 2016, Azza Soliman, a prominent human rights lawyer and activist, and founder of the Center for Egyptian Women’s Legal Assistance (CEWLA), couldn’t withdraw money from her personal or business accounts with Ahli United Bank (AUB). She was one of the activists involved in the court case. Two weeks later, she was told that the bank’s decision to freeze the account was in response to a request from the investigative judge, in clear violation of a national law that stipulates that freezing assets can only be carried out via court order. In fact, the court order to freeze Azza’s assets was only issued a month later, on December 17th, 2016. Other Egyptian banks, complying with the law, notified her that the verdict would become effective a month from the verdict date (mid-January 2017).
The story didn’t end there. As a lawyer who knows her rights, Azza filed a police report against AUB. The investigative judge responded by issuing a retaliatory arrest warrant for Azza who was taken by force from her home in the early morning hours on December 7th, 2016, to the police station, then to the investigative judge office where she spent the full day before being bailed out. The story of her arrest went viral and was picked up by state-controlled media outlets. But the pro-regime hosts of some of the most- watched TV shows used this opportunity to renew their attack on human rights activists and especially on Azza in a way that exposed her and her family to further threats and intimidation.
As an international financial institution that uses public money to finance development projects world-wide, the IFC has a responsibility to make sure that our tax money is not used illegally to retaliate against activists in countries where basic rights are denied. This is especially crucial at a time when the World Bank Group is increasingly emphasizing the importance of citizen engagement for the success of any development project. The IFC conducts a risk assessment before making a decision to invest in any project. In this specific case, in 2014, when IFC decided to convert a $100 million capital investment into equity in AUB to bring its stake up to 5 per cent, the Egyptian regime had already started cracking down on activists. One of the risks the IFC should have assessed was the likelihood that the regime could use the private banking system to punish its critics - a commonly used tactic by repressive regimes. A few months before the IFC decided to convert subordinated debt to shares in AUB, Unibank in Azerbaijan had illegally frozen the account of an Azerbaijani human rights activist. The European Bank for Reconstruction and Development (EBRD), another international financial institution that uses public money to invest in development projects, owns shares in Unibank. The IFC should have required that AUB institute a system to review the validity of requests from the regime to freeze clients’ assets, and challenge clearly illegal ones. In the absence of such a system, AUB was the only bank that rushed to freeze an activist’s account without waiting for the legally-required court order, at a time when other banks, including national state owned banks, abided by the law.
Azza’s complaint will now be assessed by the CAO and if found eligible, the complaint could result in the IFC being held responsible for breaches of its own standards. Meanwhile, this complaint should serve as a wake-up call for IFIs to develop a set of clear guidelines to ensure their investments, and our tax money, are not implicated in suppression of human rights, especially in countries where the civic space is rapidly closing.
For more information about IFC, finance and human rights please click here.
Co-authored with Amy Ekdawi, Regional Programs Director at Bank Information Center