By the ARIJ team
On November 14, 2011, a client at the U.S. PNC Bank received a payment of $112,000 from Alpha Bank in Cyprus. This led PNC Bank to file a suspicious activity report (SAR) to the Financial Crimes Enforcement Network (FinCEN).
The report was filed on PNC customer Dmitry Cherkas and his business after the bank suspected from its research that Med-Invest Ltd., the company that sent the money, was owned by Gamal Mubarak, the former Egyptian president, Hosni Mubarak’s, youngest son.
“Hosni Mubarak and his two sons, Alaa and Gamal, are the focus of allegations of corruptions and abuse of power,” PNC Bank wrote. The bank’s suspicions multiplied after an analysis of bank transfers between May 18 and November 28, 2011 revealed that the total funds sent to the U.S. company, based in the tax haven Wyoming, amounted to over $1.7 million.
The transfers took place while both Hosni and Gamal Mubarak were being held in custody on charges of corruption and killing demonstrators that were filed against them and a number of regime leaders following the outbreak of the January 2011 Uprisings that resulted in the fall of Mubarak’s regime on February 11, 2011.
The documents obtained by BuzzFeed News and shared with ICIJ, ARIJ and other media partners, indicate that Med-Invest Ltd sent U.S. company Medical Innovations & Technologies four transfers totaling $422,797.02 over two weeks – from November 14 to November 28, 2011.
The Source of the Money
According to the documents, Med-Invest Ltd was registered in Seychelles, specifically at the address 306 Victoria House, Victoria, MAHE SC. This is the registered headquarters of dozens of offshore companies, according to public records.
It was the company name’s similarity to that of the UK-based MedInvest Associates Limited, founded by Gamal Mubarak in 1996 (registration number 03188793), which led to the U.S. bank’s suspicion regarding the source of these funds.
“After Gamal Mubarak left Bank of America, he set up an investment firm called Medinvest Associates in London in 1996 with two partners,” PNC Bank wrote, citing a New York Times article.
Despite Gamal Mubarak’s resignation from the UK company in 2001, it remained active until February 2012, according to corporate records. The company was “quietly dissolved,” according to The Guardian, and may have placed its assets “beyond the reach of investigators.”
PNC Bank quoted the New York Times article, which stated that MedInvest Associates Limited was “owned by an international securities fund in Cyprus,” Bullion Company Limited.
Bullion’s shares are distributed among a number of shareholders, of which Gamal Mubarak owns 50% , according to a report by the Egyptian Initiative for Personal Rights (EIPR). EIPR also reported that Bullion Company was owned Pan World Investment, which documents from the Illicit Gains Authority affiliated with the Egyptian Ministry of Justice show is owned by Gamal and his brother Alaa.
Bullion, according to EIPR’s research in cooperation with the British NGO The Corner House, acquired 35% of the shares in one of the Hermes Financial Group companies, EFG-Hermes Private Equity, a company registered in the British Virgin Islands.
A Mada Masr investigation reveals several facts about Mubarak’s investments and assets. Firstly, that that EFG-Hermes Private Equity materialised due to a partnership between Bullion and the holding group that owns the Egyptian Investment Bank EFG Hermes, which also owns 65% of the company registered in the Virgin Islands. The investment group EFG Hermes contracted EFG Hermes Private Equity for advisory services, according to Mada Masr. Gamal Mubarak contributed a sum of $1,750 towards its $10,000 capital according to Mada, who also found that Gamal made the small initial investment and then huge profits through consulting contracts with EFG Hermes, even though the British Virgin Islands company was a shell company.
EFG-Hermes Private Equity owned several funds that invested in a number of private companies in Egypt, according to EIPR. One of the investments that made headlines was the National Bank. As a result of the investment, Gamal, Alaa and others were accused of illegally obtaining over 2 billion Egyptian pounds before the court exonerated them in February 2020.
Additionally, Bullion created the investment International Securities Fund located in Cyprus, according to reporting by Ahram. Alaa Mubarak’s company, Pan World Investment, contributes by 10% of its total shares, according to EIPR research.
The entirety of the Mubarak family’s assets, including their assets abroad, should have been frozen under EU Resolution 172 of 2011 issued in March 2011. A year after the decision, MedInvest Associates Limited was dissolved, according to public records.
The resolution did not state the size of the frozen funds in Europe. This was unlike measures taken by Switzerland, which announced that it had frozen $428 million collected from 12 influential members of the regime that was toppled by the January revolution.
The freezing decision was upheld in November 2018 by the Court of Justice of the European Union (CJEU). However, the Panama Papers, published in the spring of 2016, among other investigations, reveal a lack of compliance by the British Virgin Island authorities with the decision to freeze the assets of offshore companies mainly located in Cyprus and the BVI.
In spite of the freezing decision, legal amendments such as dissolution were made to companies owned by the Mubarak family, according to reporting by Daraj, in violation of the standard EU definition of the freezing of funds present in many resolutions: “Freezing funds means preventing any transfer, transaction, modification, use, access to or dealing with funds in any way that could lead to changes in its size, quantity, location, ownership, possession, character or destination. Further, it prevents any other changes or modifications that would enable the funds to be used, including the management of the investment portfolio.”
The United States did not announce any measures to freeze the Mubarak family’s funds and the US Treasury Department’s sanctions website does not show that any of Mubarak’s assets are frozen.