Reporter: Ahmed Atef & Ahmed Elshamy
In early February of 2015, tens of thousands of leaked financial documents exposed secretive HSBC Switzerland bank accounts used by more than 100,000 clients worldwide for illicit activities such as money laundering and tax evasion.
The Swiss Leaks as it was called, revealed numerous Egyptian transactions, with more than 1,400 bank accounts belonging to 700 customers with total deposits reaching $3.5 billion. It included cases of several businessmen, former ministers and public figures from former President Hosni Mubarak’s regime, including Mohammed Rashid, former Minister of Commerce and Industry, and Khadija-al Gamal, his daughter-in-law.
Yasser Suleiman Hisham Mallawany, a controversial figure for his role in the Egyptian Stock Exchange scandal, was also among the bank clients exposed. Largely unknown to the public, the media-shy Mallawany was a committee member in the dissolved National Democratic Party (NDP), formerly the ruling party under Mubarak.
From May 28, 2004, Mallawany and his wife, Ghada Taher controlled four accounts in HSBC Switzerland. Between 2006 and 2007, they held deposits worth more than $760,000.
Who is Mallawany?
A 1981 graduate of Cairo University, Mallawany, 55, was a former member on the board of the Al Watany Bank of Egypt and the CEO of EFG Hermes Holding Company. As a result of criminal investigations into the stock exchange manipulation, his properties were seized by the state.
The Third Suspect
During the hearing on April 13, 2011, questions aimed at Mubarak’s son Alaa on the existence of companies created to buy and sell state assets revealed Yasser Mallawany to have played a pivotal role in the scandal. The lawsuit (case no. 10427) prosecuted all involved parties for insider trading in the stock exchange, investment funds, details of Egypt’s debt repayment scheme, privatization of companies in the business sector as well as the takeover of the Egyptian Al Watany Bank. Funds were transferred to the Hermes Company’s overseas accounts.
Referral Order in Case No. 10427
The 2006 and 2007 Investigations turned up information about the accounts Mallawany and his wife had not disclosed.
The files indicating Mallawany’s manipulation of the Egyptian stock exchange during his tenure on the board of Al Watany Bank between 2006 and 2007 failed to reach the courtroom during the lawsuit. As a public sector servant, Mallawany is required to submit financial disclosure for both his and his wife’s assets.
In response to questioning from Attorney General Ashour Farag, Colonel Tareq Marzouq, director of a special unit at the General Directorate for Investigations claimed: “Yasser Mallawany was the mastermind behind it all.” This confession was part of an interrogation report Sept. 20, 2011.
Marzouq said, “It was he who proposed the idea later agreed upon between him and Ayman Ahmed Fathi Hussein, then the chairman of the Al Watany Bank. This included an agreement on a controlling stake of the Al Watany Bank that helped Mallawany and Ahmed Naim Badr, then managing director of Naeem Holding, to join its board of directors as representatives of that stake, thus benefiting in the biggest possible way from the shares they held.”
As a result, Ahmed Hassan Qura, then Al Watany Bank director, was forced to resign after he received compensation for previously contracted services. Mallawany used separate companies affiliated with Hermes Holding, which he oversaw as an executive director, to trade in these stocks strengthening the demand for Al Watany Bank’s shares. This was done with the services of a strategic investor to sell the shares in return for huge profits.
The public prosecutor accused Mallawany of the following charges:
“The sixth suspect, Gamal Mubarak, had partnered up with the third suspect, Mallawany, to commit illicit profiting, a crime described in the fourth clause. This was done by way of forming a controlling stake in the Al Watany Bank. He then helped Mallawany as a strategic shareholder in the Bullion company which holds stakes in the Hermes direct investment company that manages the Horus 2 fund. This was used to purchase stocks in the Al Watany Bank. It allowed him and his company to illicitly profit up to EGP 414,407,130, an amount equaling over $46,000,000 as per today’s exchange rate.”
The public prosecution’s indictment stated: “Gamal Mubarak worked with the third suspect Yasser Mallawany by agreement and collaboration to commit the crime described in the third clause. He agreed with him to form a controlling stake in the Al Watany Bank shares, and helped him by assigning Hermes, the investment company that manages the Horus 2 fund, to purchase shares in the aforementioned bank, acquiring EGP 493,628,646 ($55,608,229 in 2016) in the process.”
The seventh suspect in the case, Alaa Mubarak, worked with the third suspect, Mallawany, in collaboration to supply insider information. An agreement among senior shareholders of Al Watany Bank revealed the plan to sell to a strategic investor.
Alaa Mubarak thus purchased 290,000 shares in the bank through the account of his wife Haidi Mohammed Magdi Rasekh. This allowed him to make a profit of 12,335,442 Egyptian pounds ($1,389,611), which was the difference between the purchasing price of the shares and their value at resale. The amount was transferred from his wife’s account to his personal account at Al Watany Egypt, thus becoming a crime based on the agreement and collaboration as outlined in the documents. However, she was cleared of criminal involvement by the investigation.
On Feb. 5, 2011, nearly 10 days after the outbreak of the Jan. 25 revolutions, Egyptian public prosecutor, Abdul-Magid Mahmoud, banned Mallawany from all travel and Cairo Airport authorities prevented him from boarding a flight bound for Dubai. He was detained until March 2012, after which he was able to leave Egypt on a private plane to an unknown destination.
On May 31, 2012, the public prosecutor referred Egyptian businessman Hassan Haikal, son of the late journalist Mohammed Hassanein Haikal, and Mallawany, to criminal court on suspicion of corruption related to the sale of Al Watany Bank, co-owned by the state and subject to the supervision of the Central Bank. According to charges pressed against Mallawany and others, the sale of the bank had led to the misappropriation of more than 2.051 billion Egyptian pounds ($ 231,049,149).
In-depth investigations revealed that Mallawany’s empire expanded beyond stock manipulations. Here are the exposed companies:
1.SCI MELLO is a French-based financial company established in 2009 and co-owned by Mallawany and Fatima Hamed.
2.MELLO YACHTS LIMITED is a British-based company established in August 2009 originally named ATLANTICA YACHTS LTD and co-owned by Mallawany and Phillip Khoury. It was established in 2009 as before changing its name
3.COMMERCIAL INTERNATIONAL INVESTMENT COMPANY SAE is a commercial investment company based in Cairo. Mallawany was its vice chairman while it was owned by the Egyptian National Bank.
4.PICO MODERN COMPANY FOR AGRICULTURE SAE is an agricultural company co-owned by Tawfiq Salahuddin Diab and Inayat Said Taweel, the children of businessman Salah Diab and his wife. Mallawany was a member of the Board of Directors.
5.JUHAYNA FOOD INDUSTRIES SAE is a food company managed by businessman Safwan Thabet. Mallawany sits on the Board of Directors.
6.HORUS FOOD & AGRIBUSINESS MANAGEMENT LIMITED is a company registered in Cyprus and owned by the company EFG HERMES PRIVATE EQUITY LTD. where Mallawany is a partner.
7.Wings Imperial for Hotels is co-owned by Mallawany, Naguib Sawiris, Prince Bandar bin Mohammed Abdulaziz, Tawfiq Salah Diab, Yassin Lotfy Mansour, Mona Makram Obeid.
8.Palm Hills Development Company SAE was co-owned by Mallawany, businessman and former Minister of Transport Mohamed Lotfi Mansour and Shihab Mazhar Mohammed al-Amin. The company was established in 2006.
9.Shehab Maritime & Oil Services Co. MARIDIVE is an Alexandrian based petroleum services company established in 2001, was co-owned by Mallawany, Mohammed Nadim and Sahar al-Sallab.
10.Investigations conducted by the Lebanese Company Register exposed Mallawany as a partner in several Lebanese companies. Hermes CL Holding registered in October 2010 under file No. 1901855 where Mallawany sits on the Board of Directors and Hassan Mohamed Hassanein Heikal, son of the late journalist Mohammad Hassanein Heikal, is an investor.
11.Mallawany’s name is listed as a director for the Beirut-based Lebanese CREDIT LIBANAIS SAL.
Mallawany and his lawyer declined to comment on the documents and information disclosed.
Many secrets of that period are yet to be revealed. However, these previously unavailable documents have shed some light on the marriage of money and power under Mubarak.
This investigation was completed with the support of Arab Reporters for Investigative Journalism (ARIJ), and coached by Hamoud al-Mahmoud.