New agency to manage recovered, seized assets with sovereign wealth fund, private sector

President Abdel Fattah al-Sisi endorsed on Wednesday a new law to establish an agency for managing and disposing of recovered and confiscated funds. 

It will allow for billions of Egyptian pounds worth of assets to be managed outside the treasury, a step which MP Mohamed Badrawy told Mada Masr could allow for better asset management in theory, though he questioned whether this will be the case in practice.

The new agency will command assets from a number of older bodies dating as far back as the 1950s to manage seized assets, funds, lands and properties, including the Sequestered Properties Authority, the Central Authority of Resources and Agrarian Reform, and the General Authority of Recovered Funds.

It could therefore command assets seized from the Muhammad Ali dynasty, or investment funds seized in the 1980s and beyond, said Badrawy, a member of the House Planning and Budget Committee. It could include nationalized properties in Zamalek and Downtown Cairo, agricultural lands, and companies and schools formerly belonging to the Muslim Brotherhood.

Under the new structure, the entity will be subject to less formal oversight than its earlier iterations.

It will be managed by a committee comprising the prime minister, the finance minister and representatives from the Public Prosecution and the ministries of planning, justice and the interior, along with three economic and financial experts.

It can also contract with specialized companies for asset management to supply “technical experience that the new agency does not possess,” according to a statement from Finance Minister Mohamed Maiet.

A level of judicial oversight which was present in a 2018 version of the agency will now be stripped back, said a judicial source from the Court of Cassation who spoke to Mada Masr on condition of anonymity. Now, a judicial committee will be responsible only for inventorying the funds seized from "terrorist" groups and individuals, with their management handled by the new agency.

Maiet described the aim of the new agency as geared to, “optimize state-owned assets and resources, maximize returns and manage them systematically according to global best practices, ultimately enhancing economic management efficiency and maximizing state revenues.”

As such, the new agency is entitled to contract with private sector companies and collaborate with Egypt's sovereign fund in managing the funds and assets it commands.

This could compromise some of the transparency around the assets’ management, the judicial source said. Prior to the enactment of the law, the source explained that "if a building in Zamalek or Downtown Cairo was owned by the Sequestered Properties Authority, the agency could sell or lease the building for the benefit of the state treasury.” 

But the new law would allow the agency a share in the building’s ownership in partnership with the sovereign wealth fund, which is not subject to parliamentary oversight in the same way as funds in the state treasury are.

“When the sovereign wealth fund establishes a company that includes the building, the new company will have ownership of the property, and the profits will go to the agency's budget rather than directly to the state treasury," the judicial source said.

With budgetary resources strained, the judicial source said directing funds down alternative paths could exacerbate the situation. 

Badrawy noted the same issue, but said that the situation shouldn’t be assessed by the value of the funds within state coffers, but rather by the effectiveness of the state's asset management. 

Sovereign wealth funds have been a global success in this regard, he noted, but Egypt's track record with such entities over the past 50 years has been unsuccessful. The government, nevertheless, insists on adopting the same approach, Badrawy concluded.