Bringing it all back home: why tracing Mubarak's money may not be easy

Recent history shows a chequered record of success in repatriating the wealth of fallen dictators

Deposed dictators can be a miserable and humiliated breed.
Stripped of their near-divine status and whisked away to impotent - although frequently luxurious - exile, their fall from grace is often capped by asset freezes and legal prosecution on charges of corruption and embezzlement.
But despite the frequency of such actions, experts say legal action is only occasionally successful at tracing the illegally-obtained funds of the world's strongmen.
In 2009 Switzerland -- following the example of 10 of its European neighbours -- lifted the freeze on the assets of ousted Democratic Republic of Congo dictator, Mobutu Sese Seko.
After extending a 3-year freeze four times, a Swiss court ruled to unblock the assets due to a lack of decisive legal proof from Congo officials.
Now with the Mubaraks facing prosecution, many Egyptians are wondering how likely it is that the family's allegedly misbegotten fortune could be returned to its self-proclaimed rightful owners: the Egyptian people.
“Money cannot just disappear; it has to go through the financial system at one point or another, only then it can be traced and retrieved,” says an official in the Egyptian Anti-Money Laundering Unit (AMLU), who prefers to remain anonymous.
Earlier reports by ABC News and the Guardian claiming that Mubarak's fortune could be as high as US$70 billion stoked the imagination of millions of Egyptians who believed they would get their share of the stolen money.
Gamal, Mubarak's younger son, is reported to have acquired shares in several investment firms which run gigantic private equity funds, claimed to have grossed gains of $146 million in 2010 alone.
“After proper legal procedures are undertaken, we are confident that we could locate and recover the appropriated funds,” the AMLU source tells Ahram Online.
However, he was unable to name a single significant case where fleeing money was actually stopped in Egypt.
Although history is full of ousted dictators whose assets were frozen, these assets are generally far less than the initial estimated wealth of the former strongmen.
Haiti's Jean-Claude Duvalier, accused of stealing $900 million, only had $6 million of assets frozen in Switzerland.
Closer to home, $23.5 million of Saddam Hussein's money was frozen despite allegations he stole up to $40bn from the oil-rich country he dominated for 24 years.
The same scenario took place on the other side of the Persian Gulf where Iran's government was only able to liquidate the Shah's assets domestically in 1982 -- three years after his ousting -- and freeze $20 million in the United States.
Recently, Switzerland froze assets belonging to Tunisia's Zine El Abidine Ben Ali, Ivory Coast's Laurent Gbagbo, Libya's Muammar Gaddafi and Egypt's own Hosni Mubarak.
Early last week Mubarak addressed the nation denying all allegations made against himself and his family. The former president spoke with poise and confidence; leaving many with the impression that Mubarak has been able to hide his alleged fortune far from the eyes of public prosecution.
“There are plenty of ways through which funds could be channelled so they are intractable,” says Amr Atalla, performance analysis manager at the Arab African International Bank.
“Establishing an offshore company where disclosing shareholders names is not a requirement then performing a series of transactions involving several banks is the most common way to traffic funds.”
Atalla adds that moving large sums of money always arouses suspicions. Channelling funds in numerous, smaller transactions is the typical practice of money launderers.
The Central Bank of Egypt (CBE) stipulates that transparency is key to combating money laundering.
A "know-your-customers" policy is in effect at banks, demanding that all unusual transactions that are not commensurate with a client's legal business activities be reported and investigated.
However, money launderers usually perform complex financial transactions where funds are diversified into many investment instruments so the real benefactors cannot be easily traced.
Egypt passed its anti-money laundering legislation in 2002 and established the AMLU soon afterwards. However, some believe the enforcement of this legislation is inadequate.
“All the regulations are in place, the problem is that application is not tight enough,” says Nermin Nabil, head of compliance at the Arab African International Bank.
“Banks' management generally believe that compliance divisions are less important than other profit generating business units. That's why we are not as involved in decision making as we should be.”