Monday, March 21, 2011

Letters from Egypt: Bank Corruption Allegations

Photo Source: The Guardian
Another similarity to Tunisia post-revolution has Egypt on the rampage to round up anyone suspected of fraudulent actions.

A female managerial staff member, located at a main banking branch of one of the largest international financiers present in Egypt, is currently suspended pending an investigation into reports of embezzlement. The branch is one of the largest in the country dealing with high profile clients/corporate owners.

This woman has been taking money from these VIP customers in the form of foreign currency and exchanging it for Egyptian pounds (EGP or LE). The problem: instead of using the bank to make the exchange, she went to a currency exchange that had cheaper fees and garnered a nice commission. Say that the bank’s exchange rate to convert USD to EGP is at a rate of 5.85, but the New Nile Exchange Co.’s rate is 5.90. This wouldn’t matter if she were only changing in $100 here and there.

However, the VIPs are potentially exchanging millions at once. Hypothetically, if she exchanged $1 million at a nearby currency exchange equals about LE 590 million. Her bank would have only provided LE 585 million, giving her a LE 5-million commission. However, she is only taking a commission of max LE 15,000 (approximately $2,542). Where does the rest of the money go? Back to the VIPs of course.

The bank’s policy is that an executive may not accept gifts over LE 100 (around $17), and so now the investigation is on into the wheelings and dealings of this managerial staff member. The woman is also facing bribery charges for easing transactions like granting loans for corporate business owners to extend their operations.

Egypt’s financial industry is facing a hard challenge as many of its employees seem to be more disgruntled over salary discrepancies than other industries. How did this female manager come to be investigated? Her employees began complaining to upper management, and the ones that didn’t complain were, as my friend put it, “living in deep sh*t.”

This is a good indicator as to the possible ease of corruption levels here. However, what is the likelihood that the corporations will endure the same treatment? Herein lies the problem – without making corporations also pay for their misdeeds, the suspension with possible termination of one employee will fall on deaf ears. The problem will continue with these large companies looking for the next manager that will comply with the corporations’ dubious demands and the circle continues.

Then again, maybe a checks and balances will begin to form in order to instill moral and ethical conduct in the professional context. Now if only that can reach to the government officials and prohibit the use of “backsheesh” (bribes).

Words from an Egyptian on the matter:
”But after January 25th revolution, fear is gone leaving behind an encouraging spirit of hope and aim for a real positive change which makes protesters arouse everywhere -not only in banks- asking for their rights.  Accordingly, the main issue of the protest was not the amount of the wages itself but rather the inequality of distributing the profits among the employees. Some take all others have nothing.”

Quick Rant:

Saudi Arabia is not Tunisia, Egypt, Libya, etc.

I see all these news reports discussing how we’ll all be in real trouble if Saudi faces the dissidence that has fallen upon Tunisia, Egypt, Libya and with other countries holding anti-government demonstrations (Bahrain, Yemen, Algeria, Jordan and Morocco).

Of course, my opinion might be presumptuous, but here are some things to consider before getting your hopes up (or fears as they may be):
  • Population of the Royal Family
  •  Education Levels
  •  Poverty Rate
There are 7,000 members of the House of Al-Saud, the ruling family in the Kingdom of Saudi Arabia (KSA). This figure is incomparable to Libya’s Qaddafi family, Egypt’s Mubarak regime, Ben Ali of Tunisia, etc. If you have time, you’re more than welcome to look up all the extended family members of Qaddafi, Mubarak and the like, but I think it’s safe to say that the figures are nowhere near that of the Al-Saud royal family.

While a few family members of recently ousted leaders Ben Ali and Hosni Mubarak held government positions, again it cannot be compared to KSA. The major oil producer’s cabinet is appointed by the monarch every four years which include many royal family members. Elections are non-existent and even if there were elections, what does it matter when the family is so large and in-charge?

In addition, I’m unsure if that 7,000 figure only constitutes the men in the Al-Saud family. Why? Women born in Saudi have no rights. Likewise, any other religion born in Saudi isn’t granted citizenship (hence why reports have the country at 100% Muslim). I have a Coptic Christian friend here who was originally born there as his parents were working in KSA. He is ineligible for a KSA passport because he is Christian.

Other countries revolted because of education and poverty. Literacy rates in KSA are over 78%. While the CIA World Factbook doesn’t report on the poverty level in the country (figure simply says N/A), I did find that in 1999 the National Commercial Bank estimated that out of a population of 20 million (now it’s closer to 25 million), there were 120,000 millionaires (I’m sure I could find more recent research, but you get the point). With the population increase and oil revenue continuing to roll in, I think it’s also safe to say the number of millionaires has increased.

A more recent figure by the UNDP said the percentage of families living in extreme poverty was 1.63% in 2005. Present-day Egypt has more than 20% of its population living below the poverty line.

However, it is true that IF KSA had a revolution (DOUBTFUL) that there would be MAJOR concerns. You would undoubtedly see a religious war break out because every Muslim from all corners of the world would come to protect the holy land (Mecca and Medina specifically). Saudis are heavily regarded in Islamic society no matter how horrible they may be as an individual (to date, I’ve failed to meet one Saudi that was genuinely kind and respectful – male that is).

Although part of me wishes that if a KSA revolution were to happen, that it would signify a more secular society that was open and accepting to all religions, genders, etc. Then again, the fear would lie with a more radical version of Islam being introduced – if its remotely possible to see a more radical version than what Saudi maintains currently.

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