It will be tough to track riches acquired by Mubaraks

After Hosni Mubarak's younger son, Gamal, left his job as an executive with Bank of America in London in the mid-1990s, he joined forces with Egypt's largest investment bank. Today he has a significant stake in a private-equity company with interests throughout the Egyptian economy.

During Hosni Mubarak's nearly 30-year rule, he and his family were not flamboyant with their wealth, and there is no indication Gamal Mubarak or the Egyptian investment bank were involved in illegal activity. But his investments show how deeply the family is woven into the Egypt's economy.

With Hosni Mubarak out of power, there are growing calls for an accounting to begin.

Within hours of Mubarak's resignation Friday, Swiss officials ordered all banks in Switzerland to search for — and freeze — any assets of the former president, his family or close associates. In Egypt, opposition leaders vowed to press for a full investigation of Mubarak's finances.

Tracing the money is likely to be difficult because business in Egypt was largely conducted in secret among a small group of people connected to Mubarak.

"Now we open all the files," said George Ishak, head of the National Association for Change, an opposition umbrella group. "We will research everything, all of them: the families of the ministers, the family of the president, everyone."

Estimates of the Mubaraks' fortune vary wildly, including a widespread rumor that they are worth up to $70 billion. U.S. officials say that figure is exaggerated and put the family's wealth at $2 billion to $3 billion.

Sons were business elite

Gamal Mubarak, who was being groomed to be the next president, and his older brother, Alaa, were considered major figures in the business elite.

Gamal Mubarak's private-equity business came through his ties to EFG-Hermes, the largest investment bank in Egypt. EFG-Hermes, which listed assets of $8 billion on its 2010 financial statement, was pivotal in Egypt's privatization program, in which state companies were sold off to politically connected businessmen.

The connection to EFG-Hermes reaches back to the mid-1990s. After Gamal Mubarak left Bank of America, he set up an investment firm, Medinvest Associates, in London in 1996 with two partners. Medinvest, in turn, is owned by an international securities fund in Cyprus, Bullion Co. According to EFG-Hermes, Gamal Mubarak owns half of Bullion, and records in Cyprus show his brother, Alaa, is on the board of directors.

Bullion owns 35 percent of the private-equity operation, which has $919 million under management, according to the chief executive of EFG-Hermes, Hassan Heikal. The equity fund invests in oil and gas, steel, cement, food and cattle.

"No special privileges"

Heikal said that other than the private-equity investment, Gamal Mubarak had no other ties "directly, indirectly, offshore or through family" to the bank. He said the fund constituted only 7 percent of the bank's business. Questioned about the size of Gamal's initial investment in the 1990s, Heikal declined to elaborate.

A spokeswoman for EFG-Hermes said the bank "has received no special privileges or consideration from the Egyptian government and has always operated under legal and transparent best-practices." Calls to Medinvest's office in London and Bullion's office in Cyprus last week were not returned.

Gamal Mubarak has said his business activities are legitimate.

For years, opposition groups have contended that since Egypt privatized its economy in the 1990s, the Mubaraks and a few dozen elite families have held stakes in the sale of state assets and in new business ventures.

Later, some of these businessmen were appointed to government positions overseeing the businesses they ran. Connections to the presidential palace brought benefits such as the opportunity to develop government real estate and access to easy bank loans.

"The corruption of the Mubarak family was not stealing from the budget, it was transforming political capital into private capital," said Samer Soliman, a professor of political economy at American University of Cairo.

One businessman who won government approval for various major development projects is Magdi Rasekh, Alaa Mubarak's father-in-law. Rasekh is chairman of the board of Sixth of October Development & Investment, which built one of a series of sprawling developments in the desert outside Cairo. The government-backed development, Sixth of October City, is home to 500,000 people, an entirely new satellite city with an industrial park, a hospital, villas and middle-class apartments. Efforts to reach Rasekh were not successful.

As attention turns to tracking the Mubaraks' purported wealth, rumors of vast real-estate holdings by the family have swirled. But the only property outside of Egypt that has emerged is the London town house at 28 Wilton Place in Knightsbridge, where Gamal Mubarak lived when he was an investment banker there.

Determining the precise ownership of the house shows why investigating the family's wealth is complicated. A woman answering the front door said the Mubaraks had sold the town house, but property agents said there was no record of a sale, and neighbors said they had seen Gamal Mubarak and his family entering the house several times recently.

According to British property records, the home is owned by a company called Ocral Enterprises of Panama. The registered agent for the company in Panama is a local law firm. A lawyer at the firm said in a telephone interview that he could not reveal Ocral's owner. The lawyer said his firm received its instructions regarding Ocral from a company in Muscat, Oman, which he declined to identify.

Though Swiss banks have begun the search for Mubarak family assets, experts said any money would be returned to Egypt only if its new government formally demanded them.

"Egypt has to run a criminal investigation," said Daniel Thelesklaf, director of the International Center for Asset Recovery in Switzerland. "A lot will depend on the new Egyptian government."

A military probe?

As the protest intensified last week, government prosecutors froze the assets of five government ministers and imposed a travel ban on them. The move appeared to be an effort by Mubarak to distance himself from the wealthy businessmen who had become the focus of public ire over corruption. It is unclear whether the military, which now runs the government and has vast business holdings itself, will allow a full inquiry into the Mubarak family's wealth.

Perhaps the most difficult question to answer is the level of corruption, if any, involving Hosni Mubarak. Former U.S. diplomats said he appeared to live relatively simply, particularly by the standards of rulers in the region.

His main residence outside Cairo was a villa in a private compound in the Red Sea resort town of Sharm el-Sheik, where he went after resigning Friday. Diplomats said the villa was not particularly grand for the neighborhood, smaller than the nearby home of Bakr bin Laden, a half-brother of Osama bin Laden.