BUSINESS CLIMATE DEVELOPMENT STRATEGY Phase 1 Policy Assessment EGYPT DIMENSION II-1 Anti-Corruption December 2009 Partner: European Commission This report is issued under the authority of the Steering Groups of the MENA-OECD Initiative TABLE OF CONTENTS EXECUTIVE SUMMARY ............................................................................................................................. 4 Achievements ............................................................................................................................................... 4 Challenges .................................................................................................................................................... 5 Recommendations ........................................................................................................................................ 6 INTRODUCTION ......................................................................................................................................... 10 SCOPE OF THE FRAMEWORK TO ASSESS ANTI-CORRUPTION POLICIES AND PRACTICES ... 11 1.1. Anti-Corruption Strategy .................................................................................................................... 13 1.1.1. Stocktaking the Corruption Situation ........................................................................................... 13 1.1.2. The Existence of an Anti-Corruption Strategy ............................................................................. 14 1.1.3. Stakeholder Participation ............................................................................................................. 15 1.2. Criminalisation of Corruption ......................................................................................................... 16 1.2.1. Defining Corruption Offences ...................................................................................................... 16 1.2.2. Parties to Bribery .......................................................................................................................... 18 1.2.3. Immunities .................................................................................................................................... 18 1.2.4. Sanctions and Confiscation .......................................................................................................... 19 1.2.5. International Co-operation: Mutual Legal Assistance and Extradition ........................................ 22 1.3. Enforcing Domestic Anti-Corruption Provisions ............................................................................... 24 1.3.1 Control and Detection ................................................................................................................... 24 1.3.2. Reporting ...................................................................................................................................... 25 1.3.3. Collecting Statistics on Corruption Offences ............................................................................... 26 1.3.4 Implementing and Enforcing Sanctions ........................................................................................ 27 1.4. People and Public Institutions Involved in the Fight against Corruption ........................................... 28 1.4.1. Independence of the Judiciary ...................................................................................................... 28 1.4.2. Accountable, Responsible Institutions to Fight Corruption ......................................................... 29 1.4.3. Inter-Agency Coordination and Co-operation .............................................................................. 29 1.4.4. / 1.4.5. Tax Administration and Customs Administration ............................................................ 30 1.4.6. Public Procurement ...................................................................................................................... 31 1.4.7. Awareness Raising and Public Education .................................................................................... 33 1.4.8. The Media as a Means to Expose Malpractice ............................................................................. 34 1.5. Private Sector Actions to Stem Corruption ......................................................................................... 35 1.5.1 / 1.5.2 Private Codes of Conduct and Compliance Programmes (with Specific Anti-Corruption Provisions) .............................................................................................................................................. 35 1.5.3. Non-Financial Reporting .............................................................................................................. 37 CONCLUSION ............................................................................................................................................. 39 2 APPENDIX 1 – LEGAL FRAMEWORK: INCRIMINATED OFFENCES AND SANCTIONS ............... 41 APP1.1. The Bribery of Public Officials ................................................................................................... 42 APP1.1.1. Passive and Active Bribery ................................................................................................... 42 APP1.1.2. Scope of Egyptian Law’s Bribery Provisions ....................................................................... 43 APP1.2. Other Corruption Offences .......................................................................................................... 45 APPENDIX 2 – INSTITUTIONAL FRAMEWORK: PUBLIC BODIES AND AGENCIES WITH PREVENTION AND LAW ENFORCEMENT POWERS ........................................................................... 46 APP2.1. Administrative Auditing and Monitoring Authorities ................................................................. 47 APP2.2. Prosecuting and Judicial Authorities ........................................................................................... 48 REFERENCES .............................................................................................................................................. 54 ANNEX TO ANTI-CORRUPTION ............................................................................................................. 56 A1. ASSESSOR INFORMATION ............................................................................................................ 56 A2. KEY DATA ........................................................................................................................................ 57 A3. GENERAL OBSERVATIONS ........................................................................................................... 61 A4. OVERVIEW OF SCORES ................................................................................................................. 62 A5. ASSESSMENT FRAMEWORK ........................................................................................................ 64 A5.1. Introduction .................................................................................................................................. 64 A5.2. Objective and Scope of the Anti-Corruption Assessment Framework ......................................... 65 A5.3. Measurement ................................................................................................................................ 66 Anti-Corruption Strategy ........................................................................................................................... 68 Stocktaking the Corruption Situation ..................................................................................................... 68 Criminalisation of Corruption .................................................................................................................... 72 Enforcing Domestic Anti-corruption Provisions ....................................................................................... 80 People and Public Institutions Involved in the Fight against Corruption .................................................. 85 Private Sector Actions to Stem Corruption ................................................................................................ 99 Boxes Box 1. Observations from non-governmental perception surveys ............................................................. 14 Box 2. How Egypt sanctions breaches of competition and money laundering .......................................... 21 Box 3. Reported examples of corporate codes of conduct and compliance programmes in Egypt ........... 36 3 EXECUTIVE SUMMARY Government attitudes toward markets and the efficiency of their operations are an essential component of the business climate. It is a well established fact that corruption and excessive bureaucracy and red tape – which lead to fraudulence in public contracts, lack of transparency and trustworthiness, and the political dependence of the judiciary – place a significant economic burden on businesses and keep countries from achieving their economic growth and employment potential. The shift of resources from the public purse to private hands means a loss of funds for much needed public projects such as infrastructure, education, and other public services. Corruption is a major factor in the widening of the income equality gap: elites all too often use their access to political power to manipulate economic decisions which ultimately benefit their own rents. According