Hosni Mubarak’s Money Trail: Investigating Where His Billions Went

As the probe of Hosni Mubarak’s finances heats up, investigators may want to take a closer look at Hussein Salem, an Egyptian spy-turned-businessman found in Dubai with $500 million in cash. By Philip Shenon

Sean Gallup / Getty Images

The search for Hosni Mubarak’s fortune is likely to lead investigators to an Egyptian spy-turned-businessman who was widely seen in Cairo as the Mubarak family’s fixer.

The secretive energy trader and land developer, Hussein Salem, who made his most recent fortune through the sale of Egyptian natural gas to Israel, is reported to have fled Cairo last month after the first of the street riots that led to the collapse of the Mubarak government.

According to news reports in Israel, Salem, believed to be in his early eighties, arrived in Dubai carrying more than enough money to assure himself a comfortable retirement outside Egypt—$500 million.

Diplomats, economists, and bankers with an understanding of Egypt tell The Daily Beast that if a post-Mubarak government wants to track down the billions of dollars that the former president is accused of stealing and stashing abroad, they should track down the ever-elusive Salem, whose ties to Mubarak and his clan date back decades.

Investigators might also want to speak to prominent business people in the United States and Israel who have gone into business with him, including Chicago billionaire Sam Zell, who invested hundreds of millions of dollars in Salem’s natural-gas business only a few years ago.

“Salem is a real wheeler-dealer,” said Ibrahim Oweiss, an Egyptian-born economist at Georgetown University who ran the Egyptian government’s economic mission to the United States in the 1970s, when he met Salem.

Oweiss, a critic of the Mubarak regime who has refused to travel to his homeland in recent years for fear of being harassed by Egyptian spy agencies, said Salem was known to have begun his career in Egyptian government intelligence and that he became “very, very close to Mubarak and his family.”

Mubarak’s luxurious home in the Egyptian Red Sea resort of Sharm el-Sheikh, where he is now living as he and his family plot their next move, is part of a real-estate development long controlled by Salem.

For years, Egyptian government spokesmen brushed aside questions about Mubarak’s wealth, insisting the former president was an honest public servant who wanted no special favors for his family. Salem has shunned reporters for years despite his high profile; his spokesmen insist he is an honest businessman.

But a senior Western diplomat with long experience in Cairo said Salem, like many of Mubarak’s cronies, is likely to come in for uncomfortable scrutiny by banking authorities in Britain and Switzerland, which said this week that they are searching for evidence of ill-gotten gains in bank accounts held by the former Egyptian first family and among Mubarak’s friends. Mubarak’s family treated London as a second home. (The Justice Department has given no hint that it is investigating corruption by the Mubarak family in the wake of his ouster.) “The bankers in Europe should be trying to follow whatever money trail Salem and Mubarak’s other chums have left behind them,” the diplomat said.

“The bankers in Europe should be trying to follow whatever money trail Salem and Mubarak’s other chums have left behind them,” the diplomat said.

Salem’s current whereabouts could not be determined. A phone receptionist at one of his Cairo companies said no spokesperson was available to The Daily Beast. A spokesman for his key Israeli business partners did not respond to emailed questions about Salem.

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Spokesmen for Zell, who was reported to have paid about $250 million to Salem in 2007 to buy some of his shares in the Egyptian company that ships natural gas to Israel, also did not respond to a request for comment.

Salem is known to U.S. law-enforcement agencies.

In the 1980s, he and a former CIA official ran an air-transport company in Northern Virginia that was contracted to ship U.S. arms to Egypt that were promised to the Cairo government under the Camp David peace accords.

In 1983, he was indicted on federal fraud charges, accused of overbilling the Pentagon by $8 million for the shipments. He settled the charges by paying restitution and fines of $3 million. The Justice Department was criticized at the time for not pursuing diplomatically sensitive rumors that Salem’s company was funneling money to senior officials in Mubarak’s government, possibly including Mubarak himself.

Despite the embarrassment of the well-publicized criminal case in the U.S., Salem returned home to Egypt and thrived in business, his success often attributed to his close, even brotherly friendship with Mubarak. In the 1990s, Salem went into business with Mubarak’s eldest son, Alaa, in developing land in Sharm el-Sheikh.

Within Egypt, Salem’s most controversial—and, it appears, most lucrative—business has been in selling billions of dollars worth of Egyptian natural gas to Israel through a Cairo-based company he founded called East Mediterranean Gas, or EMG.

The government’s decision to grant the company the rights to sell the gas to Israel, and to allow Israeli investors to take a large share in the company, were harshly criticized by opposition politicians who were hostile to Israel and who saw obvious favoritism toward Salem by Mubarak.

Oweiss, the Georgetown economist, said he had no way of proving that Salem was a financial frontman for Mubarak, or that the former Egyptian president profited from Salem’s businesses. But Oweiss said he was planning to return home to Egypt within days and was ready to volunteer to try to use his expertise in banking and financial markets to help the government recover what may have been looted during Mubarak’s 30-year reign. “I would be delighted to be of public service in this regard,” he said. “I would do anything to help.”

Philip Shenon is an investigative reporter and bestselling author, based in Washington D.C. Almost all of his career was spent at The New York Times, where he was a reporter from 1981 until 2008. He left the paper in May 2008, a few weeks after his first book, The Commission: The Uncensored History of the 9/11 Investigation, hit the bestsellers lists of both The New York Times and The Washington Post. He has reported from several warzones and was one of two reporters from The Times embedded with American ground troops during the invasion of Iraq in the 1991 Gulf War.