Arab International Bank
Encyclopedia
The Arab International Bank (AIB) , founded by 'international treaty' to 'enjoy certain privileges', is an investment bank head-quartered in Cairo
which operates outside the jurisdiction of the Central Bank of Egypt
. Its chair is Atef Ebeid
, appointed by Hosni Mubarak
shortly after being removed from his position as prime minister
. It conducts business through a network of 7 branches in Cairo
, Alexandria
and Port Said
. .
(~39%) and Libya
(~39%) and the Abu Dhabi Investment Authority
(~13%).
It may not carry out transactions in Egyptian pounds, so it invests its liquidity with local and foreign banks. It also has a sizeable and marketable investment portfolio. The financial year of the bank, was amended in September 2007 to end on 31 December, before that it had ended on 30 June.
s unless by court order, and the AIB is regarded as a haven for businesses and businessmen seeking secretive accounts or to safely transfer funds. It also deals with the major institutions and individuals within the state apparatus.
; it is suspected that heavy outflows were transferred from this bank after 25 January 2011. A senior AIB official said that it saw large amounts of money transferred out of the country before 25 January 2011, but denied that significant transfers had taken place during the week after banks reopened.
Claiming he learned the bank was given orders to transfer large sums abroad, a lawyer has filed a lawsuit with the attorney general
against it, calling for a freeze on transactions and a transfer of assets. He accuses Atef Ebeid
of involvement in the transfer of funds of "corrupt businessmen and officials" abroad in "unknown and obscure" banking operations. He called for the opening of an investigation into "suspicious and dubious" decisions taken in the current circumstances.
Ebeid's reaction to such claims was that "no ministers or big businessmen are depositing accounts in the AIB.... on the contrary, some 90% of its balance comes from small depositors." He also denied claims that AIB is used as a doorway to money laundering
, and that "the desire for personal revenge is behind such allegations."
Cairo
Cairo , is the capital of Egypt and the largest city in the Arab world and Africa, and the 16th largest metropolitan area in the world. Nicknamed "The City of a Thousand Minarets" for its preponderance of Islamic architecture, Cairo has long been a centre of the region's political and cultural life...
which operates outside the jurisdiction of the Central Bank of Egypt
Central Bank of Egypt
The Central Bank of Egypt is the central bank of Egypt. The bank's paid-up capital is 1000 million Egyptian pounds. According to its website, the CBE:*Regulates banks and the banking system of Egypt...
. Its chair is Atef Ebeid
Atef Ebeid
Atef Muhammad Ebeid was the Prime Minister of Egypt from October 1999 to July 2004. President Hosni Mubarak invited him to form the new government after the parliamentary elections in 1999. Ebeid was sworn in on 5 October 1999, replacing Kamal Ganzouri.-Early career and Education:Dr...
, appointed by Hosni Mubarak
Hosni Mubarak
Muhammad Hosni Sayyid Mubarak is a former Egyptian politician and military commander. He served as the fourth President of Egypt from 1981 to 2011....
shortly after being removed from his position as prime minister
Prime minister
A prime minister is the most senior minister of cabinet in the executive branch of government in a parliamentary system. In many systems, the prime minister selects and may dismiss other members of the cabinet, and allocates posts to members within the government. In most systems, the prime...
. It conducts business through a network of 7 branches in Cairo
Cairo
Cairo , is the capital of Egypt and the largest city in the Arab world and Africa, and the 16th largest metropolitan area in the world. Nicknamed "The City of a Thousand Minarets" for its preponderance of Islamic architecture, Cairo has long been a centre of the region's political and cultural life...
, Alexandria
Alexandria
Alexandria is the second-largest city of Egypt, with a population of 4.1 million, extending about along the coast of the Mediterranean Sea in the north central part of the country; it is also the largest city lying directly on the Mediterranean coast. It is Egypt's largest seaport, serving...
and Port Said
Port Said
Port Said is a city that lies in north east Egypt extending about 30 km along the coast of the Mediterranean Sea, north of the Suez Canal, with an approximate population of 603,787...
. .
Privileges
By virtue of the Treaty, the Bank enjoys certain privileges in the territories of the Member States (shareholders). These include - as stated on their website :- Exemption from laws regulating banks, credit, exchange control, statutory auditing requirements, public institutions, public companies and joint stock companies.
- Immunity from all forms of nationalizationNationalizationNationalisation, also spelled nationalization, is the process of taking an industry or assets into government ownership by a national government or state. Nationalization usually refers to private assets, but may also mean assets owned by lower levels of government, such as municipalities, being...
and seizure of shares in and deposits with the Bank, - Inviolability of the bank’s documents, records and files, and immunity from judicial, administrative and accounting control and inspection rules and laws,
- Confidentiality of customers’ accounts with the Bank which are not subject to judicial or administrative distraining orders.
- Exemption from tax of any kind on its funds, profits, dividends and all its activities and different transactions.
- Exemption from taxation and any obligations for the payment, withholding or collection of any tax or duty, which may be imposed on its customers.
Shareholders
The bank’s shareholders include the states of EgyptEgypt
Egypt , officially the Arab Republic of Egypt, Arabic: , is a country mainly in North Africa, with the Sinai Peninsula forming a land bridge in Southwest Asia. Egypt is thus a transcontinental country, and a major power in Africa, the Mediterranean Basin, the Middle East and the Muslim world...
(~39%) and Libya
Libya
Libya is an African country in the Maghreb region of North Africa bordered by the Mediterranean Sea to the north, Egypt to the east, Sudan to the southeast, Chad and Niger to the south, and Algeria and Tunisia to the west....
(~39%) and the Abu Dhabi Investment Authority
Abu Dhabi Investment Authority
The Abu Dhabi Investment Authority is a sovereign wealth fund owned by Abu Dhabi, United Arab Emirates founded for the purpose of investing funds on behalf of the Government of Abu Dhabi....
(~13%).
Operations
The Bank states its activities as follows: 'The Bank undertakes all banking, financial and commercial activities relating to economic development and foreign trade particularly in member states, Arab countries and other countries.'It may not carry out transactions in Egyptian pounds, so it invests its liquidity with local and foreign banks. It also has a sizeable and marketable investment portfolio. The financial year of the bank, was amended in September 2007 to end on 31 December, before that it had ended on 30 June.
Criticism
Egyptian law does not allow the prevention of money transferMoney transfer
Money transfer generally refers to one of the following cashless modes of payment or payment systems:*Wire transfer, an international expedited bank-to-bank funds transfer*Electronic funds transfer, an umbrella term mostly used for bank card-based payments...
s unless by court order, and the AIB is regarded as a haven for businesses and businessmen seeking secretive accounts or to safely transfer funds. It also deals with the major institutions and individuals within the state apparatus.
2009
Former Members of Parliament Abu El-Ezz El-Herreiry and Gamal Zahran demanded that AIB close to end its corruption. "The bank is turning into a giant octopus that is going to swallow public money... the confidentiality the chairman imposes on bank clients, accounts and the volume of transfers makes the bank a doorway for all manner of crimes." El-Harreiry said in an article entitled "A request for terminating the Arab International Bank".2011
AIB's awkward situation was further highlighted at the outset of the 2011 Egyptian revolution2011 Egyptian revolution
The 2011 Egyptian revolution took place following a popular uprising that began on Tuesday, 25 January 2011 and is still continuing as of November 2011. The uprising was mainly a campaign of non-violent civil resistance, which featured a series of demonstrations, marches, acts of civil...
; it is suspected that heavy outflows were transferred from this bank after 25 January 2011. A senior AIB official said that it saw large amounts of money transferred out of the country before 25 January 2011, but denied that significant transfers had taken place during the week after banks reopened.
Claiming he learned the bank was given orders to transfer large sums abroad, a lawyer has filed a lawsuit with the attorney general
Attorney General
In most common law jurisdictions, the attorney general, or attorney-general, is the main legal advisor to the government, and in some jurisdictions he or she may also have executive responsibility for law enforcement or responsibility for public prosecutions.The term is used to refer to any person...
against it, calling for a freeze on transactions and a transfer of assets. He accuses Atef Ebeid
Atef Ebeid
Atef Muhammad Ebeid was the Prime Minister of Egypt from October 1999 to July 2004. President Hosni Mubarak invited him to form the new government after the parliamentary elections in 1999. Ebeid was sworn in on 5 October 1999, replacing Kamal Ganzouri.-Early career and Education:Dr...
of involvement in the transfer of funds of "corrupt businessmen and officials" abroad in "unknown and obscure" banking operations. He called for the opening of an investigation into "suspicious and dubious" decisions taken in the current circumstances.
Ebeid's reaction to such claims was that "no ministers or big businessmen are depositing accounts in the AIB.... on the contrary, some 90% of its balance comes from small depositors." He also denied claims that AIB is used as a doorway to money laundering
Money laundering
Money laundering is the process of disguising illegal sources of money so that it looks like it came from legal sources. The methods by which money may be laundered are varied and can range in sophistication. Many regulatory and governmental authorities quote estimates each year for the amount...
, and that "the desire for personal revenge is behind such allegations."