Funding Resources

Sources of funding for the Muslim Brotherhood

Throughout the years, the Muslim Brotherhood has worked to “decentralize” and conceal the financial networks run by the groups operating under its overarching framework. This component was critical to protect its economic infrastructure. The so-called differentiation between its various affiliates worldwide was therefore purely cosmetic, as funds raised were fed into the same financial centers. Therefore, if one source of funds was cut off, the others could still operate. From the Brotherhood’s perspective, all its tools were used to preserve the financial centers. Management of the global system was thus concealed from national security agencies. Just as teachers and intellectuals have been the spiritual pillars, financiers are the material pillar of the movement.

Therefore, from the movement’s beginnings in Egypt, its founders and leaders built a worldwide financial system. From the outset, the financial system was based on membership taxes and on collecting Zakat (alms) required under the Shari’ah. As the movement grew and spread, the same Da’wa infrastructure was established as a substantial source of income. Every mosque that was established became a collection center for Zakat money), every Islamic center served as a collection center, and every businessman paid the charity tax.

The organization’s sources of funding can be approached from two perspectives. The first is the contributions of members, such as subscriptions, donations, and Zakat. The second is institutional contributions, which include investment projects, and funds from international affiliated organizations.

Organizing members’ contributions

Whether in the form of subscriptions, donations, or Zakat, the members’ contributions are the most important revenues of the organization. Through Zakat, the Muslim Brotherhood has grown and strengthened its structure during its history. It represents a financial commitment that encourages members to fulfil their religious duties before the organizational ones. That is why articles have been framed in its governance bylaws.

The organization has ensured that its members’ organizational effectiveness and administrative promotion are linked to the extent of his or her commitment to pay the established subscription. The Muslim Brotherhood bylaws define working members as “those who understood the idea of the Muslim Brotherhood, pledge allegiance to it, and pledged to pay a monthly subscription”. Subscription is an obligation that applies to Egyptian members of the organization living abroad as well. Muhammad Habib, the former deputy general guide, confirmed that “monthly subscriptions are collected from them just as is the case with members of the organization living in Egypt”.

The organization also imposed a subscription fee on Freedom and Justice Party members. Dr. Ahmed Abu Baraka, the party’s legal adviser, said that the annual subscription for each party member was “up to 150 pounds, while the subscription fee to the party amounts to 200 pounds”.

The organization also encouraged its members and supporters to contribute to its activities through donations. Muhammad Habib has said: “the organization does not reject any donation from people belonging to it, and that these donations may increase during crises or periods of parliamentary elections and other events”. The organization also receives significant amounts from the profits of affiliated business people through donations amounting to up to one-tenth of their earnings. This was the case with the companies of businessman Safwan Thabet of the Juhayna Group, Abdel Moneim, former head of the Federation of Industries and owner of Nissan car dealership, and the Interbuild Group of the Haddad family. In addition, the donations of Khairat El-Shater and Hassan Malek amounted to 20 million pounds in 2012. The Brotherhood also generated funds through the “Zakat and Charity Bylaws.” These bylaws addressed the formation of the “General Committee for Zakat in the Division” for all Brotherhood members eligible for zakat payment. The Committee selects an executive body consisting of a chairman and two members selected from the General Committee members by secret ballot. This body “supervises the collection and preservation of the zakat due.”

Zakat and alms funds play a very important part in the organization’s political programs. Muntasir Omran, former leader of the Islamic organization, classified it as the second-largest source of funds for the organization, as it encourages wealthy members to donate their alms and zakat to the Brotherhood to help it assist low-income families so long as they are members. Such assistance is considered better than spending funds on “the people of the nation who do not belong to the organization”. According to Omran, the organization instead uses this money “for the work of the party and the organization, and the poor and needy are deprived of it. This explains the source of the 650 million pounds the organization spent to make Muhammad Morsi President of Egypt.”

Local investment projects

The Brotherhood has various investments, but it is challenging to define them precisely because of its mechanisms used to counter security monitoring. The group mixes its funds with the funds of its leaders and registers its investments in the names of those considered “trustworthy” among them. Such practices have helped the group escape surveillance from national authorities and others. In practice, the circumvention of the law has reached significant levels and helped the organization secure its investments.

The organization has also mixed its funds with its members’ funds to disguise its investments. Douglas Farah, a Researcher at the Center for Strategic and International Assessment in Virginia, US, has reported that it is nearly impossible to differentiate between the organization’s transactions based on its own wealth and those drawn from its members’ assets. He reports that publicly available information on the Brotherhood’s financial network includes holdings, subsidiaries, fake banks, and real financial institutions based in Panama, Liberia, the British Virgin Islands, the Cayman Islands, Switzerland, Cyprus, Nigeria, Brazil, Argentina, and Paraguay along with others. According to Farah, “many of these entities are registered under the names of individuals – such as Nada, Nasr Al-Din, Al-Qaradawi, and Humut – who have publicly identified themselves as Brotherhood leaders.”

This accords with statements by Montaser Omran, a former leader of the organization, who stressed that “the giant economic projects that the organization’s members have set up in their names are the organization’s assets”. He cites the example of the Bank of Piety, owned by Youssef Nada, and the Islamic centers and schools across France, Britain, the United States and other projects in many countries operating under different names.

Thanks to these operations, the Brotherhood’s investments abroad have reached – according to Dr. Hussein Shehata’s estimates – US$ 2 billion. They generate half a billion dollars in profits, which are transferred annually in bonds to Swiss banks. These bonds bear the names of fictitious companies, which allows them to obtain letters of guarantee and bogus credits through which funds are transferred abroad.

International investment projects

Following its suppression by police and security forces in the 1950s, the Brotherhood infiltrated several Arab countries, particularly in the Gulf. It moved into Europe by establishing regulatory bodies that initially organized worship for Muslim communities, such as the Munich Mosque. Later, the group expanded into the public arena in European countries in the early 1990s, when several Islamic organizations were established that had agendas beyond their ostensible cultural and social functions. Some of them started pursuing purely commercial interests, particularly in what is known as Halal trade, with the result that the local group affiliates’ profits increased dramatically.

Global estimates suggest the market value of Halal food worldwide in 2017 was US$ 1.4 trillion with the expectation that they will reach US$ 2.6 trillion by 2023. According to some reports, the projected increase of global profits for the Halal food industry reflects the growing Muslim population worldwide; their number is expected to increase from the current 23 percent to around 30 percent of the total world population by 2030. Observers say that there are several Brotherhood organizations oversee the licensing of Halal meat, including the Islamic Cultural Centre of Geneva, the Islamic Foundation of Germany, the Central Council of Muslims in Germany, the Union of Islamic Organizations of France (now known as Muslims of France), and the Union of Islamic Organizations of Italy. These enterprises “generate millions of dollars”. Also, Halal trade is no longer limited to food. It now includes other sectors, such as cosmetics, household, medical tools, tourism, and banking, with an estimated total capital of US$ 2,300 billion worldwide in 2017. Halal tourism has grown by 30 percent globally since 2016, and Mastercard and Crescent Rating have predicted in a recent joint study that the sector’s contribution to the global economy is set to grow from US$ 180 billion to US$ 300 billion.

Support for some countries

After Gamal Abdul Nasser initiated the repression of the Muslim Brotherhood in Egypt, another factor has assisted the group’s economic system. Rich Arab countries – such as Qatar – opened their doors to senior Brotherhood figures who fled there in the 1950s and 1960s. Regional rivalries mainly drove this opening of the doors to the Brotherhood. It also stemmed from the understanding that connecting the organizational capacity of the Muslim Brotherhood with the financial sources of Qatar could position these countries as a major power center in the Islamic world. Billions of dollars flowed to the Muslim Brotherhood and enabled the movement to make two strategic moves:

• Expanding the movement’s activities worldwide, with an emphasis on Europe and Africa, and establishing mosques, Islamic centers with the aim of promoting a genuine and complete Da’wa revolution.

• The establishment of an underground commercial infrastructure and real estate assets that served a useful purpose as an independent source of income for the movement.

The role of funding in Brotherhood’s expansion

Since its early years of establishment, the Brotherhood gained a mass base. Through economic activities launched in 1938 under the guise of implementing Islamic Shari’ah by establishing an “Islamic transaction company,” the group started selling, buying, and trading operations without receiving any usurious benefits. At the time, the group only aimed to infiltrate Egyptian society, which was then reflected in the expansion of the Charity and Social Services Section established by the organization.

To this end, the group started providing services to citizens as the number of divisions affiliated with it reached 500 in various Egyptian cities before the organization’s formal dissolution in 1948 only two decades after its foundation. Most of the organization’s projects were characterized by service. This approach allowed it to appeal to a large segment of society, infiltrate it, and appeal to its different groups, especially the poor and marginalized, to become its politically usable social arm at election times.

The organization has exploited funding as a tool to enable it to spread and expand. Perhaps the most significant incident related to this is the so-called Salsabil case. In February 1992, the Egyptian security services, after discovering that the Brotherhood had used funding channels to camouflage its coup plans, took control of the computer company Salsabil and arresting its owners Hassan Malik and Khairat Al-Shater. Both were accused of belonging to a secret organization and holding meetings within the company to plan the regime’s overthrow. “The security services said they found discs containing a detailed plan to take over the country and establish an Islamic state”, known as the “empowerment plan,” which “explain[ed] how the movement [could] tighten its control over the state and society and how to penetrate state institutions and unions further.”

Empowerment, as the document puts it, requires “the organization to penetrate the vital layers of society and its effective institutions while adhering to a specific strategy for confronting other forces in society and dealing with the forces of the outside world.” The plan stipulated the need to infiltrate several sectors, including the business sector, which it considered to be “characterized by efficiency and continuity of influence”. The document also called for economic awareness among the organization’s members as well as political and social awareness, and indicated the importance of financial institutions “concerning the advancement of society from an Islamic perspective”.

The international economy has also been exploited to support the organization’s global expansion, particularly in European countries. The Brotherhood’s approach also involves exploiting the shortcomings of its banking system to maximize its financial empire, such as investing in offshore companies and using the disparities and inconsistencies of international legislation in regulating the flow of funds.

Thanks to the financial resources of the worldwide Brotherhood network, the organization has managed to consolidate its influence in various countries by building mosques, launching societies and establishing research centers. The network has also intensified the dissemination of its various publications, practiced charitable works, and organized forums under the guise of youth and cultural coaching to gain popular sympathy and establish relations with political influencers in those countries.

Nadia Sminett, Head of the Counter-Terrorism Committee in the Belgian Parliament, said that the expansion of the Muslim Brotherhood in Europe contributed to undermining the integration of Muslims in the region’s countries. Sminett said that the issue extended “to the exploitation of their financial resources to spread extremism and use European lands as a springboard for their terrorist activities in the world”.

On the financial strength of the organization’s arms in the West, US counter-terrorism journalist Stephen J. Merley reported that the Union of Islamic Organizations of France had a capital base of $1.5 billion, 40 percent of which had been used in the form of real estate investments in Britain, Germany, Greece, Romania, and others. In 2004, the European Investment Company was set up to provide financial and investment services to the Union for several projects in Europe.

The survival challenge: Brotherhood’s funding strategy after the fall

The fall of Mohamed Morsi’s regime on July 3, 2013, marked a pivotal moment in the organization’s history, not just organizationally but also financially. The organization’s funds – estimated to be worth E£300 billion, or $16.7 billion, while other estimates suggest it would “exceed $20 billion” – became a central target in the Egyptian state’s war on terrorism.

The new reality that followed the collapse of the Brotherhood’s regime in 2013 prompted the Egyptian state to begin a policy of depleting the organization’s financial resources by adopting a judicial policy based on a series of decisions. The first decision was to form the “Committee for the Inventory and Seizure of Brotherhood Funds,” which was enacted on October 2, 2013. Prior to that, a decision was issued in June 2014 to expand the proposed committee’s powers and “make it a permanent working committee.”

According to its chairman, Izzat Khamis, the Committee’s activities up to January 2016 amounted to the detention of 1,370 organization members and the seizure of 460 cars, 318 agricultural acres, 1125 companies, 105 schools, and 43 hospitals. In addition, the Medical Association and its 27 branches, the Rabaa Al-Adawiya Association and its two branches, 62 private companies, and 19 money exchange companies were closed down. The value of school funds seized was estimated to be 3.5 billion pounds. After that, the Committee seized the “funds of 65 Muslim Brotherhood members and 13 entities belonging to the organization, including companies, associations, and medical centers.”

In the same context, Law No. 8 of 2015 was issued regarding “the organization of lists of terrorist entities and individuals”. However, it did not meet the necessary conditions to overcome the disadvantages of judicial proceedings. The Committee faced several obstacles involving the administrative court’s power “to annul its decisions because it is an ‘administrative’ committee, not a ‘judicial’ one”. This impediment required the creation of legal mechanisms to overcome this problem, which was achieved through Law No. 22 of 2018 regulating the procedures of seizure, restriction, management, and disposal of funds of terrorist organizations and terrorists. For the first time, the legislation permitted the option of transferring the seized funds to the Treasury and not just seizing them. So long as cases under investigation concerned terrorist offenses, seizure was permissible without waiting for final court verdicts for conviction.

To set the necessary procedures for the implementation of its provisions, the law provided for the establishment of an additional committee called the “Committee for the Preservation, Inventory, Management, and Disposal of the Funds of Terrorist Groups and Terrorists.” On September 11, 2018, a decision was made to seize the funds of 1,589 members belonging to and supporting the organization. The names included former President Muhammad Morsi, the organization’s guide, Muhammad Badie, and his deputy, Khairat Al-Shater. The seized funds included “118 companies, 1,133 local associations, 104 schools, 69 hospitals, 33 websites and satellite channels”. Several Muslim Brotherhood leaders were able to escape Egypt. Security investigations revealed that the organization’s leaders abroad “reformulated a new plan to secure financial resources for the organization’s members in Egypt”. The organization’s new plan has practically materialized through several initiatives, which are as follows:

1) Investing in non-industrial trade

The organization began to concentrate its investments in trade. This was confirmed by Amr Adly, Professor of Political Economy at the American University in Cairo, who explained “the organization’s awareness of the danger of investing in fixed assets in anticipation of their confiscation or ease of tracing them.” This is why Hasan Malik and other Brotherhood leaders did not start investing in strategic sectors with fixed assets, such as iron and cement, except after they reached power. The organization has also been involved in the informal or parallel economy, which helps provide employment opportunities for about 6 million Egyptians. The government estimates its this sector’s size as being worth between E£60 billion and E£80 billion. It is estimated that it could reach E£200 billion if we add to it the volume of illegal activities such as drug trafficking. This is due to its profitability for the community, as there are no taxes, no fees paid to the state, and no rights guaranteed for workers.

With a share of invested capital reaching 33 percent, commercial enterprises represent an important part of the informal economy in Egypt. Dr. Adel Amer, Director of the Egyptian Centre for Political, Economic, and Social Studies, noted the Muslim Brotherhood’s tendency to invest in this sector due to the fact “it is not registered in the official economic institutions of the state, and the government cannot control it or seize its funds”.

2) Stealth and camouflage

The Brotherhood has ensured it recruits new members unknown to the security services to compensate for those who were detained and help conceal funds. Among them is the international football player Muhammad Abu Trika. According to the Seizing Committee, the organization has assigned several of its members to smuggle money abroad. The committee says that the process takes place “through companies affiliated with the organization and its members in the system of compensation with businessmen belonging to the organization and not monitored by security services”. The organization also secures smuggling funds inside the country by using cash bags and personal visits of Egyptians residing abroad. It uses trade agreements through companies located outside the country, manipulating the quantities or prices of goods in order to pass on the difference in financial value to entities inside the country.

The organization also allied with members from the secular movement to disguise the management of its funds. A Ministry of Interior statement on June 25, 2019, revealed this following the arrest of leaders and members “on charges of managing companies” affiliated with the Muslim Brotherhood.” Those arrested included Ziyad Al-Alimi, a former MP, journalist Hisham Fouad, a member of the Revolutionary Socialist Movement, former media spokesman for the Popular Trend, Hussam Mu’nis, and activists Osama Abdel Al-Aqbawi and Hassan Mohamed Barbari. Also detained was Omar Al-Sheniti, CEO of Multiples Financial Group and a prominent financial and economic analyst.

3) Controlling flows of funds

The organization extended its control over the movement of capital to secure the collection and fundraising operations from its members and institutions inside and outside Egypt. They reinvested them as part of its established operations out of the sight of security surveillance. The organization managed to do this through three methods:

1. Penetration of the foreign exchange market: the organization made efforts to penetrate the foreign exchange market because its economy “relies mainly on the trade of foreign currencies, especially the US dollar.” According to Dr. Adel Amer, the organization “established many foreign exchange companies, and some of its leaders are specialized in foreign exchange and currency market.” The organization’s foreign exchange interests pushed it to invest in tourism. This expansion was revealed by a decision of the Brotherhood’s fund management committee that acquired eight companies.

2. Smuggling money abroad: the organization has been active in smuggling cash from hard currency out of the country “to harm the national economy and undermine the state’s development plans” , on the one hand, and to accumulate profits on the other. The smuggler “gets 5 percent of the value of the currency he smuggles in a single trip, which is equivalent to billions of pounds.” To this end, the organization assigned several of its members to carry out this task, led by fugitive businessman Mohamed Salah Mahmoud, owner of a company running imports and exports of furniture, as he played “a major role in using his company to transfer millions of pounds to his account or the accounts of other companies owned by leaders of the organization.” In September 2019, the security forces discovered the involvement of sixteen Brothers, including Mahmoud Hussein Ahmed Hussein and Ayman Ahmed Abdul-Ghani Hassanein, forming three terrorist cells planning “suspicious smuggling of funds to members of the organization abroad.”

3. Money laundering: the organization has been active in money laundering through “exchange offices, companies, charities, and inciting media channels” to hide its funding sources and give them legitimacy. Investigations also revealed its exploitation of tourism and travel bureaus, social service bureaus, and Islamic centers “in money laundering and the diversion and concealment of illegal funds for trading in arms.” The Brotherhood’s Funds Inventory Committee said that “there is a suspicion” of “money laundering” in the company Zad owned by Khairat Al-Shater, deputy guide of the Brotherhood. The Money Laundering and Anti-Terrorism Unit, along with the Seizing Committee, received “information on several names linked to the Brotherhood’s suspicious activity from bank account holders, who were carrying out transactions involving suspected money laundering.”

https://trendsresearch.org/insight/unveiling-the-muslim-brotherhoods-business-and-funding-networks/