5 Money Lessons from Hosni Mubarak

According to a recent press release from think tank Global Financial Integrity, between 2000 and 2008, Egypt lost more than $57.2 billion to illicit financial activities and government corruption.

It’s a safe bet that a lot of that money went to ex-President Hosni Mubarak and those in his inner circle.

The British newspaper Guardian cites Middle Eastern sources as saying the Mubarak clan could have a personal net worth of somewhere between $40 billion and $70 billion. That’s pretty good for a guy on the government payroll, and he hasn’t even started to negotiate a book deal or joined a speaker’s bureau.

If these rumors of his wealth are true – and nobody other than Mubarak himself really knows – that would put him on par with some of the world’s wealthiest people. According to Forbes, Mexican businessman Carlos Slim is currently at the top of their billionaire list with $53.5 billion, closely followed by Bill Gates at $53 billion, then Warren Buffet at $47 billion. (Don’t expect to see Mubarak joining the list however – due to the difficulty of determining the personal wealth of dictators, Forbes doesn’t include them in their list.)

But however you slice it, Hosni’s done pretty well for himself. So that leads one to wonder: Are there any takeaways for other dictators that can be gleaned from Mubarak’s money?

I’ve put a call in to Mubarak’s press relations folks to request an interview. No word yet, but I’m sure he’s busy moving. In the meantime, I’ve formulated some ideas on my own.

1. Staying in the same job can be profitable

While the global workforce seems ever more transitory, switching jobs – or in the case of dictators, countries – often comes at a cost, both in terms of money and stress. Relocation expenses, lost retirement and other benefits, working one’s way back up a different corporate or governmental ladder – they all add up. With more than 30 years in the same job, this is something Hosni obviously appreciated.

LESSON? While the grass may appear greener in other pastures, sometimes the way to make the most green is to keep mowing the pasture you’re in.

2. Find the highest savings rates

Rumor has it that Mubarak has billions squirreled away in banks all over the world, from the Middle East to Switzerland to Britain. While I haven’t seen an official explanation for the variety of institutions, he must have been using an interest rate search engine, then moving money around to lock in the highest possible savings rates.

LESSON? Make your money work as hard for you as you make your fellow countrymen work for it by getting the highest possible savings rates.

3. Diversify, diversify, diversify

While Hosni’s background was more military than financial, it’s obvious that he picked up some knowledge about investing along the way. Because he didn’t just throw cash in bank accounts. He reportedly has tons of real estate in London, New York, Los Angeles, and along the Red Sea coast, as well as a number of alleged businesses and joint ventures set up to skim profits from many foreign companies doing business in Egypt.

In fact, while nobody knows for sure how he managed to save billions, it’s quite likely that he made more from his outside investments than from his state salary.

LESSON? Once you’ve got a couple of billion set aside for emergencies, look for other sources for long-term investment. And don’t neglect real estate: You never know when an extra luxury compound or two will come in handy.

4. Know when to hold ‘em, know when to fold ‘em

At 82, Hosni kept his nose to the grindstone well after most people would have retired. Why did he work so long? Partly to assure himself and Mrs. Mubarak of a comfortable retirement, no doubt. But one has to suspect that he was also having a good time. Nothing wrong with that, at least to a point.

LESSON? If you love what you do, keep doing it until they push you out the door – but don’t let your ego get in the way. When the people start massing and even the army turns against you, it’s time to move on.

5. Spread the wealth

Whether you’re running a small business or the cradle of civilization, if you’re making money, spread some around. Mubarak reportedly made many people in his inner circle fabulously wealthy, and that purchased support almost certainly contributed to his 30-year reign.

At the end of the day, however, Hosni didn’t spread it far enough: Otherwise he might still be there. At some point he lost sight of the fact that power wasn’t something he earned: It was given to him by the Egyptian people – and the average Egyptian makes $2/day.

LESSON? Always remember that without little people, there’s no big people.

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  • Anonymous

    Stacy -

    Brilliant!! Well written. I love your sense of humor. You put a big smile on my face this morning.

    Thank you!
    Ken

  • http://pulse.yahoo.com/_HAXPEX4GXKU5OV2WEN6RXZANQ4 George Reid

    The US gave Egypt $1 1/2 to $2 billion per year for 30 years. If you do the math you can see where Hosni got most of the money (30 years X $2B = $60B, compunded = >$70B).

  • Anonymous

    The Guardian has now rounded down the ex-presidents wealth to $3bn … still a substantial amount, but after 30 years, barely $1/yr for each man woman and child in Egypt