Egypt court annuls government land deal with top community developer Talaat Moustafa Group

Egypt court annuls developer land deal

CAIRO — An Egyptian court on Tuesday annulled a land sale between the government and the country’s largest publicly listed property developer on grounds it was not opened to public bidding, Egypt’s Middle East News Agency reported.

The case illustrates what critics say is rampant favoritism by the government toward wealthy businessmen, many of whom are also influential lawmakers or otherwise linked to the officialdom.

The ruling against the Urban Communities Authority sent shares of Talaat Moustafa Group — the force behind some of the most prominent upscale master-planned communities around Cairo — spiraling down 7 percent to 7.5 Egyptian pounds ($1.33).

It was the result of a suit filed by businessman Hamdi el-Fakhrani, who claimed the deal would result in 147 billion Egyptian pounds ($26.25 billion) in losses for the government. The case is tied to a 13 square mile (33 square kilometer) plot on which TMG is building its Madinaty project — an exclusive community which the company says will house 600,000 residents.

El-Fakhrani also argued that the UAC granted TMG “unprecedented” perks by extending electricity, water and sewage infrastructure to the area and exempted the construction materials from duties.

Mohamed Suleiman, who had headed the Housing, Utilities and Urban Development Ministry when the deal was reached, is under investigation over the land sale. He is also being questioned by public prosecutors for allegedly embezzling public money and illegally allocating plots of land to his relatives, children, and business associates.

TMG’s former chairman, Hisham Talaat Moustafa, is on a retrial for his alleged role in the murder of his Lebanese diva girlfriend in Dubai. Moustafa, who was also a member of Egypt’s lower house of parliament, and another man, had been sentenced to death in the case, but the verdict was overturned and a new trial ordered.

Madinaty — slated to be a sprawling oasis of villas, hotels and golf courses on the outskirts of Cairo — is just one of several such communities catering to the country’s upper-middle and upper class residents.

The gated communities offer a sanctuary from the bustle of Cairo, home to almost 20 million people. But they are also seen as another example of how the wealthy and the government are out of touch with the needs of the lower income residents who struggle to afford the basics

TMG, in a statement posted on the Egypt Stock Exchange, said the dispute was one between the administrative court and the Urban Communities Authority and “does not involve” the Arabian Projects and Real Estate Development Company, its subsidiary that purchased the deal with the government. It said the authority would appeal the ruling.

For its ruling, the court cited a government committee report which stated that the deal was awarded by direct order and that the contract didn’t adhere to laws requiring such deals to be open to public bidding.