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Damac sues Egypt over corruption ruling

By Issac John DUBAI -- Damac Properties said on Tuesday that it has filed an international arbitration case against Egypt in a bid to appeal the conviction of its chairman on corruption charges.

The Dubai-based developer said the "in absentia conviction" of its chairman Hussain Sajwani , a UAE national, by an Egyptian court is a clear violation of a bilateral treaty designed to protect investments by UAE nationals in the North African country.

Sajwani's counsel, Ken Fleuriet of international law firm King & Spalding, told Khaleej Times from his London office that the case was filed at the International Centre for Settlement of Investment Disputes, or ICSID, on Friday and they expect a tribunal to be appointed by this summer.

Sajwani was sentenced "in absentia" to five years in jail and a fine of $40.5 million in Cairo last week after being found guilty of buying tracts of public land in the Red Sea province below their market value from Egypt's former tourism minister Zoheir Garranah.

'Lightning speed'

Describing the prosecution as "a travesty of justice, the lawyer said Egypt's "malicious criminal proceedings" neglected all aspects of the treaty with the UAE.

The counsel alleged that Sajwani was not even given a chance to represent himself during several important hearings conducted at "lightning speed." Sajwani said in a statement sent to Khaleej Times that the conviction had caused significant damage to his investments in Egypt and the wider Gulf area.

Damac 's Egyptian investments include a 30 million square metre development project at Gamsha Bay, near Hurghada, as well as four major real estate projects in the greater Cairo area.

Sajwani and another businessman were prosecuted and convicted alongside Garranah in a criminal case brought by Egypt's new military regime. Egypt's new regime has arrested and prosecuted a number of former Mubarak ministers amidst a public outcry to bring former Mubarak associates to trial.

"The criminal prosecution and conviction of Sajwani were a classic case of 'guilt by association.' No crime was committed by simply conducting business with the former regime," Fleuriet said.

"While the Egyptian court held that the price paid for the Gamsha Bay property was too low, the transaction was entirely proper, and Damac was entitled to rely upon the price charged by the government at the time. It was an arms' length transaction that was fully vetted by the appropriate Egyptian officials at the time of purchase," he argued.

Fleuriet said the case raised serious questions about the rule of law in Egypt in the wake of Egypt's January 2011 revolution. "It is expected to cast an international spotlight on the political vendettas currently being pursued by Egypt's new regime at the behest of the Egyptian public."

"This ICSID case may subject Egypt to international liability far greater than what it apparently hopes to recover by its ongoing legal actions against investors who conducted business with Mubarak's ministers. It will also raise serious questions among foreign investors about the safety of investing in Egypt."

"The prosecution was a travesty of justice and violated the most basic tenets of due process. Egypt did not inform the accused of the case being brought against him. Egypt's public prosecutor offered no evidence or explanation as to how he had engaged in any wrongdoing by simply concluding a business transaction with the former government," said the counsel.

"The treaty and international law clearly prevent malicious criminal prosecutions and violations of due process that result in the sort of travesty of justice that occurred in this case," said Fleuriet.

The bilateral investment treaty between the UAE and Egypt accords a number of protections to UAE investors who invest in Egypt, including requirements that Egypt's government not treat them in a manner that is unfair, inequitable, arbitrary, or discriminatory.

Damac said in a statement that Egypt must afford UAE investors and their investments "full protection and security" and not subject investments to measures that impair their maintenance, use, enjoyment, or possession. "Egypt's malicious and unwarranted criminal prosecution and conviction violated a number of Egypt's obligations under the treaty," it said.

© Khaleej Times 2011