24 September 2010
Tarek El-Tablawy and Sarah El-Deeb
Associated Press
CAIRO: A legal committee set up by the Egyptian government recommended on Wednesday the annulment of a disputed land-sale contract, but said it could be reassigned to the same developer on grounds that continuing with the project was a social and economic necessity for the country.
The committee’s finding follows almost two weeks of uncertainty surrounding the fate of the Madinaty project, a $3 billion master-planned community being built by Talaat Moustafa Group, after a high court last week upheld a verdict annulling the sale of the land to the company.
The case has spotlighted what critics claim is rampant corruption in Egypt and favoritism afforded wealthy businessmen who form a key support base for the government. The upholding of the verdict, which could not be appealed, sent TMG’s shares plummeting for three days and had the government scrambling to avert the possibility that it would undercut investor confidence in a key sector of the Egyptian economy.
In its report, the committee recommended that the New Urban Communities Authority – a Housing Ministry body – “end the contract” with TMG and reclaim the land that was awarded the company.
But the report, released by the Cabinet spokesman’s office and which will be discussed in a Cabinet meeting on Sunday, also affirmed that maintaining the current legal status of the parties involved in the 33-square-kilometer Madinaty project requires continuing to implement the project with the same parties.
In explaining its reasoning, the committee cited an article in the law under which the case was filed that allowed the government to sell land through a direct award instead of public auction if there was a social and economic interest that benefited the public good. Abdel-Rahim Nafie, the head of the committee, said unit owners, contractors and others have no reason to be concerned.
“Let everyone who dealt with the company rest assured … it was a desert plot that has now become a city. This is a public good that necessitates protecting this [new] community,” Nafie said in an interview on Egyptian television.
The Madinaty contract was struck down by a lower court on the grounds that the sale took place through a direct award instead of a public tender and auction.
The case was raised by a businessman who has since filed a similar motion against Palm Hills, a developer of primarily upscale projects.
In comments published Wednesday, Prime Minister Ahmad Nazif had defended TMG and blasted criticism of the deal, saying that attacking such companies that play key roles in Egypt was tantamount to committing “economic suicide.”
Egyptian officials have said they were committed to finding a legal solution to the case that would guarantee the rights of investors, shareholders and those who bought units in the project ultimately intended to house 600,000 people in villas and flats. Madinaty, which in Arabic means “My City,” will also include golf courses and hotels. President Hosni Mubarak had ordered the committee be set up to look into a legal solution to the case since it could not be appealed to a higher court.
The committee said that the New Urban Communities Authority, in deciding to reassign the land, must take into account that the plot whose contract was annulled is not in the same condition that it was when the contract was signed and that it has been “transformed from barren desert to an urban community.”
Copyright The Daily Star 2010.
