Egypt’s Cabinet said Tuesday it has postponed a meeting to discuss a legal challenge to the government’s sale of land to a developer in a deal that critics have seized on as a sign of the cozy relationship between Egypt’s business elite and the government.
The high court has effectively annulled the land sale to the Talaat Moustafa Group, the country’s largest publicly traded developer, because the government awarded the land by direct decree instead of offering it at a public auction.
The case has reverberated in a country where critics contend the government uses sweetheart deals to reward the businessmen who form one of its key support blocs.
Adding to the government’s troubles, foreign investors in the project have given the government a two-week deadline to come up with a solution or they will seek international arbitration, a company attorney said Tuesday.
The 13-square-mile (33-square-kilometer) Madinaty project is to include apartments, villas, golf courses and hotels that would be home to 600,000 people in the desert outside Cairo.
Despite the court ruling, which came in response to a challenge from an Egyptian businessman, the government is pledging to honor the sale.
President Hosni Mubarak ordered the formation of a special legal committee to come up with solutions to present to the Cabinet. That meeting was scheduled for Wednesday, but was delayed until early next week to give the committee “a bit more time to finish their report,” said Cabinet spokesman Magdy Rady.
The delay could be a setback for the government, which has worked for years to promote Egypt as an investment-friendly destination. That image could be undercut by concerns that similar contracts could face persistent legal challenges and jeopardize billions of dollars in gains.
An attorney for Talaat Moustafa Group said foreign investors in the company had given the government 15 days to find a solution or they would seek international arbitration.
“Foreign investors have the right to protect their interests and take legal steps,” the attorney, Shawky el-Sayed, told The Associated Press. “They took the first step” by announcing their intent to seek arbitration if a solution is not found. He declined to name any of the investors.
Rady, the Cabinet spokesman, said he was not aware of any deadline by investors.
The high court’s ruling against the deal sent the company’s shares spiraling down over the course of three days and sparked fears that similar challenges could be leveled against other mega-real estate projects in Egypt.
The businessman who brought the case, Hamdy el-Fakharani, said he has filed a similar case against Palm Hills, a developer of upscale projects.
El-Fakharani said his suit against the Madinaty deal was prompted by an effort to combat Egypt’s rampant corruption.
“This case stopped this practice” of direct awarding of public land to developers, he told the AP. “From today, there’s no one who will want to take land by direct decree.”