Egypt: Politics, Land Sales, and Corruption (Iskander)

Elizabeth Iskander reports for EA WorldView:

On Tuesday, Egypt’s High Administrative Court issued a final ruling in the case of land sold to businessman Talaat Mustafa for a residential development, Madinaty, being built on the outskirts of Cairo.

Billionaire Mustafa is part of the circle of businessmen close to the government and is a member of the ruling National Democratic Party (NDP). He is also a former member of Egypt’s Upper House, the Majles al-Shura. 

The entrepreneur is also no stranger to controversy, and this is not his first time in court. In 2009, he was found guilty and sentenced to death for his alleged part in the murder of Lebanese singer Suzanne Tamim. The sentence was later overturned, and a retrial was ordered in March; however, Tamim’s family dropped the case shortly afterwards. 

In the Madinaty case, the court declared the contract of the sale for a 33 million-square-meter plot of government land, by the state-run New Urban Communities Authority, to Talaat Mustafa Group (TMG) was invalid. The court concluded that the conditions of the contract were “strange” and the value set onthe land was unfair, given current market prices.  The implication is that the New Urban Communities Authority gave TMG preferential sale conditions.

This is not the first time such a scandal has emerged.  In 2007, land in Tut Amoun village was sold to a company called Palm Hills Developments, a company in which current Housing Minister Ahmed al-Maghraby owns shares. Indeed, a company owned by the al-Maghraby family, Mansour and El Maghraby for Investment & Development (MMID), is the majority stakeholder of Palm Hills Developments.  The Housing Minister is a board member of MMID and his brother, Mohamed Akef al-Maghraby, is the Chairman. The exposure of the scandal led President Hosni Mubarak to issue a decree to cancel the sale of the land.

Another former Minister of Housing, Mohamed Suleiman, has also been accused of corruption and using his portfolio to amass a personal fortune of millions.  In March 2007, a group of MPs asked the speaker of the Majles al-Sha’ab, Fathi Surour, to refer Suleiman to the prosecutor-general to be investigated on alleged charges of corruption.  The request was rejected at the time.  This year an investigation has been opened into the allegations, but the outcome so far is unclear.

It is not only in housing that corruption has been revealed. An investigation in 2007 revealed that blood bags and kidney-washing tools manufactured by Hidelina, a factory belonging to Hani Surour, did not meet the required standards and specifications. More than 200,000 contaminated blood bags infected with bacteria and fungi, which could cause cancer and hepatitis, were allegedly supplied by Surour’s company and that the use of  these bags could cause cancer and hepatitis in patients. Surour, a former MP and deputy chairman of the NDP's Economic Affairs Committee, was initially sentenced to a term in prison. However, as with Mustafa, his sentence was later overturned, and he was exonerated in July.

The list goes on, but it is clear from these examples that membership in the National Democratic Party brings business benefits and virtual immunity from punishment.  The NDP has allowed this cronyism to prevail among some of Egypt’s top business figures, as the government focuses on implementing its privatisation agenda at any cost. While investigations, trials, and even convictions are allowed to go ahead to give the appearance of action by the state, these rarely achieve permanent results.  This indicates why, despite the court issuing its “final” ruling in the case of the sale of land to TMG, the company announced on Wednesday that it will appeal the decision again.

Yet, if the NDP has been able to absorb these corruption scandals so far, its ability to do so is becoming impeded by uncertainties over the potential transition of power from President Mubarak to his son Gamal and the rising level of general discontent on the Egyptian street. Could the Mustafa case be the case that sets a new direction in Egyptian law and politics?