Egypt ex-ministers to be investigated for public money waste, order breakdown

Ahram Online, Tuesday 8 Feb 2011

Four ex-ministers and NDP members are being investigated on suspicion of theft of public money, profiteering and fraud, among other accusations

The former housing minister, Ahmed el-Maghrabi, appeared before prosecutors on Monday to face charges of squandering public money and seizing state land, the state news agency Mena said.

"The complaints accuse him of violating state property, seizing public money and enriching himself unjustifiably," stated the Mena report.

By the end of last week, Egypt’s public prosecutor issued a travel ban on former Interior Minister Habib al-Adly, former Housing Minister Ahmad al-Maghrabi and former Tourism Minister Zuhair Garana. Former National Democratic Party member Ahmad Ezz was also among those banned from leaving the country. Their bank accounts have also been frozen.

Two weeks ago, Egyptian President Mubarak dismissed his cabinet following massive protests demanding the ouster of Mubarak and bringing the regime down, and appointed a new government led by Ahmed Shafiq, Egypt’s former aviation minister.

A session of the Administrative Court – mandated in cases in which a state body is involved – will today review the case of Palm Hills Development’s (PHD) land acquisition, which in recent weeks has been brandished as yet another notorious example of the land grabbing that, many claim, has become one of the most prominent features of crony capitalism, in which government bureaucracy is in bed with business.

The PHD deal was taken to court on the grounds that it violates the law regulating government tenders and auctions.

PHD has one of the largest land banks in the country, with most of its revenues during the period 2007-2009 coming from the resale of plots of land.

It was founded by Mansour and Maghraby Investment and Development Company (MMID) and is listed on the Egypt Stock Exchange and the London Stock Exchange.

The mother company (MMID) belongs to one of Egypt's largest family-owned businesses. MMID currently owns about 50% of the shares.

Founded in 2005, Palm Hills was singled out for the limelight not just for its scale, but also for the fact that a year earlier, two of its business tycoon founders had been handed cabinet appointments.

An HSBC report, published in early 2010, gave a strong recommendation to its investors to buy PHD shares, giving the company a very good rating of overweight V, partly based on an "inexpensive and diversified land bank". The report titled, "Picking winners in the Egyptian Real Estate sector" spotlighted PHD, along with Sodic and the Talaat Mostafa Group.

According to HSBC, while Palm Hills Development bought land at a very low cost, at an average of 155 LE per meter square, all its products are oriented to the richest 12 per cent of the population, with a minimum price of LE1.2-1.5 million per unit.


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