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Developer sues Industrial Development Authority

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IDG claims that the authority has imposed unjustified fines

By Abdelkader Ramadan

The Industrial Development Group (IDG) has taken the Industrial Development Authority to court at the Cairo Regional Centre for Commercial Arbitration over what the IDG considered intransigence, by imposing fines without justification.

This has been the largest dispute between the two parties since construction of IDGs projects began in 6th of October city.

The authority has claimed that all fines imposed were a result of irregularities found in a number of the company’s factories, and the IDG’s failure to construct buildings based on contractual terms.

They accused the IDG of selling land to investors at inflated prices, and demanded that a share of these revenues, EGP 9.5 million, be paid to the authority as compensation for violating the contract. The authority went on to claim that there was a discrepancy between the agreed amount of land the IDG was permitted to build on. The authority claimed that the IDG was never granted permission to undergo construction in a region known as Area 3, (the first region of the city to undergo construction) the surface area of which totalled 1 million square metres.

A source close to the authority claimed that the IDG was repeatedly warned about selling land to investors and that doing so would be considered a violation of the contract. They further claimed that the price at which land was to be sold would be fixed, and did not include the cost of the services offered by developers and the outer wall. Additional fines were imposed for the IDG’s failure to construct enough green lands, as agreed upon in the contract.

“The authority’s claims regarding Area 3 did not materialise until after the IDG began complaining about the imposition of unjustified fines and began to seek legal arbitration,” said the Managing Director of IDG, Samih Atteya.  He added that “contracts drawn up between the IDG and the authority did in fact include the cost of submitted services and outer wall, and that the authority does not have the right to change the wording of the contract after the fact.

Despite the dispute, the IDG paid the EGP 9.5 million in fees in order to avoid stalling the implementation of several projects. Atteya claimed that the authority’s decision to not grant building licenses to investors seeking to undergo development projects in the city would have a negative effect on the city’s infrastructure and the companies who had already purchased land. He asked the court to re-assess the value of these fines and authorise all contracts with investors.

Atteya pointed to an agreement between the company and the General Authority for Investment, licensing one million new metres, known as Area 4, as an investment zone, and that it would recognise all contracts with investors. Fifty five projects in Area 3 are considered to be under threat, including 55 factories and 20 projects still under construction.

  • Alan Cockayne

    This ploy has been typical throughout the development industry; tourist development especially. It is a back-door scam using fines granted by unscrupulous officials to enforce double-payments.

    The primary sale of land and subsequent payments for such, to establish construction licences was always open to “mafia” style corrupt elements.

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