A ministerial committee approved the settlement of an investment dispute on Wednesday following New Urban Communities Authority (NUCA) approval on Tuesday for the final settlement for UAE-based company Al-Futtaim.
The settlement is worth EGP 214m and will be fully paid fully by NUCA, said Al-Futtaim Legal Adviser Hani Sarie-Eldin.
Sarie-Eldin said the agreement on the final settlement is currently under review by the State Lawsuits Authority (SLA). The Egyptian constitution requires that the government refer all dispute agreements to the State Lawsuit Authority for review. Sarie-Eldin expects that the STA will approve the settlement.
Sarie-Eldin said: “It was agreed to extend project implementation for five years, beginning once the SLA completes its review of the settlement.”
The process of obtaining licences for the group has been delayed since 2009 Sarie-Eldin said, “costing Egypt between EGP10-11bn in investments”.
Al-Futtaim invested EGP 7bn into Egypt under a pre-2009 licence between 2011 and 2014, out of EGP22bn in investments that were planned to be supplied by the end of 2015.
According to Sarie-Eldin, an agreement was made with the Ministry of Housing, to pay nearly EGP 101m in exchange for additional land the company acquired for the Cairo Festival City project.
Another EGP 87m still remains to be paid in instalments, for which an unconditional letter of guarantee was issued by the New Urban Communities Authority, alongside an additional EGP 32m. This brings the total settlement value to EGP214m which Al-Futtaim is committed to fully repay, in addition to registering ownership of the additional lands.
Al-Futtaim received a land plot of 700 acres in 1997 to construct real estate projects in New Cairo. The contract was amended in 2007 and the company paid additional amounts. But supervisory reports cited irregularities worth billions of Egyptian pounds for the difference between the allocation price and the actual price of the land on which the Cairo Festival City project is located.
Sarie-Eldin said: “Egypt is suffering from what happened in the wake of the 25 January Revolution including the politicisation of criminal law through its application in investment and administrative disputes.”
He regarded this as a disaster that terrifies local and foreign investors and causes them to refrain from investing or dealing with state agencies.
Sarie-Eldin went on to say that continuing to work under the same legislation and mechanisms of the past will generate the same problems that are currently unsolved. He said this is particularly in regards to the investment disputes left over from a corrupt regime.
He said: “The utilisation of criminal law in investment and administrative disputes as a result of a failure to conduct political trials for both statesmen and government officials or good-willed investors, and will result in confusion and hesitation on part of the state to resolve investment disputes. This will lead to Egypt exiting the fierce competition for Foreign Direct Investment.”